Ares Management Corporation

11/06/2026 | Press release | Distributed by Public on 11/06/2026 14:53

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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 September 30, 2026, 93% 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, including the impact of the upcoming U.S. midterm elections, 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 Three months ended September 30, 2026 Nine months ended September 30, 2026
High yield bonds ICE BAML High Yield Master II Index U.S. (1.8) <0.1
High yield bonds ICE BAML European Currency High Yield Index Europe (1.8) 0.1
Leveraged loans S&P UBS Leveraged Loan Index U.S. 2.0 3.4
Leveraged loans S&P UBS Western European Leveraged Loan Index Europe 1.1 2.8
Equities S&P 500 Index U.S. 2.3 12.8
Equities MSCI All Country World Ex-U.S. Index Non-U.S. 0.6 14.7
Infrastructure equities S&P Global Infrastructure Index Global (7.4) 1.9
Real estate equities FTSE NAREIT All Equity REITs Index U.S. (6.9) 4.9
Real estate equities FTSE EPRA/NAREIT Developed Europe Index Europe (9.2) (9.3)
Real estate equities Tokyo Stock Exchange REIT Index APAC (5.4) (15.2)
During the third quarter of 2026, global markets continued to experience volatility amid renewed geopolitical tension in the Middle East and evolving expectations regarding U.S. trade policies, elevated energy prices and continued inflationary pressures. Despite these headwinds, U.S. leveraged loan markets generated positive performance benefiting from higher floating rates while U.S. and international equity markets proved resilient, supported by robust second quarter corporate earnings growth.
Despite uncertainty stemming from rising global interest rates and ongoing geopolitical developments, global commercial real estate fundamentals continued to improve during the third quarter of 2026 as net absorption strengthened and new supply remained limited. Although higher interest rates weighed on capital markets activity and transaction volumes and contributed to weaker performance across global REIT markets during the quarter, we do not believe this performance reflects a deterioration in our portfolio's underlying fundamentals. Rather, we expect constrained new supply to continue providing a meaningful tailwind across sectors and geographies for commercial real estate markets. In addition, renewable energy
deployment also remained at a meaningful scale, supported by stable demand for clean energy and a strong development pipeline. Demand for digital infrastructure remained strong, driven by continued data center development and growing demand from artificial intelligence based companies. While performance varies by sector and geography, we believe strong underlying demand trends and continued investment activity across the sector will provide meaningful opportunities for infrastructure investment in coming periods.
Private equity activity improved during the third quarter of 2026, but remained uneven and short of a broad-based recovery as macroeconomic volatility, elevated financing costs and continued uncertainty regarding the implications of artificial intelligence weighed on transaction activity. We believe disciplined capital deployment and active strategies focused on operational execution, sustainable growth and technology enablement remain critical to driving long-term value creation.
We believe our portfolios across all strategies remain well positioned for a fluctuating interest rate environment. On a market value basis, approximately 81% of our debt assets and 51% of our total assets were floating rate instruments as of September 30, 2026.
Recent Transactions
On October 26, 2026, ARCC entered into a definitive merger agreement with MidCap Financial Investment Corporation (NASDAQ: MFIC) ("MFIC") under which ARCC will acquire MFIC in a stock-and-cash transaction for a total enterprise value of approximately $2.6 billion. Under terms of the transaction, the cash portion of the total consideration, approximately $100.0 million, or $1.21 per share of MFIC common stock, will be provided by a subsidiary of Ares.
Managing Business Performance
Operating Metrics
We measure our business performance using certain operating metrics that are common to the alternative investment management industry and are discussed below.
Assets Under Management
AUM refers to the assets we manage and is viewed as a metric to measure our investment and fundraising performance as it reflects assets generally at fair value plus available uncalled capital.
The tables below present rollforwards of our total AUM by segment ($ in millions):
Credit
Group 		Real Assets
Group
Secondaries
Group
Private Equity
Group 		Other
Businesses 		Total AUM
Balance at 6/30/2026
$ 440,544 $ 151,230 $ 44,179 $ 24,451 $ 10,915 $ 671,319
New par/equity commitments 6,371 7,847 2,579 - 1,967 18,764
New debt commitments 8,832 3,397 32 - - 12,261
Capital reductions (3,838) (572) (8) - - (4,418)
Distributions (4,835) (2,110) (827) (238) (550) (8,560)
Redemptions (1,863) (403) (126) - - (2,392)
Net allocations among investment strategies (195) 418 - - (223) -
Change in fund value 1,248 1,791 448 292 (133) 3,646
Balance at 9/30/2026
$ 446,264 $ 161,598 $ 46,277 $ 24,505 $ 11,976 $ 690,620
Credit
Group 		Real Assets
Group 		Secondaries
Group 		Private Equity
Group 		Other
Businesses 		Total AUM
Balance at 6/30/2025
$ 377,106 $ 129,774 $ 33,949 $ 23,766 $ 7,790 $ 572,385
Acquisitions - - - 856 - 856
New par/equity commitments 11,479 3,347 3,349 528 2,148 20,851
New debt commitments 7,800 1,473 775 - - 10,048
Capital reductions (4,248) (883) (32) (1) - (5,164)
Distributions (3,669) (1,272) (210) (151) (477) (5,779)
Redemptions (1,202) (592) (60) - (502) (2,356)
Net allocations among investment strategies 440 125 - - (565) -
Change in fund value 3,748 382 604 98 (17) 4,815
Balance at 9/30/2025
$ 391,454 $ 132,354 $ 38,375 $ 25,096 $ 8,377 $ 595,656
Credit
Group 		Real Assets
Group 		Secondaries
Group 		Private Equity
Group 		Other
Businesses 		Total AUM
Balance at 12/31/2025
$ 406,866 $ 139,088 $ 42,156 $ 25,288 $ 9,107 $ 622,505
Acquisitions 5,544 - - - - 5,544
New par/equity commitments 30,833 19,766 4,649 858 4,607 60,713
New debt commitments 28,414 7,461 377 - - 36,252
Capital reductions (10,987) (1,796) (96) (1) - (12,880)
Distributions (13,326) (5,927) (1,571) (1,875) (1,289) (23,988)
Redemptions (4,645) (1,070) (282) - - (5,997)
Net allocations among investment strategies (142) 948 166 - (972) -
Change in fund value 3,707 3,128 878 235 523 8,471
Balance at 9/30/2026
$ 446,264 $ 161,598 $ 46,277 $ 24,505 $ 11,976 $ 690,620
Credit
Group 		Real Assets
Group 		Secondaries
Group 		Private Equity
Group 		Other
Businesses 		Total AUM
Balance at 12/31/2024
$ 348,858 $ 75,298 $ 29,153 $ 24,041 $ 7,096 $ 484,446
Acquisitions - 45,281 - 856 - 46,137
New par/equity commitments 26,344 7,904 8,155 1,503 5,165 49,071
New debt commitments 21,782 5,706 775 - - 28,263
Capital reductions (11,524) (2,035) (90) (55) - (13,704)
Distributions (11,938) (4,450) (609) (1,356) (1,025) (19,378)
Redemptions (2,527) (882) (123) - (510) (4,042)
Net allocations among investment strategies 1,935 174 73 - (2,182) -
Change in fund value 18,524 5,358 1,041 107 (167) 24,863
Balance at 9/30/2025
$ 391,454 $ 132,354 $ 38,375 $ 25,096 $ 8,377 $ 595,656
The components of our AUM are presented below ($ in billions):
AUM: $690.6 AUM: $595.7
FPAUM
Non-fee paying(1)
AUM not yet paying fees
(1) Includes $6.2 billion and $5.7 billion of non-fee paying AUM from our general partner and employee commitments as of September 30, 2026 and 2025, respectively.
Please refer to "- Results of Operations by Segment" for a more detailed presentation of AUM by segment for each of the periods presented.
Fee Paying Assets Under Management
FPAUM refers to AUM from which we directly earn management fees and is equal to the sum of all the individual fee bases of our funds that directly contribute to our management fees.
The tables below present rollforwards of our total FPAUM by segment ($ in millions):
Credit
Group 		Real Assets
Group
Secondaries
Group
Private Equity
Group 		Other
Businesses 		Total
Balance at 6/30/2026
$ 266,120 $ 88,614 $ 31,466 $ 13,907 $ 9,815 $ 409,922
Commitments 4,474 3,615 792 - 1,316 10,197
Deployment/increase in leverage 8,486 2,182 434 - 158 11,260
Capital reductions (3,611) (242) - - - (3,853)
Distributions (4,439) (2,199) (428) (65) (550) (7,681)
Redemptions (1,841) (403) (126) - - (2,370)
Net allocations among investment strategies (6) 444 - - (438) -
Change in fund value 377 655 (81) (84) (205) 662
Change in fee basis 1,611 (1,059) - (281) (2,000) (1,729)
Balance at 9/30/2026
$ 271,171 $ 91,607 $ 32,057 $ 13,477 $ 8,096 $ 416,408
Credit
Group 		Real Assets
Group 		Secondaries
Group 		Private Equity
Group 		Other
Businesses 		Total
Balance at 6/30/2025
$ 228,153 $ 79,495 $ 24,535 $ 10,993 $ 6,381 $ 349,557
Acquisitions - - - 1,118 - 1,118
Commitments 8,129 2,811 3,153 - 1,805 15,898
Deployment/increase in leverage 9,888 1,460 113 1 142 11,604
Capital reductions (3,001) (774) - - - (3,775)
Distributions (4,063) (1,704) (101) (8) (414) (6,290)
Redemptions (785) (592) (60) - - (1,437)
Net allocations among investment strategies 669 125 - - (794) -
Change in fund value 757 (496) 444 (16) (96) 593
Change in fee basis 421 178 (5) (240) - 354
Balance at 9/30/2025
$ 240,168 $ 80,503 $ 28,079 $ 11,848 $ 7,024 $ 367,622
Credit
Group 		Real Assets
Group 		Secondaries
Group 		Private Equity
Group 		Other
Businesses 		Total
Balance at 12/31/2025
$ 249,816 $ 84,065 $ 29,481 $ 14,437 $ 7,150 $ 384,949
Acquisitions 5,495 - - - - 5,495
Commitments 14,407 8,938 1,830 - 3,181 28,356
Deployment/increase in leverage 27,524 5,650 1,950 893 2,946 38,963
Capital reductions (9,636) (463) (88) - - (10,187)
Distributions (12,792) (4,855) (979) (493) (1,289) (20,408)
Redemptions (4,671) (992) (282) - - (5,945)
Net allocations among investment strategies 1,057 994 153 - (2,204) -
Change in fund value (386) 695 107 (186) 312 542
Change in fee basis 357 (2,425) (115) (1,174) (2,000) (5,357)
Balance at 9/30/2026
$ 271,171 $ 91,607 $ 32,057 $ 13,477 $ 8,096 $ 416,408
Credit
Group 		Real Assets
Group 		Secondaries
Group 		Private Equity
Group 		Other
Businesses 		Total
Balance at 12/31/2024
$ 209,145 $ 44,088 $ 22,401 $ 11,427 $ 5,492 $ 292,553
Acquisitions - 30,467 - 1,118 - 31,585
Commitments 20,465 4,760 4,893 - 4,589 34,707
Deployment/increase in leverage 24,594 4,256 780 33 395 30,058
Capital reductions (8,212) (951) - (11) - (9,174)
Distributions (12,668) (4,415) (170) (8) (962) (18,223)
Redemptions (2,177) (882) (123) - - (3,182)
Net allocations among investment strategies 2,293 174 73 - (2,540) -
Change in fund value 6,670 2,706 230 (14) 50 9,642
Change in fee basis 58 300 (5) (697) - (344)
Balance at 9/30/2025
$ 240,168 $ 80,503 $ 28,079 $ 11,848 $ 7,024 $ 367,622
The charts below present FPAUM by its fee bases ($ in billions):
FPAUM: $416.4 FPAUM: $367.6
Invested capital
NAV/fair value/reported value(1)
Capital commitments Collateral balances (at par) GAV
(1)Includes $99.9 billion and $87.8 billion from funds that primarily invest in illiquid strategies as of September 30, 2026 and 2025, respectively. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.
Please refer to "- Results of Operations by Segment" for detailed information by segment of the activity affecting total FPAUM for each of the periods presented.
Perpetual Capital Assets Under Management
The chart below presents our perpetual capital AUM by segment and type ($ in billions):
Credit Real Assets Secondaries Other Businesses Perpetual Wealth Funds Private Commingled Funds Publicly-Traded
Funds 		Managed Accounts
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 September 30, 2026 and 2025, 93% and 94%, 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 September 30, 2026, AUM not yet paying fees includes $93.8 billion of AUM available for future deployment and $2.3 billion of development assets not yet stabilized that could collectively generate approximately $826.9 million in potential incremental annual management fees, representing a 24% embedded growth rate in our base management fees from the last twelve month period.
Incentive Eligible Assets Under Management and Incentive Generating Assets Under Management
The charts below present our IEAUM and IGAUM by segment ($ in billions):
Credit Real Assets Secondaries Private Equity Other Businesses
As of September 30, 2026 and 2025, IGAUM included $79.8 billion and $58.3 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 September 30, 2026, perpetual capital IGAUM that could potentially result in crystallized fee related performance revenues totaled $46.7 billion, composed of $25.5 billion within the Credit Group and $21.2 billion within the Real Assets Group. As of September 30, 2025, perpetual capital IGAUM that could potentially result in crystallized fee related performance revenues totaled $32.1 billion, composed of $20.3 billion within the Credit Group, $7.4 billion within the Real Assets Group and $4.4 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.
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.
The activity of the Consolidated Funds is reflected within the unaudited condensed consolidated financial statement line items indicated by reference thereto. Consolidated Funds represented approximately 4% of our AUM as of September 30, 2026. We have eliminated approximately 5% of total revenues that we earned from Consolidated Funds 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. See "Note 12. Equity and Redeemable Interest" within our unaudited condensed consolidated financial statements for a further description of our redeemable interest in Consolidated Funds.
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.
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 seven months of results during the nine months ended September 30, 2025, our year-over-year analysis of the nine months ended September 30, 2026 will lack comparability.
The following table presents our summarized consolidated results of operations ($ in thousands):
Three months ended September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Total revenues $ 1,433,399 $ 1,657,628 $ (224,229) (14)% $ 4,258,445 $ 4,096,561 $ 161,884 4%
Total expenses (1,148,528) (1,308,216) 159,688 12 (3,496,968) (3,460,122) (36,846) (1)
Total other income (expense), net (43,235) 302,859 (346,094) NM 179,022 443,808 (264,786) (60)
Less: Income tax expense
36,244 111,892 75,648 68 169,093 190,387 21,294 11
Net income 205,392 540,379 (334,987) (62) 771,406 889,860 (118,454) (13)
Less: Net income attributable to non-controlling interests in Consolidated Funds 77,226 67,407 9,819 15 178,114 127,383 50,731 40
Net income attributable to Ares Operating Group entities 128,166 472,972 (344,806) (73) 593,292 762,477 (169,185) (22)
Less: Net income (loss) attributable to redeemable interest in Ares Operating Group entities (71) 1,797 (1,868) NM 661 1,839 (1,178) (64)
Less: Net income attributable to non-controlling interests in Ares Operating Group entities 42,907 182,293 (139,386) (76) 214,077 287,524 (73,447) (26)
Net income attributable to Ares Management Corporation 85,330 288,882 (203,552) (70) 378,554 473,114 (94,560) (20)
Less: Series B mandatory convertible preferred stock dividends declared 25,313 25,313 - - 75,938 75,938 - -
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders $ 60,017 $ 263,569 (203,552) (77) $ 302,616 $ 397,176 (94,560) (24)
Three and Nine Months Ended September 30, 2026 Compared to Three and Nine Months Ended September 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 September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Revenues
Management fees $ 1,057,116 $ 971,762 $ 85,354 9% $ 3,064,206 $ 2,689,371 $ 374,835 14%
Carried interest allocation 161,748 464,666 (302,918) (65) 558,293 948,575 (390,282) (41)
Incentive fees 82,299 100,668 (18,369) (18) 286,986 155,795 131,191 84
Principal investment income 19,854 17,976 1,878 10 22,619 50,937 (28,318) (56)
Administrative, transaction and other fees 112,382 102,556 9,826 10 326,341 251,883 74,458 30
Total revenues $ 1,433,399 $ 1,657,628 (224,229) (14) $ 4,258,445 $ 4,096,561 161,884 4
Management Fees. Within the Credit Group, capital deployment in private funds within our direct lending and alternative credit strategies led to a rise in FPAUM, contributing $28.2 million and $84.7 million of the increase in management fees for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025. In addition, our publicly-traded and our perpetual wealth funds contributed $15.9 million and $82.8 million of the increases in management fees for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025, primarily
driven by increases in FPAUM associated with fundraising. Within the Real Assets Group, funds that we manage as a result of the GCP Acquisition contributed $31.4 million of the increase in management fees for the nine months ended September 30, 2026 compared to the same period in 2025, primarily driven by fees generated for two additional months in the current year period.
In addition, Part I Fees increased by $29.2 million and $84.3 million for the three and nine months ended September 30, 2026, respectively, compared to the same periods in 2025. The increases in Part I Fees were primarily attributable to our open-ended core infrastructure fund, ASIF and to our open-ended European direct lending fund, driven by increases in net investment income from their growing portfolios of investments.
For detail regarding the fluctuations of management fees within each of our segments, see "-Results of Operations by Segment."
Carried Interest Allocation. The following table sets forth the change in carried interest allocation by segment ($ in millions):
Three months ended September 30, Nine months ended September 30,
2026 2025 2026 2025
Credit funds $ 109.0 $ 286.8 $ 399.6 $ 691.2
Real Assets funds 47.4 38.2 216.2 93.1
Secondaries funds
18.6 29.5 20.4 27.7
Private Equity funds 43.9 47.0 76.2 112.7
Other businesses (21.0) 71.8 (88.3) 83.9
Elimination of carried interest from Consolidated Funds (36.2) (8.4) (65.4) (20.3)
Carried interest of non-controlling interests in consolidated subsidiaries 0.0 (0.2) (0.4) (39.7)
Carried interest allocation $ 161.7 $ 464.7 $ 558.3 $ 948.6
The activity was principally composed of the following:
Three months ended September 30, 2026 Three months ended September 30, 2025
•Credit funds:
◦Primarily from one direct lending fund, one alternative credit fund and one opportunistic credit fund with $23.5 billion of IGAUM generating returns in excess of their hurdle rates:
◦Within direct lending, ACE VI generated carried interest allocation of $42.5 million, driven by net investment income during the period
◦Within alternative credit, Pathfinder II generated carried interest allocation of $38.7 million, driven by the appreciation of certain investments that primarily operate in the services and utilities industries
◦Within opportunistic credit, ASOF II generated carried interest allocation of $38.4 million, driven by improved profitability of portfolio companies that operate in the industrial and healthcare industries
◦Reversal of unrealized carried interest of $44.6 million by SSF IV, driven by the decrease in market value of its investment in Savers Value Village, Inc. ("SVV") and other portfolio companies, due to declines in their stock prices, and $16.9 million by ACE III in connection with lower valuations of certain portfolio investments
•Real Assets funds:
◦AREOF IV generated carried interest allocation of $19.2 million, driven by the appreciation of certain investments within the industrial and multifamily sector
◦IDF V generated carried interest allocation of $14.2 million, driven by net investment income during the period
◦ACIP II generated carried interest allocation of $10.9 million, driven by the appreciation of an energy portfolio company and a data center investment
•Secondaries funds:
◦ASIS III, AGSS and a private equity secondaries fund generated carried interest of $13.4 million, $11.5 million and $9.2 million, respectively, primarily driven by the appreciation of certain portfolio investments
◦Reversal of unrealized carried interest of $20.8 million from LREF VIII, primarily driven by the lower valuation from certain portfolio investments
•Private Equity funds:
◦A corporate private equity fund and ACOF VI generated carried interest allocation of $22.6 million and $16.6 million, respectively, driven by improved profitability from portfolio companies that primarily operate in the healthcare and service industries
•Other Businesses:
◦Reversal of unrealized carried interest of $29.3 million attributable to the decrease in market value of our investment in Kodiak AI, Inc. (Nasdaq: KDK), driven by its lower stock price
•Credit funds:
◦Primarily from three opportunistic credit funds, two alternative credit funds and two direct lending funds with $31.1 billion of IGAUM generating returns in excess of their hurdle rates:
◦Within our opportunistic credit funds, ASOF II generated carried interest allocation of $47.9 million, driven by improved profitability of portfolio companies that operate in the healthcare and services industries. SSF IV and ASOF I generated carried interest allocation of $42.2 million and $21.5 million, respectively, primarily due to their investments in SVV, driven by its higher stock price
◦Within our alternative credit funds, Pathfinder II and Pathfinder I generated carried interest allocation of $37.3 million and $25.5 million, respectively, driven by market appreciation of certain investments and net investment income during the period
◦Within our direct lending funds, ACE VI and PCS II generated carried interest allocation of $33.8 million and $29.9 million, respectively, driven by net investment income on an increasing invested capital base
•Real Assets funds:
◦EIF V and ACIP II generated carried interest allocation of $18.4 million and $12.7 million, respectively, driven by appreciation of certain investments
◦IDF V generated carried interest allocation of $16.3 million, driven by net investment income during the period
•Secondaries funds:
◦LREF IX and LEP XVII generated carried interest allocation of $12.9 million and $9.3 million, respectively, primarily driven by appreciation of certain portfolio investments
•Private Equity funds:
◦ACOF VI generated carried interest allocation of $60.2 million, primarily driven by improved profitability from portfolio companies that primarily operate in the industrial, healthcare, retail and service industries
◦Reversal of unrealized carried interest allocation of $18.6 million from ACOF IV, driven by lower profitability of portfolio companies that primarily operate in the energy and healthcare industries
•Other Businesses:
◦Carried interest allocation of $66.0 million attributable to the change in value from previously held AAC II Class A ordinary shares that converted into equity securities of KDK following the business combination
Nine months ended September 30, 2026 Nine months ended September 30, 2025
•Credit funds:
◦Primarily from one alternative credit fund, three direct lending funds and one opportunistic credit fund with $36.4 billion of IGAUM generating returns in excess of their hurdle rates:
◦Within alternative credit, Pathfinder II generated carried interest allocation of $125.6 million, driven by the market appreciation of certain investments that primarily operate in the utilities, transportation and services industries
◦Within direct lending, ACE VI, ACE V and PCS II generated carried interest allocation of $106.5 million, $36.0 million and $21.8 million, respectively, driven by net investment income during the period
◦Within opportunistic credit, ASOF II generated carried interest allocation of $63.1 million, driven by improved profitability of portfolio companies that operate in the industrial, consumer services and healthcare industry
•Real Assets funds:
◦JDC I generated carried interest allocation of $58.5 million, driven by the appreciation of a data center investment
◦IDF V generated carried interest allocation of $41.5 million, driven by net investment income during the period
◦ACIP II generated carried interest allocation of $36.5 million, driven by the appreciation of a data center investment and an energy portfolio company
◦AREOF IV generated carried interest allocation of $36.5 million, driven by the appreciation of certain investments within the industrial and multifamily sector
•Secondaries funds:
◦ASIS III, AGSS, LREP IX and a private equity secondaries fund generated carried interest of $27.0 million, $15.6 million, $12.3 million and $12.3 million, respectively, primarily driven by the appreciation of certain portfolio investments
◦Reversal of unrealized carried interest of $56.6 million from LREF VIII, primarily driven by the lower valuation of certain portfolio investments
•Private Equity funds:
◦ACOF VI and a corporate private equity fund generated carried interest allocation of $53.8 million and $22.6 million, respectively, driven by improved profitability from portfolio companies that primarily operate in the retail, healthcare and service industries
◦Reversal of unrealized carried interest of $21.6 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
•Other Businesses:
◦Reversal of unrealized carried interest of $104.2 million attributable to the decrease in market value of our investment in KDK, driven by its lower stock price
•Credit funds:
◦Primarily from one opportunistic credit fund, three direct lending funds and two alternative credit funds with $38.9 billion of IGAUM generating returns in excess of their hurdle rates:
◦Within our opportunistic credit funds, ASOF II generated carried interest allocation of $122.6 million, driven by improved profitability of portfolio companies that operate in the services, healthcare and industrial industries
◦Within our direct lending funds, ACE V, ACE VI and PCS II generated carried interest allocation of $101.0 million, $93.0 million and $74.7 million, respectively, driven by net investment income on an increasing invested capital base.
◦Within our alternative credit funds, Pathfinder II and Pathfinder I generated carried interest allocation of $68.7 million and $57.0 million, respectively, driven by market appreciation of certain investments and net investment income during the period
•Real Assets funds:
◦IDF V generated carried interest allocation of $31.2 million, driven by net investment income during the period
◦ACIP II and EIF V generated carried interest allocation of $22.7 million and $19.9 million, respectively, driven by the appreciation of certain portfolio investments
•Secondaries funds:
◦LEP XVII and LREF IX generated carried interest allocation of $16.5 million and $14.4 million, respectively, primarily driven by appreciation of certain portfolio investments
◦Reversal of unrealized carried interest of $11.3 million from LEP XVI, driven by lower valuation of certain investments
•Private Equity funds:
◦ACOF VI generated carried interest allocation of $139.0 million, 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 $19.5 million and $13.1 million, respectively, from ACOF IV and from a corporate private equity extended value fund, driven by lower operating performance from portfolio companies that primarily operate in the energy, healthcare, industrial and service industries
•Other Businesses:
◦Carried interest allocation of $66.0 million attributable to the change in value from previously held AAC II Class A ordinary shares that converted into equity securities of KDK following the business combination
Incentive Fees. The following table sets forth incentive fees by segment ($ in millions):
Three months ended September 30, Nine months ended September 30,
2026 2025 2026 2025
Credit funds $ 66.6 $ 77.5 $ 217.5 $ 106.1
Real Assets funds 9.2 5.9 12.2 6.5
Secondaries funds
6.5 17.3 57.3 43.2
Incentive fees $ 82.3 $ 100.7 $ 287.0 $ 155.8
The decrease in incentive fees for the three months ended September 30, 2026 compared to the same period in 2025 was primarily due to (i) lower recognition of fees earned from APMF; and (ii) incentive fees from an alternative credit fund that crystallized in connection with a loan repayment in the prior year period. The increase in incentive fees for the nine months ended September 30, 2026 compared to the same period in 2025 was driven by $138.5 million of fees 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 nine months ended September 30, 2026 was primarily attributable to:
•Dividend income of $7.6 million and $18.0 million, respectively, primarily generated from our investments in various real estate debt funds and from our Japanese open-ended industrial real estate fund that pays dividends semi-annually, as well as various U.S. direct lending and real estate secondaries funds for the nine months ended September 30, 2026. 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 no longer presented within principal investment income, instead it is presented as net realized and unrealized gains on investments of Consolidated Funds within our Condensed Consolidated Statements of Operations.
•Unrealized gains of $12.2 million and $17.4 million, respectively, from our investments in various digital infrastructure, Japanese real estate equity and private equity secondaries funds, partially offset by unrealized losses of $14.6 million from our investments in certain U.S. real estate equity funds for the nine months ended September 30, 2026.
The activity for the three and nine months ended September 30, 2025 was primarily attributable to:
•Dividend income of $7.9 million and $24.4 million, respectively, primarily generated from our investments in various funds within our real estate debt strategy.
•Unrealized gains of $19.6 million and $11.7 million, respectively, from our investments in various credit secondaries, private equity secondaries and infrastructure equity funds, partially offset by an unrealized loss of $11.9 million and $12.2 million, respectively, from a U.S. real estate equity fund. The nine months ended September 30, 2025 also included unrealized gains of $8.1 million from our investments in various U.S. direct lending funds.
•The activity for the nine months ended September 30, 2025 also included 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.
Administrative, Transaction and Other Fees. The increases for the three and nine months ended September 30, 2026 compared to the same periods in 2025 were driven by: (i) $7.9 million and $20.8 million, respectively, of higher property-related fees, mostly from higher property management fees earned as we expand these services across more properties and earn the fees for services that were previously provided by third parties; and (ii) $7.4 million and $27.1 million, respectively, of additional administrative service fees earned from new and existing private funds within our Credit Group, from our perpetual wealth funds and from funds acquired in the GCP Acquisition.
The increase for the three months ended September 30, 2026 compared to the same period in 2025 was partially offset by lower property-related fees of $6.1 million from funds acquired in the GCP Acquisition, attributable to lower leasing fees which vary based on the transaction and timing. While we recognized lower property-related fees from funds acquired in the GCP Acquisition this quarter, we recognized higher property-related fees of $18.2 million from these funds for the nine months ended September 30, 2026 compared to the same period in 2025.
Expenses
Three months ended September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Expenses of the Company
Compensation and benefits $ 700,592 $ 659,835 $ (40,757) (6)% $ 2,081,659 $ 1,960,669 $ (120,990) (6)%
Performance related compensation 173,620 404,095 230,475 57 633,883 761,434 127,551 17
General, administrative and other expenses 258,627 246,154 (12,473) (5) 754,779 706,224 (48,555) (7)
Total $ 1,132,839 $ 1,310,084 177,245 14 $ 3,470,321 $ 3,428,327 (41,994) (1)
Compensation and Benefits. The following table presents the components of change in compensation and benefits for the three and nine months ended September 30, 2026 compared to the same periods in 2025 ($ in millions):
Three month change Nine month change
Compensation and benefits
Cash-based compensation and benefits $ (14.7) $ (111.4)
Part I Fee compensation (16.1) (46.1)
Equity compensation expense (26.9) (86.1)
Acquisition-related:
Acquisition-related compensation expense 11.5 21.4
Acquisition-related equity compensation expense 5.4 101.2
Total $ (40.8) $ (121.0)
For detail regarding the fluctuations of compensation and benefits within each of our segments see "-Results of Operations by Segment."
The increases in cash-based compensation and benefits reflected the continued growth in salary and benefits for our increased headcount. The nine months ended September 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. Full-time equivalent headcount increased by 13% to 4,393 professionals for the year-to-date period in 2026 from 3,891 professionals in 2025.
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 $8.7 million and $7.0 million for the three months ended September 30, 2026 and 2025, respectively, and $21.9 million and $16.7 million for the nine months ended September 30, 2026 and 2025, respectively, to reclaim a portion of the supplemental distribution fees we paid.
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.
In connection with the GCP Acquisition, we agreed to pay sellers and employees different forms of consideration. A portion of the consideration represented purchase price that was accounted for as compensation and included both cash and equity. Additionally, we committed to paying certain employees for services to be performed over the initial 12 months following the transaction close date. Acquisition-related compensation expense and acquisition-related equity compensation expense decreased for the nine months ended September 30, 2026 compared to the same period in 2025 primarily due to (i) equity-based compensation expense of $108.8 million from awards issued that included a portion that immediately vested in the first quarter of 2025; and (ii) retention related payments to certain employees of $47.2 million that were settled in cash within the first year of the acquisition. Conversely, acquisition-related compensation expense recorded in connection with contingent earnout arrangements increased when compared to the prior year periods. See "Note 7. Commitments and Contingencies" within our unaudited condensed consolidated financial statements for a further description of these contingent earnout arrangements.
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 for the three and nine months ended September 30, 2026 compared to the same periods in 2025 reflect growing headcount and fundraising activities and were driven by: (i) higher marketing costs of $5.5 million and $22.6 million, respectively, associated with program sponsorships and fund formation costs, as well as costs incurred during the second quarter of 2026 for our firmwide annual general meeting with limited partners ("AGM"); (ii) information technology of $9.2 million and $19.6 million,
respectively, driven by data architecture and software and our growing headcount; and (iii) occupancy costs of $4.1 million and $9.2 million, respectively, to support our growing business, including the expansion of our New York headquarters.
The increase in general, administrative and other expenses for the nine months ended September 30, 2026 compared to the same period in 2025 was also attributable to higher professional service fees of $13.0 million, primarily from consulting fees to support various ongoing technology initiatives to enhance our operations. Conversely, placement fees decreased by $12.0 million, primarily due to placement fees recognized in the prior year period associated with new commitments to an opportunistic credit fund.
In addition, the increase in general, administrative and other expenses for the nine months ended September 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 $38.8 million for the nine months ended September 30, 2026 compared to the same period in 2025. We incurred $35.3 million during the nine months ended September 30, 2025 related to the GCP Acquisition.
Other Income (Expense)
Three months ended September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Other income (expense) of the Company
Net realized and unrealized gains (losses) on investments $ (147,437) $ 188,420 $ (335,857) NM $ (71,338) $ 201,396 $ (272,734) NM
Interest and dividend income 9,128 13,644 (4,516) (33) 22,749 39,072 (16,323) (42)
Interest expense (58,506) (46,315) (12,191) (26) (161,461) (126,277) (35,184) (28)
Other expense, net (14,413) (7,263) (7,150) (98) (10,945) (64,498) 53,553 83
Total $ (211,228) $ 148,486 (359,714) NM $ (220,995) $ 49,693 (270,688) NM


Net Realized and Unrealized Gains (Losses) on Investments; Interest and Dividend Income. The activity for the three and nine months ended September 30, 2026 was primarily attributable to:
•Unrealized losses of $113.7 million and $3.8 million, respectively, from our investments in X-Energy, Inc. (Nasdaq: XE), and unrealized losses of $22.5 million and $60.7 million, respectively, from our investments in KDK.
•Net gains of $12.0 million for the nine months ended September 30, 2026 from the settlement of foreign currency hedges during the second quarter of 2026, 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 $6.0 million, respectively, from our strategic investment in a Brazilian alternative asset manager; (ii) dividend income of $2.0 million and $3.9 million, respectively, from J-REIT, which pays dividends semi-annually; and (iii) income of $1.0 million and $3.6 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 no longer presented within interest and dividend income, instead it is presented as net realized and unrealized gains on investments and as interest and other income of Consolidated Funds within our Condensed Consolidated Statements of Operations.
The activity for the three and nine months ended September 30, 2025 was primarily attributable to:
•Unrealized gains of $169.5 million and $169.4 million, respectively, from our strategic investments in XE.
•Interest and dividend income primarily included: (i) dividend income of $2.0 million and $6.0 million, respectively, from our strategic investment in a Brazilian alternative asset manager; (ii) income of $1.4 million and $5.5 million, respectively, from our investments in CLOs and CLO-based investments; and (iii) the first semi-annual dividend of $2.1 million from J-REIT. The nine months ended September 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 nine months ended September 30, 2026 compared to the same periods in 2025 due to (i) higher interest expense from our Credit Facility from higher average outstanding balance; (ii) interest expense from the Term Loan that was executed in March 2026; and (iii) higher interest expense from the subordinated notes resulting from an interest rate reset.
Other Expense, Net. The activities for the three and nine months ended September 30, 2026 and 2025 primarily included: (i) transaction gains (losses) associated with currency fluctuations impacting the revaluation of assets and liabilities denominated in foreign currencies other than an entity's functional currency; and (ii) expense attributable to the remeasurement of fair value of contingent consideration that reflect our progress toward achieving the earnouts established in connection with the GCP Acquisition. See "Note 7. Commitments and Contingencies" within our unaudited condensed consolidated financial statements for a further description of these contingent earnout arrangements.
Other expense, net during the nine months ended September 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 September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Consolidated Company Entities
Income before taxes $ 164,832 $ 581,681 $ (416,849) (72)% $ 756,121 $ 946,970 $ (190,849) (20)%
Less: Income tax expense
36,666 108,709 72,043 66 162,829 184,493 21,664 12
Net income $ 128,166 $ 472,972 (344,806) (73) $ 593,292 $ 762,477 (169,185) (22)
The decreases in income tax expense were primarily attributable to lower pre-tax income allocable to AMC, partially offset by higher entity level taxes in foreign and local jurisdictions, and contributed to an overall decrease to the effective tax rate for the three and nine months ended September 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 September 30, Nine months ended September 30,
2026 2025 2026 2025
AMC common stockholders
68.89 % 67.29 % 68.54 % 66.71 %
Non-controlling AOG unitholders 31.11 32.71 31.46 33.29
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 September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Net income $ 205,392 $ 540,379 $ (334,987) (62)% $ 771,406 $ 889,860 $ (118,454) (13)%
Less: Net income attributable to non-controlling interests in Consolidated Funds 77,226 67,407 9,819 15 178,114 127,383 50,731 40
Net income attributable to Ares Operating Group entities 128,166 472,972 (344,806) (73) 593,292 762,477 (169,185) (22)
Less: Net income (loss) attributable to redeemable interest in Ares Operating Group entities (71) 1,797 (1,868) NM 661 1,839 (1,178) (64)
Less: Net income attributable to non-controlling interests in Ares Operating Group entities 42,907 182,293 (139,386) (76) 214,077 287,524 (73,447) (26)
Net income attributable to Ares Management Corporation 85,330 288,882 (203,552) (70) 378,554 473,114 (94,560) (20)
Less: Series B mandatory convertible preferred stock dividends declared 25,313 25,313 - - 75,938 75,938 - -
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders $ 60,017 $ 263,569 (203,552) (77) $ 302,616 $ 397,176 (94,560) (24)
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.
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 September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Expenses of the Consolidated Funds $ (15,689) $ 1,868 $ (17,557) NM $ (26,647) $ (31,795) $ 5,148 16%
Net realized and unrealized gains on investments of Consolidated Funds 227,694 180,255 47,439 26 538,106 396,413 141,693 36
Interest and other income of Consolidated Funds 132,478 130,821 1,657 1 297,046 452,783 (155,737) (34)
Interest expense of Consolidated Funds (192,179) (156,703) (35,476) (23) (435,135) (455,081) 19,946 4
Income before taxes 152,304 156,241 (3,937) (3) 373,370 362,320 11,050 3
Less: Income tax expense (benefit) of Consolidated Funds (422) 3,183 3,605 NM 6,264 5,894 (370) (6)
Net income 152,726 153,058 (332) - 367,106 356,426 10,680 3
Less: Revenues attributable to Ares Management Corporation eliminated upon consolidation 82,472 75,366 7,106 9 201,927 198,372 3,555 2
Other expense (income), net attributable to Ares Management Corporation eliminated upon consolidation 6,972 (10,285) (17,257) NM 12,935 (30,671) (43,606) NM
Net income attributable to non-controlling interests in Consolidated Funds $ 77,226 $ 67,407 9,819 15 $ 178,114 $ 127,383 50,731 40
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.
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 September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Fee Related Earnings
Credit Group $ 521,397 $ 468,605 $ 52,792 11% $ 1,497,286 $ 1,303,509 $ 193,777 15%
Real Assets Group 166,615 126,087 40,528 32 445,772 314,011 131,761 42
Secondaries Group 50,672 74,033 (23,361) (32) 166,213 165,154 1,059 1
Private Equity Group 16,420 13,107 3,313 25 46,580 37,260 9,320 25
Other 5,167 6,294 (1,127) (18) 18,192 15,527 2,665 17
Operations Management Group (236,071) (216,916) (19,155) (9) (694,384) (587,864) (106,520) (18)
Fee Related Earnings $ 524,200 $ 471,210 52,990 11 $ 1,479,659 $ 1,247,597 232,062 19
Realized Income
Credit Group $ 517,978 $ 474,572 $ 43,406 9% $ 1,604,702 $ 1,342,005 $ 262,697 20%
Real Assets Group 149,135 112,051 37,084 33 404,308 297,296 107,012 36
Secondaries Group 50,007 72,317 (22,310) (31) 162,902 160,703 2,199 1
Private Equity Group 13,989 10,581 3,408 32 44,748 33,666 11,082 33
Other (6,366) (29) (6,337) NM (10,830) 10,083 (20,913) NM
Operations Management Group (234,601) (213,983) (20,618) (10) (691,451) (584,506) (106,945) (18)
Realized Income $ 490,142 $ 455,509 34,633 8 $ 1,514,379 $ 1,259,247 255,132 20
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 September 30, Nine months ended September 30,
2026 2025 2026 2025
Income before taxes $ 241,636 $ 652,271 $ 940,499 $ 1,080,247
Adjustments:
Depreciation and amortization expense 60,574 65,956 180,717 177,365
Equity compensation expense 181,621 160,130 568,032 583,083
Acquisition-related compensation expense(1)
30,958 42,448 87,397 108,752
Acquisition and merger-related expense 2,110 5,427 4,046 42,826
Placement fee adjustment (7,411) (2,415) (22,329) (3,513)
Other expense, net 13,531 17,571 5,197 47,260
Income before taxes of non-controlling interests in consolidated subsidiaries (7,575) (3,861) (22,056) (14,649)
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations (76,804) (70,590) (184,378) (133,277)
Total performance income-unrealized (170,142) (463,933) (387,014) (828,968)
Total performance related compensation-unrealized 105,921 330,960 311,091 579,241
Total net investment (income) loss-unrealized 115,723 (278,455) 33,177 (379,120)
Realized Income 490,142 455,509 1,514,379 1,259,247
Total performance income-realized (31,300) (24,559) (385,177) (205,561)
Total performance related compensation-realized 19,491 15,295 247,129 138,782
Total net investment loss-realized 45,867 24,965 103,328 55,129
Fee Related Earnings $ 524,200 $ 471,210 $ 1,479,659 $ 1,247,597
(1)Represents bonus payments, a portion of earnouts and other costs in connection with various acquisitions that are recorded as compensation expense and are presented within compensation and benefits within our Condensed Consolidated Statements of Operations.
For the specific components and calculations of these non-GAAP measures, as well as additional reconciliations to the most comparable measures in accordance with GAAP, see "Note 13. Segment Reporting" within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Discussed below are our results of operations for our reportable segments and the OMG.
Results of Operations by Segment
Credit Group-Three and Nine Months Ended September 30, 2026 Compared to Three and Nine Months Ended September 30, 2025
Fee Related Earnings
The following table presents the components of the Credit Group's FRE ($ in thousands):
Three months ended September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Management fees $ 713,941 $ 651,964 $ 61,977 10% $ 2,102,064 $ 1,854,501 $ 247,563 13%
Fee related performance revenues 63,818 62,389 1,429 2 70,155 81,098 (10,943) (13)
Other fees 17,066 13,471 3,595 27 50,013 37,431 12,582 34
Compensation and benefits (222,751) (212,709) (10,042) (5) (577,488) (537,661) (39,827) (7)
General, administrative and other expenses (50,677) (46,510) (4,167) (9) (147,458) (131,860) (15,598) (12)
Fee Related Earnings $ 521,397 $ 468,605 52,792 11 $ 1,497,286 $ 1,303,509 193,777 15
Management Fees. The chart below presents Credit Group management fees and effective management fee rates ($ in millions):
The following table presents the components of and causes for changes in the Credit Group's management fees for the three and nine months ended September 30, 2026 compared to the prior year period ($ in millions):
Three month change Nine month change
Publicly-traded funds and perpetual wealth vehicles:
Base management fees from our open-ended European direct lending fund and ASIF, due to increases in FPAUM associated with fundraising
$ 11.4 $ 53.0
Part I Fees from our open-ended European direct lending fund and ASIF, driven by increases in net investment income from their growing portfolio of investments
15.0 59.7
Fees from our open-ended sports, media and entertainment opportunities fund, which began generating fees during the first quarter of 2026 following the expiration of its fee waiver
2.9 7.5
Fees from ARCC, due to an increase in the average size of its portfolio 1.5 15.9
Private commingled funds and SMAs:
Fees from SDL III, ACE VI, our open-ended core alternative credit fund, ASOF III and Pathfinder II, driven by capital deployment 34.7 111.7
Reduction in fees from SDL II, ACE IV, ACE V, Pathfinder I and ASOF I as these funds are past their investment periods
(14.2) (40.6)
Fees from acquired BlueCove funds effective February 1, 2026 5.4 14.6
Cumulative effect of other changes 5.3 25.8
Total $ 62.0 $ 247.6
The decreases in effective management fee rates for the three and nine months ended September 30, 2026 compared to the same periods in 2025 were primarily attributable to increases in FPAUM from our liquid credit and alternative credit strategies, which have effective management fee rates lower than the average effective management fee rate of funds within the Credit Group.
Fee Related Performance Revenues. Fee related performance revenues for the three and nine months ended September 30, 2026 and 2025 were primarily attributable to incentive fees from an open-ended core alternative credit fund that has an annual measurement period in the third quarter. The three and nine months ended September 30, 2026 also included incentive fees from our open-ended sports, media and entertainment opportunities fund, which has a quarterly measurement period and a fee waiver that expired at the end of 2025. Fee related performance revenues for the nine months ended September 30, 2025 also included incentive fees from a European direct lending fund that crystallized a deferred payment during the first quarter of 2025 due to the restructuring of its hold back provisions.
Other Fees. The increases in other fees for the three and nine months ended September 30, 2026 compared to the same periods in 2025 were primarily driven by: (i) higher administrative service fees of $1.8 million and $7.7 million, respectively, which are earned on invested capital from certain private funds; and (ii) higher capital markets transaction fees of $1.9 million and $6.0 million, respectively, reflecting increased transaction volumes.
Compensation and Benefits. The increases in compensation and benefits for the three and nine months ended September 30, 2026 compared to the same periods in 2025 were primarily driven by: (i) higher Part I Fee compensation of $9.2 million and $39.2 million, respectively, corresponding to the increases in Part I Fees; and (ii) higher salary expenses of $2.4 million and $7.6 million, respectively, primarily attributable to headcount growth. The increase in compensation and benefits for the nine months ended September 30, 2026 compared to the same period in 2025 was partially offset by lower fee related performance compensation of $11.4 million primarily due to lower fee related performance revenues from a European direct lending fund that crystallized a deferred payment during the first quarter of 2025 due to the restructuring of its hold back provisions. In order to reclaim a portion of the supplemental distribution fees we paid, we reduced: (i) Part I Fee compensation by $2.3 million and $6.0 million for the three months ended September 30, 2026 and 2025, respectively, and $7.5 million and $15.7 million for the nine months ended September 30, 2026 and 2025, respectively; and (ii) fee related performance compensation by $0.2 million and $2.5 million for the three and nine months ended September 30, 2026, respectively.
Full-time equivalent headcount increased by 7% to 751 investment and investment support professionals for the year-to-date period in 2026 from 701 professionals in 2025 primarily due to the impact of the BlueCove Acquisition and also to support our growing direct lending and alternative credit platforms.
General, Administrative and Other Expenses. The increases in general, administrative and other expenses for the three and nine months ended September 30, 2026 compared to the same periods in 2025 reflect growing headcount, as well as marketing costs, including costs incurred during the second quarter of 2026 for our firmwide AGM event. The increase for the nine months ended September 30, 2026 compared to the same period in 2025 was also driven by higher placement fees of $2.8 million primarily due to commitments to our seventh Asian special situations fund.
While we continue to develop our distribution relationships and expand our European wealth product offerings, supplemental distribution fees decreased over the comparative periods by $4.9 million and $10.1 million, respectively, primarily driven by lower sales in ASIF and our open-ended European direct lending fund.
Realized Income
The following table presents the components of the Credit Group's RI ($ in thousands):
Three months ended September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Fee Related Earnings $ 521,397 $ 468,605 $ 52,792 11% $ 1,497,286 $ 1,303,509 $ 193,777 15%
Performance income-realized 3,538 19,438 (15,900) (82) 298,188 95,465 202,723 212
Performance related compensation-realized (1,922) (11,421) 9,499 83 (184,262) (58,927) (125,335) (213)
Realized net performance income 1,616 8,017 (6,401) (80) 113,926 36,538 77,388 212
Investment income (loss)-realized (3,114) 2,095 (5,209) NM 234 11,570 (11,336) (98)
Interest income 297 577 (280) (49) 1,619 6,132 (4,513) (74)
Interest expense (2,218) (4,722) 2,504 53 (8,363) (15,744) 7,381 47
Realized net investment income (loss) (5,035) (2,050) (2,985) 146 (6,510) 1,958 (8,468) NM
Realized Income $ 517,978 $ 474,572 43,406 9 $ 1,604,702 $ 1,342,005 262,697 20
The Credit Group's realized activities were principally composed of and caused by the following:
Three months ended September 30, 2026 Three months ended September 30, 2025
Realized net performance income
•No significant activities
Carried interest:
•Distributions of $1.3 million from an alternative credit fund, which is a European-style waterfall fund that is past its investment period and monetizing investments
Incentive fees:
•$4.6 million from an alternative credit fund that crystallized in connection with a loan repayment
Realized investment income and interest income
•Realized losses of $3.3 million from lower return expectations in connection with a CLO-based investment
•Income of $2.5 million generated from our investments in 11 CLOs and CLO-based investments
Nine months ended September 30, 2026 Nine months ended September 30, 2025
Realized net performance income
Carried interest:
•Distribution of $47.4 million from ACE V following the end of its investment period in 2025
•Tax distributions of $8.0 million, primarily from ACE V
Incentive fees:
•Distribution of $53.9 million from SDL I in connection with the sale of its remaining assets to a continuation vehicle
Carried interest:
•Tax distributions of $14.0 million primarily from ACE IV, ACE V and Pathfinder I
•Distributions of $10.6 million from two alternative credit funds, which are European-style waterfall funds that are past their investment periods and monetizing investments
Incentive fees:
•$4.6 million from an alternative credit fund that crystallized in connection with a loan repayment
•$4.4 million from two alternative credit funds that have annual measurement periods in the second quarter and from a U.S. direct lending fund
Realized investment income and interest income
•No significant activities
•Income of $9.2 million generated from our investments in 14 CLOs and CLO-based investments
Interest expense is allocated among our segments primarily based on the cost basis of our balance sheet investments and the cost of acquisitions. We have contributed certain capital interests to structured financing vehicles, which are reflected within our Other segment results; therefore, the cost basis of our Credit Group's investments during the current year periods was lower than the comparative periods. As a result, interest expense allocated to the Credit Group decreased for the three and nine months ended September 30, 2026 compared to the same periods in 2025.
Credit Group-Performance Income
The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Credit Group. Accrued net performance income excludes net performance income that has been realized but not yet received as of the reporting date ($ in millions):
As of September 30, 2026
As of December 31, 2025
Accrued Performance Income Accrued Performance Compensation Accrued Net Performance Income Accrued Performance Income Accrued Performance Compensation Accrued Net Performance Income
Pathfinder I $ 236.8 $ 201.3 $ 35.5 $ 216.3 $ 183.9 $ 32.4
Pathfinder II 260.3 203.7 56.6 134.7 105.4 29.3
ASOF I 270.7 200.4 70.3 276.4 204.6 71.8
ASOF II 387.7 271.9 115.8 324.6 227.3 97.3
ACE IV 171.5 111.6 59.9 185.7 120.5 65.2
ACE V 242.3 152.7 89.6 347.6 218.9 128.7
ACE VI 296.8 187.1 109.7 190.3 119.7 70.6
PCS I 153.5 90.7 62.8 150.5 88.9 61.6
PCS II 284.8 168.3 116.5 262.6 155.5 107.1
Other Credit funds 278.8 171.2 107.6 246.0 149.1 96.9
Total Credit Group $ 2,583.2 $ 1,758.9 $ 824.3 $ 2,334.7 $ 1,573.8 $ 760.9
The following table presents the change in accrued performance income for the Credit Group ($ in millions):
As of December 31, 2025
Activity during the period As of September 30, 2026
Waterfall Type Accrued Performance Income Change in Unrealized Realized Other Adjustments Accrued Performance Income
Accrued Carried Interest
Pathfinder I European $ 216.3 $ 20.5 $ - $ - $ 236.8
Pathfinder II European 134.7 125.6 - - 260.3
ASOF I European 276.4 (3.0) (2.7) - 270.7
ASOF II European 324.6 63.1 - - 387.7
ACE IV European 185.7 (13.1) (1.1) - 171.5
ACE V European 347.6 36.0 (144.0) 2.7 242.3
ACE VI European 190.3 106.5 - - 296.8
PCS I European 150.5 3.0 - - 153.5
PCS II European 262.6 21.8 - 0.4 284.8
Other Credit funds European 220.3 29.0 - (0.3) 249.0
Other Credit funds American 25.7 10.1 (3.0) (3.0) 29.8
Total accrued carried interest 2,334.7 399.5 (150.8) (0.2) 2,583.2
SDL I Incentive - 138.5 (138.5) - -
Other credit funds
Incentive - 8.9 (8.9) - -
Total Credit Group $ 2,334.7 $ 546.9 $ (298.2) $ (0.2) $ 2,583.2
Credit Group-Assets Under Management
The tables below present rollforwards of AUM for the Credit Group ($ in millions):
Liquid
Credit 		Alternative
Credit 		Opportunistic
Credit 		U.S. Direct
Lending 		European
Direct Lending 		APAC
Credit
Other(1)
Total Credit
Group
Balance at 6/30/2026 $ 61,969 $ 59,133 $ 21,385 $ 196,740 $ 88,985 $ 12,332 $ - $ 440,544
New par/equity commitments 928 2,527 175 1,943 388 410 - 6,371
New debt commitments 1,329 350 - 5,275 1,878 - - 8,832
Capital reductions (769) - - (2,817) (246) (6) - (3,838)
Distributions (32) (183) (940) (1,446) (1,978) (256) - (4,835)
Redemptions (954) (21) - (755) (133) - - (1,863)
Net allocations among investment strategies (6) (189) - (30) - - 30 (195)
Change in fund value (221) 538 192 781 (202) 160 - 1,248
Balance at 9/30/2026 $ 62,244 $ 62,155 $ 20,812 $ 199,691 $ 88,692 $ 12,640 $ 30 $ 446,264
Liquid
Credit 		Alternative
Credit 		Opportunistic
Credit 		U.S. Direct
Lending 		European
Direct Lending 		APAC
Credit 		Other Total Credit
Group
Balance at 6/30/2025 $ 48,820 $ 43,716 $ 17,985 $ 174,244 $ 81,291 $ 11,050 $ - $ 377,106
New par/equity commitments 2,780 2,466 937 3,910 1,380 6 - 11,479
New debt commitments 77 200 - 4,177 3,346 - - 7,800
Capital reductions (2,189) (434) (175) (1,394) (50) (6) - (4,248)
Distributions (40) (358) (279) (1,673) (1,307) (12) - (3,669)
Redemptions (396) (123) - (615) (68) - - (1,202)
Net allocations among investment strategies - 440 - - - - - 440
Change in fund value 293 804 547 1,664 301 139 - 3,748
Balance at 9/30/2025 $ 49,345 $ 46,711 $ 19,015 $ 180,313 $ 84,893 $ 11,177 $ - $ 391,454
Liquid
Credit 		Alternative
Credit 		Opportunistic
Credit 		U.S. Direct
Lending 		European
Direct Lending 		APAC
Credit
Other(1)
Total Credit
Group
Balance at 12/31/2025 $ 53,061 $ 48,060 $ 19,841 $ 189,610 $ 84,662 $ 11,557 $ 75 $ 406,866
Acquisitions 5,544 - - - - - - 5,544
New par/equity commitments 4,461 12,752 1,777 5,294 5,054 1,495 - 30,833
New debt commitments 2,971 639 - 20,210 4,594 - - 28,414
Capital reductions (1,610) (91) - (8,649) (631) (6) - (10,987)
Distributions (172) (936) (1,329) (6,135) (4,132) (622) - (13,326)
Redemptions (1,910) (21) - (2,292) (422) - - (4,645)
Net allocations among investment strategies (4) 85 - (178) - - (45) (142)
Change in fund value (97) 1,667 523 1,831 (433) 216 - 3,707
Balance at 9/30/2026 $ 62,244 $ 62,155 $ 20,812 $ 199,691 $ 88,692 $ 12,640 $ 30 $ 446,264
Liquid
Credit 		Alternative
Credit 		Opportunistic
Credit 		U.S. Direct
Lending 		European
Direct Lending 		APAC
Credit
Other(1)
Total Credit
Group
Balance at 12/31/2024 $ 46,895 $ 41,565 $ 14,964 $ 159,129 $ 74,560 $ 11,470 $ 275 $ 348,858
New par/equity commitments 4,517 3,336 4,448 9,821 4,158 64 - 26,344
New debt commitments 2,494 200 350 15,392 3,346 - - 21,782
Capital reductions (4,587) (711) (351) (3,640) (2,121) (114) - (11,524)
Distributions (400) (1,535) (1,382) (4,162) (3,740) (719) - (11,938)
Redemptions (1,330) (123) - (1,006) (68) - - (2,527)
Net allocations among investment strategies - 1,935 - 278 - - (278) 1,935
Change in fund value 1,756 2,044 986 4,501 8,758 476 3 18,524
Balance at 9/30/2025 $ 49,345 $ 46,711 $ 19,015 $ 180,313 $ 84,893 $ 11,177 $ - $ 391,454
(1) Amounts represent equity commitments to the platform that have not yet been allocated to an investment strategy.
The components of our AUM for the Credit Group are presented below ($ in billions):
AUM: $446.2 AUM: $391.5
FPAUM
Non-fee paying(1)
AUM not yet paying fees
(1) Includes $2.4 billion and $2.1 billion of non-fee paying AUM from our general partner and employee commitments as of September 30, 2026 and 2025, respectively.
Credit Group-Fee Paying AUM
The tables below present rollforwards of fee paying AUM for the Credit Group ($ in millions):
Liquid
Credit 		Alternative
Credit 		Opportunistic
Credit 		U.S. Direct
Lending 		European
Direct Lending 		APAC
Credit 		Total Credit
Group
Balance at 6/30/2026 $ 59,861 $ 38,896 $ 10,162 $ 104,191 $ 48,368 $ 4,642 $ 266,120
Commitments 2,178 - - 1,958 284 54 4,474
Deployment/increase in leverage - 2,370 1,294 2,398 2,105 319 8,486
Capital reductions (733) - - (2,094) (784) - (3,611)
Distributions (32) (60) (1,092) (2,011) (762) (482) (4,439)
Redemptions (953) - - (755) (133) - (1,841)
Net allocations among investment strategies (6) - - - - - (6)
Change in fund value 91 20 - 573 (308) 1 377
Change in fee basis - - (105) - 490 1,226 1,611
Balance at 9/30/2026 $ 60,406 $ 41,226 $ 10,259 $ 104,260 $ 49,260 $ 5,760 $ 271,171
Liquid
Credit 		Alternative
Credit 		Opportunistic
Credit 		U.S. Direct
Lending 		European
Direct Lending 		APAC
Credit 		Total Credit
Group
Balance at 6/30/2025 $ 46,629 $ 31,581 $ 8,783 $ 93,940 $ 41,905 $ 5,315 $ 228,153
Commitments 3,782 - - 3,073 1,274 - 8,129
Deployment/increase in leverage 13 2,292 505 4,512 2,278 288 9,888
Capital reductions (2,189) - - (434) (378) - (3,001)
Distributions (40) (594) (133) (2,352) (864) (80) (4,063)
Redemptions (397) (123) - (197) (68) - (785)
Net allocations among investment strategies - 669 - - - - 669
Change in fund value 181 - - 901 (246) (79) 757
Change in fee basis (11) - - - 432 - 421
Balance at 9/30/2025 $ 47,968 $ 33,825 $ 9,155 $ 99,443 $ 44,333 $ 5,444 $ 240,168
Liquid
Credit 		Alternative
Credit 		Opportunistic
Credit 		U.S. Direct
Lending 		European
Direct Lending 		APAC
Credit 		Total Credit
Group
Balance at 12/31/2025 $ 51,958 $ 35,303 $ 9,821 $ 102,310 $ 45,095 $ 5,329 $ 249,816
Acquisitions 5,495 - - - - - 5,495
Commitments 6,687 - - 5,120 2,019 581 14,407
Deployment/increase in leverage 7 5,728 2,414 12,181 6,604 590 27,524
Capital reductions (1,587) - - (6,272) (1,691) (86) (9,636)
Distributions (169) (815) (1,158) (8,099) (1,616) (935) (12,792)
Redemptions (1,894) - - (2,355) (422) - (4,671)
Net allocations among investment strategies (4) 1,049 - 12 - - 1,057
Change in fund value (87) (39) - 951 (1,219) 8 (386)
Change in fee basis - - (818) 412 490 273 357
Balance at 9/30/2026 $ 60,406 $ 41,226 $ 10,259 $ 104,260 $ 49,260 $ 5,760 $ 271,171
Liquid
Credit 		Alternative
Credit 		Opportunistic
Credit 		U.S. Direct
Lending 		European
Direct Lending 		APAC
Credit 		Total Credit
Group
Balance at 12/31/2024 $ 44,629 $ 29,384 $ 7,899 $ 86,415 $ 35,786 $ 5,032 $ 209,145
Commitments 8,428 10 - 9,265 2,724 38 20,465
Deployment/increase in leverage 22 4,457 1,957 11,035 5,826 1,297 24,594
Capital reductions (4,595) - - (2,747) (793) (77) (8,212)
Distributions (409) (2,224) (701) (6,091) (2,504) (739) (12,668)
Redemptions (1,318) (123) - (588) (148) - (2,177)
Net allocations among investment strategies - 2,293 - - - - 2,293
Change in fund value 1,222 28 - 2,154 3,342 (76) 6,670
Change in fee basis (11) - - - 100 (31) 58
Balance at 9/30/2025 $ 47,968 $ 33,825 $ 9,155 $ 99,443 $ 44,333 $ 5,444 $ 240,168
The charts below present FPAUM for the Credit Group by its fee bases ($ in billions):
FPAUM: $271.2 FPAUM: $240.2
Invested capital
NAV/fair value(1)
Collateral balances (at par) Capital commitments
(1)Includes $62.2 billion and $58.7 billion from funds that primarily invest in illiquid strategies as of September 30, 2026 and 2025, respectively. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.
Credit Group-Fund Performance Metrics as of September 30, 2026
ARCC contributed approximately 28% of the Credit Group's total management fees for the nine months ended September 30, 2026. In addition, the Credit Group's other significant funds, which are presented in the tables below, collectively contributed approximately 43% of the Credit Group's management fees for the nine months ended September 30, 2026.
The following table presents the performance data for our significant perpetual capital funds in the Credit Group as of September 30, 2026 ($ in millions):
Returns(%)
Primary
Investment Strategy 		Year of Inception AUM Current Quarter Year-To-Date
Since Inception(1)
Fund Gross Net Gross Net Gross Net
ARCC(2)
U.S. Direct Lending 2004 $ 36,361 N/A 2.3 N/A 4.2 N/A 11.8
CADC(3)
U.S. Direct Lending 2017 8,187 N/A 1.5 N/A 1.0 N/A 6.5
Open-ended core alternative credit fund(4)
Alternative Credit 2021 9,936 2.0 1.3 7.8 5.5 11.7 8.6
ASIF(3)
U.S. Direct Lending 2023 26,346 N/A 2.4 N/A 4.4 N/A 9.9
Open-ended European direct lending fund(5)
European Direct Lending 2024 10,501 N/A 1.7 N/A 4.7 N/A 8.6
(1)Since inception returns are annualized.
(2)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Net returns are calculated using the fund's NAV and assume dividends are reinvested at the closest quarter-end NAV to the relevant quarterly ex-dividend dates. Additional information related to ARCC can be found in its filings with the SEC, which are not part of this report.
(3)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Returns are shown for institutional share class. Shares of other classes may have lower returns due to higher selling commissions and fees. Net returns are calculated using the fund's NAV and assume distributions are reinvested at the NAV on the date of distribution. Additional information related to CADC and ASIF can be found in their respective filings with the SEC, which are not part of this report.
(4)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. The fund is made up of a Main Class ("Class M") and a Constrained Class ("Class C"). Class M includes investors electing to participate in all investments and Class C includes investors electing to be excluded from exposure to liquid investments. Returns presented in the table are for onshore Class M. The current quarter gross and net returns for Class M (offshore) are 2.1% and 1.1%, respectively. The year-to-date gross and net returns for Class M (offshore) are 7.8% and 5.0%, respectively. The since inception gross and net returns for Class M (offshore) are 11.6% and 8.2%, respectively. The current quarter gross and net returns for Class C (offshore) are 1.9% and 1.1%, respectively. The year-to-date gross and net returns for Class C (offshore) are 7.2% and 4.8%, respectively. The since inception gross and net returns for Class C (offshore) are 11.1% and 7.9%, respectively. Metrics for the rated note feeder funds are not shown separately.
(5)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Returns are shown for the Euro hedged distributing institutional share class. Shares of other classes may have lower returns due to higher selling commissions and fees, and currency hedging. Actual individual stockholder returns will vary. Net returns are calculated using the fund's NAV and assume distributions are reinvested at the NAV on the date of distribution.
The following table presents the performance data of the Credit Group's significant drawdown funds as of September 30, 2026 ($ in millions):
Primary Investment Strategy Year of Inception AUM Original Capital Commitments Capital Invested to Date
Realized Value(1)
Unrealized Value(2)
Total Value MoIC IRR(%)
Fund
Gross(3)
Net(4)
Gross(5)
Net(6)
Funds Deploying Capital
ASOF II Opportunistic Credit 2021 $ 8,340 $ 7,128 $ 6,303 $ 1,552 $ 7,108 $ 8,660 1.5x 1.4x 15.6 11.3
ACE VI Unlevered(7)
European Direct Lending 2022 24,413 7,439 4,164 461 4,251 4,712 1.2x 1.1x 11.6 8.5
ACE VI Levered(7)
9,667 5,412 834 5,656 6,490 1.3x 1.2x 16.9 12.2
SDL III Unlevered(8)
U.S. Direct Lending 2023 31,205 3,311 1,689 166 1,706 1,872 1.1x 1.1x 10.8 8.1
SDL III Levered 11,959 6,891 870 7,030 7,900 1.2x 1.2x 18.4 12.9
Pathfinder II Alternative Credit 2023 7,835 6,612 4,221 302 4,946 5,248 1.3x 1.2x 22.3 15.6
Funds Harvesting Investments
ACE V Unlevered(9)
European Direct Lending 2020 15,810 7,026 5,650 2,304 5,016 7,320 1.4x 1.3x 9.4 6.9
ACE V Levered(9)
6,376 5,126 3,433 3,938 7,371 1.5x 1.4x 13.0 9.4
PCS II U.S. Direct Lending 2020 6,615 5,114 4,053 1,645 3,998 5,643 1.5x 1.3x 11.9 8.3
SDL II Unlevered U.S. Direct Lending 2021 12,965 1,989 1,700 896 1,261 2,157 1.3x 1.3x 10.6 8.4
SDL II Levered 6,047 4,924 3,584 3,198 6,782 1.5x 1.4x 16.2 12.2
(1)For funds other than our opportunistic credit funds, realized value represents the sum of all cash distributions to all partners and, if applicable, excludes tax and incentive distributions made to the general partner. For our opportunistic credit funds, realized value represents the sum of all cash distributions to the fee-paying limited partners and, if applicable, excludes tax and incentive distributions made to the general partner.
(2)Unrealized value represents the fund's NAV reduced by the accrued incentive allocation, if applicable. There can be no assurance that unrealized values will be realized at the valuations indicated. For funds other than our opportunistic credit funds, the unrealized value is based on all partners. For our opportunistic credit funds, the unrealized value is based on the fee-paying limited partners.
(3)The gross multiple of invested capital ("MoIC") is calculated at the fund-level and is based on the interests of the fee-paying limited partners and, if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The gross MoIC is before giving effect to management fees, carried interest and other expenses, as applicable, but after giving effect to credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Early in the life of a fund, the gross fund-level MoICs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
(4)The net MoIC is calculated at the fund-level and is based on the interests of the fee-paying limited partners and, if applicable, excludes those interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The net MoIC is after giving effect to management fees and carried interest, other expenses and credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Early in the life of a fund, the net fund-level MoICs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
(5)The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the fund and the fund's residual value at the end of the measurement period. Gross IRR reflects returns to the fee-paying limited partners and, if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the gross IRR calculation are based on the actual dates of the cash flows. The gross IRRs are calculated before giving effect to management fees, carried interest and other expenses, as applicable, but after giving effect to credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Gross fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
(6)The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund's residual value at the end of the measurement period. Net IRRs reflect returns to the fee-paying limited partners and, if applicable, exclude interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the net IRR calculations are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees and carried interest, other expenses and credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
(7)ACE VI is made up of six parallel funds, four denominated in Euros and two denominated in GBP: ACE VI (E) Unlevered, ACE VI (E) II Unlevered, ACE VI (G) Unlevered, ACE VI (E) Levered, ACE VI (E) II Levered and ACE VI (G) Levered, and three feeder funds: ACE VI (D) Levered, ACE VI (Y) Unlevered and ACE VI (D) Rated Notes. ACE VI (E) II Levered includes ACE VI (D) Levered feeder fund and ACE VI (E) II Unlevered includes ACE VI (Y) Unlevered and ACE VI (D) Rated Notes feeder funds. The gross and net IRR and gross and net MoIC presented in the table are for ACE VI (E) Unlevered and ACE VI (E) Levered. Metrics for ACE VI (E) II Levered exclude the ACE VI (D) Levered feeder fund and metrics for ACE VI (E) II Unlevered exclude ACE VI (Y) Unlevered and ACE VI (D) Rated Notes feeder funds. The gross and net IRR for ACE VI (G) Unlevered are 13.5% and 9.8%, respectively. The gross and net MoIC for ACE VI (G) Unlevered are 1.2x and 1.2x, respectively. The gross and net IRR for ACE VI (G) Levered are 21.0% and 12.7%, respectively. The gross and net MoIC for ACE VI (G) Levered are 1.3x and 1.2x, respectively. The gross and net IRR for ACE VI (E) II Unlevered are 11.6% and 8.4%, respectively. The gross and net MoIC for ACE VI (E) II Unlevered are 1.2x and 1.1x, respectively. The gross and net IRR for ACE VI (E) II Levered are 17.3% and 12.9%, respectively. The gross and net MoIC for ACE VI (E) II Levered are 1.3x and 1.2x, respectively. The gross and net IRR for ACE VI (D) Levered are 19.7% and 15.2%, respectively. The gross and net MoIC for ACE VI (D) Levered are 1.3x and 1.2x, respectively. The gross and net IRR for ACE VI (Y) Unlevered are 9.6% and 6.5%, respectively. The gross and net MoIC for ACE VI (Y) Unlevered are 1.1x and 1.1x, respectively. The gross and net IRR for ACE VI (D) Rated Notes are 18.8% and 13.0%, respectively. The gross and net MoIC for ACE VI (D) Rated Notes are 1.3x and 1.2x, respectively. Original capital commitments are converted to U.S. Dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE VI Unlevered and ACE VI Levered are for the combined levered and unlevered parallel funds and are converted to U.S. Dollars at the prevailing quarter-end exchange rate.
(8)SDL III Unlevered includes investor commitments in three currencies: U.S. Dollars, GBP and Yen. The gross and net IRR and MoIC presented in the table are for investors committed in U.S. Dollars. The gross and net IRR for investors committed in GBP are 11.2% and 8.6%, respectively. The gross and net MoIC for investors committed in GBP are 1.2x and 1.1x, respectively. The gross and net IRR for investors committed in Yen are 6.9% and 4.1%, respectively. The gross and net MoIC for investors committed in Yen are 1.1x and 1.1x, respectively. Original capital commitments are converted to U.S. Dollars at the prevailing exchange rate at the time of the fund's closing. All other values for SDL III Unlevered are for the combined fund and are converted to U.S. Dollars at the prevailing quarter-end exchange rate.
(9)ACE V is made up of four parallel funds, two denominated in Euros and two denominated in GBP: ACE V (E) Unlevered, ACE V (G) Unlevered, ACE V (E) Levered and ACE V (G) Levered, and two feeder funds: ACE V (D) Levered and ACE V (Y) Unlevered. ACE V (E) Levered includes the ACE V (D) Levered feeder fund and ACE V (E) Unlevered includes the ACE V (Y) Unlevered feeder fund. The gross and net IRR and gross and net MoIC presented in the table are for ACE V (E) Unlevered and ACE V (E) Levered. Metrics for ACE V (E) Levered exclude the ACE V (D) Levered feeder fund and metrics for ACE V (E) Unlevered exclude the ACE V (Y) Unlevered feeder fund. The gross and net IRR for ACE V (G) Unlevered are 11.1% and 8.3%, respectively. The gross and net MoIC for ACE V (G) Unlevered are 1.5x and 1.4x, respectively. The gross and net IRR for ACE V (G) Levered are 14.4% and 10.2%, respectively. The gross and net MoIC for ACE V (G) Levered are 1.6x and 1.4x, respectively. The gross and net IRR for ACE V (D) Levered are 13.6% and 10.0%, respectively. The gross and net MoIC for ACE V (D) Levered are 1.6x and 1.4x, respectively. The gross and net IRR for ACE V (Y) Unlevered are 9.7% and 6.8%, respectively. The gross and net MoIC for ACE V (Y) Unlevered are 1.4x and 1.3x, respectively. Original capital commitments are converted to U.S. Dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE V Unlevered and ACE V Levered are for the combined levered and unlevered parallel funds and are converted to U.S. Dollars at the prevailing quarter-end exchange rate.
Real Assets Group-Three and Nine Months Ended September 30, 2026 Compared to Three and Nine Months Ended September 30, 2025
Fee Related Earnings
The following table presents the components of the Real Assets Group's FRE ($ in thousands):
Three months ended September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Management fees $ 229,503 $ 177,655 $ 51,848 29% $ 628,719 $ 484,032 $ 144,687 30%
Fee related performance revenues 9,271 5,904 3,367 57 12,226 6,051 6,175 102
Other fees 58,722 55,556 3,166 6 167,792 125,494 42,298 34
Compensation and benefits (87,975) (85,513) (2,462) (3) (248,826) (222,504) (26,322) (12)
General, administrative and other expenses (42,906) (27,515) (15,391) (56) (114,139) (79,062) (35,077) (44)
Fee Related Earnings $ 166,615 $ 126,087 40,528 32 $ 445,772 $ 314,011 131,761 42
Management Fees. The chart below presents Real Assets Group management fees and effective management fee rates ($ in millions):
The following table presents the components of and causes for changes in the Real Assets Group's management fees for the three and nine months ended September 30, 2026 compared to the prior year ($ in millions):
Three month change Nine month change
Perpetual wealth funds:
Base management fees from our open-ended core infrastructure fund; our diversified non-traded REIT; and our industrial non-traded REIT, driven by additional capital raised
$ 24.1 $ 54.6
Part I Fees from our open-ended core infrastructure fund, driven by an increase in net investment income from its growing portfolio of investments 21.9 35.2
Fees from acquisitions:
Fees from funds acquired in the GCP Acquisition, including catch-up fees from USLP V (0.1) 31.4
Capital commitments to private commingled funds:
Fees from US XI and EPEP IV, excluding catch-up fees
5.8 16.3
Cumulative effect of other changes 0.1 7.2
Total $ 51.8 $ 144.7
The increases in effective management fee rates for the three and nine months ended September 30, 2026 compared to the same periods in 2025 were primarily driven by additional capital raised and Part I Fees generated by our open-ended core infrastructure fund. For the nine months ended September 30, 2026 compared to the same period in 2025, the increase was partially offset by lower effective management fee rates from funds that we manage as a result of the GCP Acquisition. Due to the vertically integrated focus of the acquired platform following the GCP Acquisition, the size and composition of other fees earned from certain funds has increased relative to management fees.
Fee Related Performance Revenues. Fee related performance revenues for the three and nine months ended September 30, 2026 were primarily attributable to incentive fees earned from our Japanese open-ended industrial real estate equity fund based on performance over three-year measurement periods and, to lesser extent, incentive fees earned from our U.S. open-ended industrial real estate equity fund that crystallizes fees by investor based on performance over three-year measurement periods.
Other Fees. The increases in other fees for the three and nine months ended September 30, 2026 compared to the same periods in 2025 were driven by: (i) higher property management fees of $3.7 million and $13.3 million, respectively, as we expand these services across more properties and earn the fees for services that were previously provided by third-parties; (ii) higher development fees of $3.6 million and $5.7 million, respectively, from our U.S. real estate equity funds; and (iii) higher administrative service fees of $0.8 million and $3.5 million, respectively, from funds acquired in the GCP Acquisition.
The increase for the three months ended September 30, 2026 compared to the same period in 2025 was partially offset by lower property-related fees of $6.8 million from funds acquired in the GCP Acquisition, attributable to lower leasing fees which vary based on the transaction and timing. While we recognized lower property-related fees from funds acquired in the GCP Acquisition this quarter, we recognized higher property-related fees of $15.1 million from these funds for the nine months ended September 30, 2026 compared to the same period in 2025.
Compensation and Benefits. The increases in compensation and benefits for the three and nine months ended September 30, 2026 compared to the same periods in 2025 were driven by: (i) Part I Fee compensation of $6.9 million recognized for the first time during the most recent quarter; and (ii) higher salary expenses of $3.0 million and $2.4 million, respectively, primarily attributable to headcount growth; partially offset by (iii) lower fee related performance compensation of $3.1 million and $1.6 million, respectively, corresponding to the decreases in fee related performance revenues from our U.S. open-ended industrial real estate equity fund. We reduced Part I Fee compensation by $6.4 million and $14.4 million, respectively, for the three and nine months ended September 30, 2026, and by $1.0 million for both the three and nine months ended September 30, 2025, to reclaim a portion of the supplemental distribution fees we paid.
In addition, the increase in compensation and benefits for the nine months ended September 30, 2026 included $19.9 million from two additional months of activities from the operations that we acquired in connection with the GCP Acquisition.
Full-time equivalent headcount increased by 21% to 1,041 investment and investment support professionals for the year-to-date period in 2026 from 860 professionals for the same period in 2025, including the impact from the GCP Acquisition of 112 full-time equivalents.
General, Administrative and Other Expenses. The increases in general, administrative and other expenses for the three and nine months ended September 30, 2026 compared to the same periods in 2025 were driven by: (i) higher supplemental distribution fees of $8.8 million and $18.7 million, respectively, due to the expansion of our distribution relationships for our open-ended core infrastructure fund; (ii) higher marketing costs of $2.0 million and $3.3 million, respectively, largely
attributable to fund formation costs for US XI that exceeded amounts contractually recoverable from the fund and to investor events, including costs incurred during the second quarter of 2026 for our firmwide AGM event; and (iii) higher information technology and occupancy costs of $2.8 million and $2.5 million, respectively, to support our growing headcount.
In addition, the increase in general, administrative and other expenses for the nine months ended September 30, 2026 was also attributable to $9.4 million from two additional months of activities from the operations that we acquired in connection with the GCP Acquisition.
Realized Income
The following table presents the components of the Real Assets Group's RI ($ in thousands):
Three months ended September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Fee Related Earnings $ 166,615 $ 126,087 $ 40,528 32% $ 445,772 $ 314,011 $ 131,761 42%
Performance income-realized 22,788 1,200 21,588 NM 40,397 70,186 (29,789) (42)
Performance related compensation-realized (14,077) (769) (13,308) NM (24,879) (49,893) 25,014 50
Realized net performance income 8,711 431 8,280 NM 15,518 20,293 (4,775) (24)
Investment income-realized 8,982 10,415 (1,433) (14) 40,861 24,878 15,983 64
Interest income 175 1,639 (1,464) (89) 660 4,922 (4,262) (87)
Interest expense (35,348) (26,521) (8,827) (33) (98,503) (66,808) (31,695) (47)
Realized net investment loss (26,191) (14,467) (11,724) 81 (56,982) (37,008) (19,974) (54)
Realized Income $ 149,135 $ 112,051 37,084 33 $ 404,308 $ 297,296 107,012 36
The Real Assets Group's realized activities were principally composed of and caused by the following:
Three months ended September 30, 2026 Three months ended September 30, 2025
Realized net performance income
Carried interest:
•Distributions of $7.7 million from US IX and US VIII, which are both European-style waterfall funds that are past their investment periods and monetizing investments
•No significant activities
Realized investment income and interest income
•Income of $3.7 million from our Japanese real estate equity funds that pay dividends semi-annually
•Income of $2.8 million from a real estate debt fund
•Income of $7.9 million from our APAC real estate equity and real estate debt funds
•Income of $2.2 million from US VIII
Nine months ended September 30, 2026 Nine months ended September 30, 2025
Realized net performance income
Carried interest:
•Distributions of $11.0 million from US IX and US VIII, which are both European-style waterfall funds that are past their investment periods and monetizing investments
•Distributions of $2.5 million from a European real estate equity fund
Carried interest:
•Tax distributions of $12.6 million from EIF V
•Distributions of $4.6 million from US VIII and a U.S. real estate equity fund, which are both European-style waterfall funds that are past their investment periods and monetizing investments
•Distributions of $2.1 million from the sale of an ACIP I co-investment vehicle's investment in a renewable energy company
Realized investment income and interest income
•Realized gains of $23.9 million from the settlement of foreign currency hedges, primarily related to capital interests we hold in Japanese real estate equity funds
•Income of $7.2 million from our Japanese real estate equity funds that pay dividends semi-annually
•Income of $3.0 million from a real estate debt fund
•Income of $15.8 million from our APAC real estate equity and real estate debt funds
•Income of $3.5 million from US VIII
Interest expense increased for the three and nine months ended September 30, 2026 compared to the same periods in 2025 due to a higher average outstanding balance of our Credit Facility and interest expense for the Term Loan that was executed in March 2026. In addition, financing costs to complete the GCP Acquisition resulted in a greater allocation of interest expense to the Real Assets Group and the current year period reflected two additional months of interest expense that was allocated based on capital used to finance the GCP Acquisition.
Real Assets Group-Performance Income
The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Real Assets Group. Accrued net performance income excludes net performance income that has been realized but not yet received as of the reporting date ($ in millions):
As of September 30, 2026 As of December 31, 2025
Accrued Performance Income Accrued Performance Compensation Accrued Net Performance Income Accrued Performance Income Accrued Performance Compensation Accrued Net Performance Income
US IX $ 64.9 $ 40.3 $ 24.6 $ 85.0 $ 52.7 $ 32.3
IDF V 207.0 128.2 78.8 172.5 106.9 65.6
EIF V 98.9 73.9 25.0 93.6 70.0 23.6
ACIP I 95.9 66.1 29.8 84.8 58.2 26.6
JDC I 85.1 72.3 12.8 26.0 22.1 3.9
Other Real Assets funds 204.1 132.0 72.1 125.1 82.5 42.6
Total Real Assets Group $ 755.9 $ 512.8 $ 243.1 $ 587.0 $ 392.4 $ 194.6
The following table presents the change in accrued performance income for the Real Assets Group ($ in millions):
As of December 31, 2025 Activity during the period As of September 30, 2026
Waterfall
Type 		Accrued Performance Income Change in Unrealized Realized Other Adjustments Accrued Performance Income
Accrued Carried Interest
US IX European $ 85.0 $ (4.3) $ (15.8) $ - $ 64.9
IDF V European 172.5 41.5 - (7.0) 207.0
EIF V European 93.6 5.3 - - 98.9
ACIP I European 84.8 11.1 - - 95.9
JDC I European 26.0 58.5 - 0.6 85.1
Other Real Assets funds European 89.1 93.5 (18.6) (0.5) 163.5
Other Real Assets funds American 36.0 10.5 (6.0) 0.1 40.6
Total Real Assets Group $ 587.0 $ 216.1 $ (40.4) $ (6.8) $ 755.9
Real Assets Group-Assets Under Management
The tables below present rollforwards of AUM for the Real Assets Group ($ in millions):
Real Estate Infrastructure Total Real
Assets Group
Balance at 6/30/2026 $ 121,335 $ 29,895 $ 151,230
New equity commitments 2,687 5,160 7,847
New debt commitments 3,206 191 3,397
Capital reductions (572) - (572)
Distributions (1,486) (624) (2,110)
Redemptions (391) (12) (403)
Net allocations among investment strategies 182 236 418
Change in fund value 1,422 369 1,791
Balance at 9/30/2026 $ 126,383 $ 35,215 $ 161,598
Real Estate Infrastructure Total Real
Assets Group
Balance at 6/30/2025 $ 108,650 $ 21,124 $ 129,774
New equity commitments 1,698 1,649 3,347
New debt commitments 1,096 377 1,473
Capital reductions (883) - (883)
Distributions (741) (531) (1,272)
Redemptions (226) (366) (592)
Net allocations among investment strategies (133) 258 125
Change in fund value 39 343 382
Balance at 9/30/2025 $ 109,500 $ 22,854 $ 132,354
Real Estate Infrastructure Total Real
Assets Group
Balance at 12/31/2025 $ 113,745 $ 25,343 $ 139,088
New equity commitments 10,573 9,193 19,766
New debt commitments 6,770 691 7,461
Capital reductions (1,796) - (1,796)
Distributions (4,165) (1,762) (5,927)
Redemptions (1,037) (33) (1,070)
Net allocations among investment strategies 410 538 948
Change in fund value 1,883 1,245 3,128
Balance at 9/30/2026 $ 126,383 $ 35,215 $ 161,598
Real Estate Infrastructure Total Real
Assets Group
Balance at 12/31/2024 $ 58,246 $ 17,052 $ 75,298
Acquisitions 43,273 2,008 45,281
New equity commitments 3,869 4,035 7,904
New debt commitments 5,162 544 5,706
Capital reductions (2,035) - (2,035)
Distributions (2,591) (1,859) (4,450)
Redemptions (516) (366) (882)
Net allocations among investment strategies (239) 413 174
Change in fund value 4,331 1,027 5,358
Balance at 9/30/2025 $ 109,500 $ 22,854 $ 132,354
The components of our AUM for the Real Assets Group are presented below ($ in billions):
AUM: $161.6 AUM: $132.4
FPAUM
Non-fee paying(1)
AUM not yet paying fees
(1) Includes $2.1 billion and $1.4 billion of non-fee paying AUM from our general partner and employee commitments as of September 30, 2026 and 2025, respectively.
Real Assets Group-Fee Paying AUM
The tables below present rollforwards of fee paying AUM for the Real Assets Group ($ in millions):
Real Estate Infrastructure Total Real
Assets Group
Balance at 6/30/2026 $ 71,917 $ 16,697 $ 88,614
Commitments 872 2,743 3,615
Deployment/increase in leverage 1,437 745 2,182
Capital reductions (242) - (242)
Distributions (1,048) (1,151) (2,199)
Redemptions (391) (12) (403)
Net allocations among investment strategies 199 245 444
Change in fund value 520 135 655
Change in fee basis (1,059) - (1,059)
Balance at 9/30/2026 $ 72,205 $ 19,402 $ 91,607
Real Estate Infrastructure Total Real
Assets Group
Balance at 6/30/2025 $ 67,192 $ 12,303 $ 79,495
Commitments 1,695 1,116 2,811
Deployment/increase in leverage 850 610 1,460
Capital reductions (774) - (774)
Distributions (541) (1,163) (1,704)
Redemptions (226) (366) (592)
Net allocations among investment strategies (133) 258 125
Change in fund value 7 (503) (496)
Change in fee basis 178 - 178
Balance at 9/30/2025 $ 68,248 $ 12,255 $ 80,503
Real Estate Infrastructure Total Real
Assets Group
Balance at 12/31/2025 $ 71,063 $ 13,002 $ 84,065
Commitments 3,219 5,719 8,938
Deployment/increase in leverage 3,118 2,532 5,650
Capital reductions (463) - (463)
Distributions (2,331) (2,524) (4,855)
Redemptions (959) (33) (992)
Net allocations among investment strategies 427 567 994
Change in fund value 556 139 695
Change in fee basis (2,425) - (2,425)
Balance at 9/30/2026 $ 72,205 $ 19,402 $ 91,607
Real Estate Infrastructure Total Real
Assets Group
Balance at 12/31/2024 $ 32,896 $ 11,192 $ 44,088
Acquisitions 30,178 289 30,467
Commitments 3,068 1,692 4,760
Deployment/increase in leverage 2,250 2,006 4,256
Capital reductions (951) - (951)
Distributions (1,812) (2,603) (4,415)
Redemptions (516) (366) (882)
Net allocations among investment strategies (239) 413 174
Change in fund value 3,433 (727) 2,706
Change in fee basis (59) 359 300
Balance at 9/30/2025 $ 68,248 $ 12,255 $ 80,503
The charts below present FPAUM for the Real Assets Group by its fee bases ($ in billions):
FPAUM: $91.6 FPAUM: $80.5
Invested capital GAV NAV/fair value Capital commitments
Real Assets Group-Fund Performance Metrics as of September 30, 2026
The significant funds presented in the table below collectively contributed approximately 38% of the Real Assets Group's management fees for the nine months ended September 30, 2026.
The following table presents the performance data for our significant perpetual capital funds in the Real Assets Group as of September 30, 2026 ($ in millions):
Returns(%)
Primary
Investment Strategy 		Year of Inception AUM Current Quarter Year-To-Date
Since Inception(1)
Fund Gross Net Gross Net Gross Net
Diversified non-traded REIT(2)
Real Estate 2012 $ 8,568 N/A 2.0 N/A 7.1 N/A 6.7
J-REIT(3)
Real Estate 2012 7,915 N/A N/A N/A N/A N/A 12.8
Industrial non-traded REIT(4)
Real Estate 2017 8,379 N/A 1.9 N/A 5.8 N/A 8.5
U.S. open-ended industrial real estate equity fund(5)
Real Estate 2017 8,351 2.4 2.1 7.4 6.4 15.7 12.9
Open-ended core infrastructure fund(6)
Infrastructure 2024 8,475 N/A 2.0 N/A 6.5 N/A 10.2
(1)Since inception returns are annualized.
(2)Performance is measured by total return, which includes income and appreciation and reinvestment of all distributions for the respective time period. Returns are shown for institutional share class. Shares of other classes may have lower returns due to higher selling commissions and fees. Actual individual stockholder returns will vary. Net returns are calculated using the fund's NAV and assume distributions are reinvested at the NAV on the date of distribution. The inception date used in the calculation of the since inception return is the date in which the first shares of common stock were sold after converting to a NAV-based REIT.
(3)Performance is measured by total return, which includes income and appreciation and reinvestment of all distributions for the respective time period. Actual individual stockholder returns will vary. Net returns are calculated using the fund's NAV and assume distributions are reinvested at NAV on the semi-annual period-end date. NAVs are calculated semi-annually in February and August, and therefore, only the since inception return is presented. The inception date used in the calculation of the since inception return is the date in which the fund's investment units began to be listed on the Tokyo Stock Exchange. The since inception return is calculated based on the most recent NAV date. Additional information related to J-REIT can be found in its materials posted to its website, which are not part of this report.
(4)Performance is measured by total return, which includes income and appreciation and reinvestment of all distributions for the respective time period. Returns are shown for institutional share class. Shares of other classes may have lower returns due to higher selling commissions and fees. Actual individual stockholder returns will vary. Net returns are calculated using the fund's NAV and assume distributions are reinvested at the NAV on the date of distribution.
(5)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Gross returns do not reflect the deduction of management fees, incentive fees, as applicable, or other expenses. Net returns are calculated by subtracting the applicable management fees, incentive fees, as applicable, and other expenses from the gross returns on a quarterly basis.
(6)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Returns are shown for institutional share class. Shares of other classes may have lower returns due to higher selling commissions and fees. Net returns are calculated using the fund's NAV and assume distributions are reinvested at the NAV on the date of distribution.
Secondaries Group-Three and Nine Months Ended September 30, 2026 Compared to Three and Nine Months Ended September 30, 2025
Fee Related Earnings
The following table presents the components of the Secondaries Group's FRE ($ in thousands):
Three months ended September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Management fees $ 73,273 $ 91,303 $ (18,030) (20)% $ 215,423 $ 210,596 $ 4,827 2%
Fee related performance revenues 5,681 17,110 (11,429) (67) 56,474 43,002 13,472 31
Other fees 586 196 390 199 4,175 6,119 (1,944) (32)
Compensation and benefits (18,363) (24,952) 6,589 26 (76,220) (66,390) (9,830) (15)
General, administrative and other expenses (10,505) (9,624) (881) (9) (33,639) (28,173) (5,466) (19)
Fee Related Earnings $ 50,672 $ 74,033 (23,361) (32) $ 166,213 $ 165,154 1,059 1
Management Fees. The chart below presents Secondaries Group management fees and effective management fee rates ($ in millions):
The following table presents the components of and causes for changes in the Secondaries Group's management fees for the three and nine months ended September 30, 2026 compared to the prior year periods ($ in millions):
Three month change Nine month change
Fees from APMF, driven by additional capital raised
$ 6.9 $ 23.8
Fees from ACS, driven by capital deployment 3.3 8.2
Driven by capital commitments:
Fees from a private equity secondaries fund
1.1 3.2
Catch-up fees from ASIS III and related vehicles in the third quarter of 2025 (27.2) (25.9)
Cumulative effect of other changes (2.1) (4.5)
Total $ (18.0) $ 4.8
The decrease in effective management fee rate for the three months ended September 30, 2026 compared to the same period in 2025 was primarily driven by the deployment of capital by ACS at a lower effective management fee rate.
Fee Related Performance Revenues. The decrease in fee related performance revenues for the three months ended September 30, 2026 compared to the same period in 2025 was attributable to lower recognition of fees earned from APMF. The increase in fee related performance revenues for the nine months ended September 30, 2026 compared to the same period in 2025 was attributable to higher incentive fees earned from APMF due to NAV appreciation in the second quarter of 2026.
Other Fees. For the comparable year-to-date periods, other fees largely represent capital markets transaction fees that will vary based on the timing and nature of the investment and financing activities of our funds.
Compensation and Benefits. The changes in compensation and benefits for the three and nine months ended September 30, 2026 compared to the same periods in 2025 aligns with the changes in fee related performance revenues. We reduced fee related performance compensation by $2.5 million and $3.1 million for the three months ended September 30, 2026 and 2025, respectively, and $9.1 million and $8.7 million for the nine months ended September 30, 2026 and 2025, respectively, to reclaim a portion of the supplemental distribution fees we paid. The increase in compensation and benefits for the comparative year-to-date periods also reflected the continued growth in salary and benefits for our growing headcount.
Full-time equivalent headcount increased by 7% to 123 investment and investment support professionals for the year-to-date period in 2026 from 115 professionals in 2025.
General, Administrative and Other Expenses. The increases in general, administrative and other expenses for the three and nine months ended September 30, 2026 compared to the same periods in 2025 reflect growing headcount, as well as fundraising and fund formation costs, including costs for an infrastructure secondaries fund that exceeded amounts contractually recoverable from the fund for the nine months ended September 30, 2026.
Supplemental distribution fees increased slightly for the nine months ended September 30, 2026 compared to the same period in 2025, but lower sales in APMF in the current quarter contributed to a decrease of $1.2 million over the comparative quarterly period.
Realized Income
The following table presents the components of the Secondaries Group's RI ($ in thousands):
Three months ended September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Fee Related Earnings $ 50,672 $ 74,033 $ (23,361) (32)% $ 166,213 $ 165,154 $ 1,059 1%
Performance income-realized 762 177 585 NM 762 177 585 NM
Performance related compensation-realized (139) (106) (33) 31 (139) (106) (33) (31)
Realized net performance income 623 71 552 NM 623 71 552 NM
Investment income-realized 668 221 447 202 1,637 376 1,261 NM
Interest income 18 68 (50) (74) 53 1,048 (995) (95)
Interest expense (1,974) (2,076) 102 5 (5,624) (5,946) 322 5
Realized net investment loss (1,288) (1,787) 499 (28) (3,934) (4,522) 588 13
Realized Income $ 50,007 $ 72,317 (22,310) (31) $ 162,902 $ 160,703 2,199 1
Realized net investment loss for the three and nine months ended September 30, 2026 and 2025 largely represents allocated interest expense exceeding investment income during these periods.
Secondaries Group-Performance Income
The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Secondaries Group. Accrued net performance income excludes net performance income that has been realized but not yet received as of the reporting date ($ in millions):
As of September 30, 2026 As of December 31, 2025
Accrued Performance Income Accrued Performance Compensation Accrued Net Performance Income Accrued Performance Income Accrued Performance Compensation Accrued Net Performance Income
LEP XVII $ 39.7 $ 32.7 $ 7.0 $ 35.5 $ 29.5 $ 6.0
LREF VIII 17.5 14.8 2.7 74.0 62.8 11.2
LREP IX 39.4 31.1 8.3 27.1 21.4 5.7
Other Secondaries funds 106.6 69.9 36.7 45.1 31.1 14.0
Total Secondaries Group $ 203.2 $ 148.5 $ 54.7 $ 181.7 $ 144.8 $ 36.9
The following table presents the change in accrued performance income for the Secondaries Group ($ in millions):
As of December 31, 2025 Activity during the period As of September 30, 2026
Waterfall Type Accrued Performance Income Change in Unrealized Realized Accrued Performance Income
Accrued Carried Interest
LEP XVII European $ 35.5 $ 4.2 $ - $ 39.7
LREF VIII European 74.0 (56.5) - 17.5
LREP IX European 27.1 12.3 - 39.4
Other Secondaries funds
European 45.1 60.6 - 106.6
Total accrued carried interest 181.7 20.6 - 203.2
Other Secondaries funds
Incentive - 0.8 (0.8) -
Total Secondaries Group $ 181.7 $ 21.4 $ (0.8) $ 203.2
Secondaries Group-Assets Under Management
The table below presents the rollforwards of AUM for the Secondaries Group ($ in millions):
Private Equity
Secondaries 		Real Estate
Secondaries 		Infrastructure
Secondaries 		Credit
Secondaries 		Total Secondaries
Group
Balance at 6/30/2026 $ 24,227 $ 7,807 $ 7,214 $ 4,931 $ 44,179
New equity commitments 1,919 640 - 20 2,579
New debt commitments 32 - - - 32
Capital reductions - (8) - - (8)
Distributions (328) (259) (238) (2) (827)
Redemptions (126) - - - (126)
Change in fund value 231 59 190 (32) 448
Balance at 9/30/2026 $ 25,955 $ 8,239 $ 7,166 $ 4,917 $ 46,277
Private Equity
Secondaries 		Real Estate
Secondaries 		Infrastructure
Secondaries 		Credit
Secondaries 		Total Secondaries
Group
Balance at 6/30/2025 $ 18,183 $ 7,998 $ 4,199 $ 3,569 $ 33,949
New equity commitments 910 174 1,941 324 3,349
New debt commitments 775 - - - 775
Capital reductions (32) - - - (32)
Distributions (108) (36) (57) (9) (210)
Redemptions (60) - - - (60)
Change in fund value 380 125 82 17 604
Balance at 9/30/2025 $ 20,048 $ 8,261 $ 6,165 $ 3,901 $ 38,375
Private Equity
Secondaries 		Real Estate
Secondaries 		Infrastructure
Secondaries 		Credit
Secondaries 		Total Secondaries
Group
Balance at 12/31/2025 $ 22,104 $ 8,196 $ 6,975 $ 4,881 $ 42,156
New equity commitments 3,883 687 9 70 4,649
New debt commitments 377 - - - 377
Capital reductions (88) (8) - - (96)
Distributions (561) (637) (280) (93) (1,571)
Redemptions (282) - - - (282)
Net allocations among investment strategies 13 25 25 103 166
Change in fund value 509 (24) 437 (44) 878
Balance at 9/30/2026 $ 25,955 $ 8,239 $ 7,166 $ 4,917 $ 46,277
Private Equity
Secondaries 		Real Estate
Secondaries 		Infrastructure
Secondaries 		Credit
Secondaries 		Total Secondaries
Group
Balance at 12/31/2024 $ 15,805 $ 7,779 $ 3,691 $ 1,878 $ 29,153
New equity commitments 3,258 402 2,522 1,973 8,155
New debt commitments 775 - - - 775
Capital reductions (32) (58) - - (90)
Distributions (336) (80) (167) (26) (609)
Redemptions (123) - - - (123)
Net allocations among investment strategies 10 25 - 38 73
Change in fund value 691 193 119 38 1,041
Balance at 9/30/2025 $ 20,048 $ 8,261 $ 6,165 $ 3,901 $ 38,375
The components of our AUM for the Secondaries Group are presented below ($ in billions):
AUM: $46.3 AUM: $38.4
FPAUM
Non-fee paying(1)
AUM not yet paying fees
(1) Includes $0.7 billion and $1.1 billion of non-fee paying AUM from our general partner and employee commitments as of September 30, 2026 and 2025, respectively.
Secondaries Group-Fee Paying AUM
The table below presents the rollforwards of fee paying AUM for the Secondaries Group ($ in millions):
Private Equity
Secondaries 		Real Estate
Secondaries 		Infrastructure
Secondaries 		Credit
Secondaries 		Total Secondaries
Group
Balance at 6/30/2026 $ 17,168 $ 6,522 $ 4,895 $ 2,881 $ 31,466
Commitments 207 585 - - 792
Deployment/increase in leverage 331 79 - 24 434
Distributions (214) (169) (27) (18) (428)
Redemptions (126) - - - (126)
Change in fund value (2) (137) 42 16 (81)
Balance at 9/30/2026 $ 17,364 $ 6,880 $ 4,910 $ 2,903 $ 32,057
Private Equity
Secondaries 		Real Estate
Secondaries 		Infrastructure
Secondaries 		Credit Secondaries Total Secondaries
Group
Balance at 6/30/2025 $ 13,918 $ 6,557 $ 3,144 $ 916 $ 24,535
Commitments 1,251 24 1,878 - 3,153
Deployment/increase in leverage 65 (28) 5 71 113
Distributions (11) (43) (47) - (101)
Redemptions (60) - - - (60)
Change in fund value 133 120 22 169 444
Change in fee basis (5) - - - (5)
Balance at 9/30/2025 $ 15,291 $ 6,630 $ 5,002 $ 1,156 $ 28,079
Private Equity
Secondaries 		Real Estate
Secondaries 		Infrastructure
Secondaries 		Credit
Secondaries 		Total Secondaries
Group
Balance at 12/31/2025 $ 16,592 $ 6,721 $ 4,859 $ 1,309 $ 29,481
Commitments 1,198 632 - - 1,830
Deployment/increase in leverage 423 171 - 1,356 1,950
Capital reductions (88) - - - (88)
Distributions (236) (492) (34) (217) (979)
Redemptions (282) - - - (282)
Net allocations among investment strategies - 25 25 103 153
Change in fund value (212) (93) 60 352 107
Change in fee basis (31) (84) - - (115)
Balance at 9/30/2026 $ 17,364 $ 6,880 $ 4,910 $ 2,903 $ 32,057
Private Equity
Secondaries 		Real Estate
Secondaries 		Infrastructure
Secondaries 		Credit
Secondaries 		Total Secondaries
Group
Balance at 12/31/2024 $ 12,788 $ 6,441 $ 2,582 $ 590 $ 22,401
Commitments 2,271 194 2,428 - 4,893
Deployment/increase in leverage 202 19 18 541 780
Distributions (25) (81) (64) - (170)
Redemptions (123) - - - (123)
Net allocations among investment strategies 10 25 - 38 73
Change in fund value 173 32 38 (13) 230
Change in fee basis (5) - - - (5)
Balance at 9/30/2025 $ 15,291 $ 6,630 $ 5,002 $ 1,156 $ 28,079
The chart below presents FPAUM for the Secondaries Group by its fee bases ($ in billions):
FPAUM: $32.0 FPAUM: $28.1
Reported value Capital commitments Invested capital
Secondaries Group-Fund Performance Metrics as of September 30, 2026
The significant funds presented in the tables below collectively contributed approximately 42% of the Secondaries Group's management fees for the nine months ended September 30, 2026.
The following table presents the performance data for our significant perpetual capital fund in the Secondaries Group as of September 30, 2026 ($ in millions):
Returns(%)
Primary
Investment Strategy 		Year of Inception AUM Current Quarter Year-To-Date
Since Inception(1)
Fund Gross Net Gross Net Gross Net
APMF(2)
Private Equity Secondaries 2022 $ 5,907 N/A (1.9) N/A 8.1 N/A 13.7
(1)Since inception returns are annualized.
(2)Performance is measured by total return, which includes income and appreciation and reinvestment of all distributions for the respective time period. Returns are shown for institutional share class. Shares of other classes may have lower returns due to higher selling commissions and fees. Net returns are calculated using the fund's NAV and assume distributions are reinvested at the NAV on the date of distribution. Additional information related to APMF can be found in its filings with the SEC, which are not part of this report.
The following table presents the performance data of the significant drawdown fund in the Secondaries Group as of September 30, 2026 ($ in millions):
Primary Investment Strategy Year of Inception AUM Original Capital Commitments Capital Invested to Date
Realized Value(1)
Unrealized Value(2)
Total Value MoIC IRR(%)
Fund
Gross(3)
Net(4)
Gross(5)
Net(6)
Fund Harvesting Investments
LEP XVI(7)
Private Equity Secondaries 2016 $ 3,620 $ 4,896 $ 4,512 $ 2,079 $ 3,255 $ 5,334 1.3x 1.2x 10.6 6.1
Returns for LEP XVI are calculated from results of the underlying portfolio that are generally reported on a three month lag and may not include the impact of economic and market activities occurring in the current reporting period.
(1)Realized value represents the sum of all cash distributions to all limited partners and, if applicable, excludes tax and incentive distributions made to the general partner.
(2)Unrealized value represents the limited partners' share of fund's NAV reduced by the accrued incentive allocation, if applicable. There can be no assurance that unrealized values will be realized at the valuations indicated.
(3)The gross MoIC is calculated at the fund-level and is based on the interests of all partners. If applicable, limiting the gross MoIC to exclude interests attributable to the non-fee paying limited partners and/or the general partner who does not pay management fees or carried interest would have no material impact on the result. The gross MoIC is before giving effect to management fees, carried interest, as applicable, and other expenses, but after giving effect to credit facility interest expenses, as applicable. The funds may utilize a short-term credit facility for general cash management purposes, as well as a long-term credit facility as permitted by the respective fund's governing documentation. The gross fund-level MoIC would have generally been lower had such fund called capital from its partners instead of utilizing the credit facility.
(4)The net MoIC is calculated at the fund-level and is based on the interests of the fee-paying limited partners and, if applicable, excludes those interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The net MoIC is after giving effect to management fees and other expenses, carried interest and credit facility interest expense, as applicable. The funds may utilize a short-term credit facility for general cash management purposes, as well as a long-term credit facility as permitted by the respective fund's governing documentation. The net fund-level MoICs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
(5)The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the fund and the fund's residual value at the end of the measurement period. Gross IRR reflects returns to all partners. If applicable, limiting the gross IRR to exclude interests attributable to the non-fee paying limited partners and/or the general partner who does not pay management fees or carried interest would have no material impact on the result. The cash flow dates used in the gross IRR calculation are based on the actual dates of the cash flows. The gross IRRs are calculated before giving effect to management fees, carried interest, as applicable, and other expenses, but after giving effect to credit facility interest expenses, as applicable. The funds may utilize a short-term credit facility for general cash management purposes, as well as a long-term credit facility as permitted by the respective fund's governing documents. The gross fund-level IRR would generally have been lower had such fund called capital from its partners instead of utilizing the credit facility.
(6)The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund's residual value at the end of the measurement period. Net IRRs reflect returns to the fee-paying limited partners and, if applicable, exclude interests attributable to the non-fee paying limited partners and/or the general partner who does not pay management fees or carried interest. The cash flow dates used in the net IRR calculations are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees and other expenses, carried interest and credit facility interest expenses, as applicable. The funds may utilize a short-term credit facility for general cash management purposes, as well as a long-term credit facility as permitted by the respective fund's governing documents. Net fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
(7)The results of the fund are presented on a combined basis with the affiliated parallel funds or accounts, given that the investments are substantially the same.
Private Equity Group-Three and Nine Months Ended September 30, 2026 Compared to Three and Nine Months Ended September 30, 2025
Fee Related Earnings
The following table presents the components of the Private Equity Group's FRE ($ in thousands):
Three months ended September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Management fees $ 34,000 $ 33,284 $ 716 2% $ 100,919 $ 97,049 $ 3,870 4%
Other fees 859 467 392 84 2,036 1,298 738 57
Compensation and benefits (14,539) (15,752) 1,213 8 (42,425) (46,379) 3,954 9
General, administrative and other expenses (3,900) (4,892) 992 20 (13,950) (14,708) 758 5
Fee Related Earnings $ 16,420 $ 13,107 3,313 25 $ 46,580 $ 37,260 9,320 25
Management Fees. The chart below presents Private Equity Group management fees and effective management fee rates ($ in millions):
The following table presents the components of and causes for changes in the Private Equity Group's management fees for the three and nine months ended September 30, 2026 compared to the same periods in 2025 ($ in millions):
Three month change Nine month change
Private commingled funds:
Fees from ACOF VII, which started generating fees in the fourth quarter of 2025 $ 11.1 $ 33.2
Fees from ACOF VI, due to the step down in fee rate and change in fee base following the commencement of fees from ACOF VII (8.7) (28.8)
Fees from ACOF V, due to distributions that reduced the fee base as the fund has passed its investment period (1.9) (5.4)
Fees from acquired APAC private equity funds effective August 2025 (0.5) 4.0
Cumulative effect of other changes 0.7 0.9
Total $ 0.7 $ 3.9
The decreases in effective management fee rates for the three and nine months ended September 30, 2026 compared to the same periods in 2025 were primarily due to a step down in fee rate to 0.75% for ACOF VI beginning in the first quarter of 2026, following the commencement of fees from ACOF VII in the fourth quarter of 2025.
Compensation and Benefits. Total compensation and benefits decreased over the comparative periods, reflecting changes as we seek to optimize the composition of our investment and investment support professionals within our corporate private equity team. The increase in headcount when compared to the prior year results from the acquisition of an APAC private equity company during the third quarter of 2025. Full-time equivalent headcount increased by 4% to 111 investment and investment support professionals for the year-to-date period in 2026 from 107 professionals in 2025.
Realized Income
The following table presents the components of the Private Equity Group's RI ($ in thousands):
Three months ended September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Fee Related Earnings $ 16,420 $ 13,107 $ 3,313 25% $ 46,580 $ 37,260 $ 9,320 25%
Performance income-realized 4,212 3,744 468 13 45,830 39,733 6,097 15
Performance related compensation-realized (3,353) (2,999) (354) 12 (37,849) (29,856) (7,993) (27)
Realized net performance income 859 745 114 15 7,981 9,877 (1,896) (19)
Investment income (loss)-realized 34 513 (479) (93) 401 (3,720) 4,121 NM
Interest income 425 1 424 NM 426 2,024 (1,598) (79)
Interest expense (3,749) (3,785) 36 1 (10,640) (11,775) 1,135 10
Realized net investment loss (3,290) (3,271) (19) (1) (9,813) (13,471) 3,658 27
Realized Income $ 13,989 $ 10,581 3,408 32 $ 44,748 $ 33,666 11,082 33
The Private Equity Group's realized activities were principally composed of and caused by the following:
Nine months ended September 30, 2026 Nine months ended September 30, 2025
Realized net performance income
Carried interest:
•Distributions from partial sales of ACOF IV's investments in various energy companies
Carried interest:
•Distributions from partial sales of ACOF VI's investment in Frontier Communications Parent, Inc. and ACOF IV's investments in various energy companies
Realized investment income (loss) and interest income
•No significant activities
•Realized investment loss of $5.7 million from ACOF III as the fund continues to liquidate its remaining assets
Private Equity Group-Performance Income
The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Private Equity Group ($ in millions):
As of September 30, 2026 As of December 31, 2025
Accrued Performance Income Accrued Performance Compensation Accrued Net Performance Income Accrued Performance Income Accrued Performance Compensation Accrued Net Performance Income
ACOF IV $ 81.4 $ 65.2 $ 16.2 $ 142.8 $ 114.4 $ 28.4
ACOF VI 642.2 624.9 17.3 594.3 584.1 10.2
ACOF VII 23.0 18.5 4.5 2.1 1.7 0.4
Other Private Equity funds 32.1 25.8 6.3 9.0 7.2 1.8
Total Private Equity Group $ 778.7 $ 734.4 $ 44.3 $ 748.2 $ 707.4 $ 40.8
We transferred our rights to receive a portion of the carried interest from ACOF VI in exchange for capital interests in certain structured financing vehicles. We remain obligated to compensate our professionals who retain the rights to their allocation of performance income, which continue to be reported within performance related compensation.
The following table presents the change in accrued carried interest for the Private Equity Group ($ in millions):
As of December 31, 2025 Activity during the period As of September 30, 2026
Waterfall Type Accrued Carried Interest Change in Unrealized Realized Accrued Carried Interest
ACOF IV American $ 142.8 $ (21.5) $ (39.9) $ 81.4
ACOF VI American 594.3 53.8 (5.9) 642.2
ACOF VII American 2.1 20.9 - 23.0
Other Private Equity funds American 8.1 23.5 - 31.6
Other Private Equity funds European 0.9 (0.4) - 0.5
Total Private Equity Group $ 748.2 $ 76.3 $ (45.8) $ 778.7
Private Equity Group-Assets Under Management
The tables below present rollforwards of AUM for the Private Equity Group ($ in millions):
Corporate Private
Equity 		APAC Private
Equity 		Total Private
Equity Group
Balance at 6/30/2026 $ 21,360 $ 3,091 $ 24,451
Distributions (227) (11) (238)
Change in fund value 267 25 292
Balance at 9/30/2026 $ 21,400 $ 3,105 $ 24,505
Corporate Private
Equity 		APAC Private
Equity 		Total Private
Equity Group
Balance at 6/30/2025 $ 21,201 $ 2,565 $ 23,766
Acquisitions - 856 856
Net new equity commitments 516 12 528
Capital reductions (1) - (1)
Distributions (70) (81) (151)
Change in fund value 78 20 98
Balance at 9/30/2025 $ 21,724 $ 3,372 $ 25,096
Corporate Private
Equity 		APAC Private
Equity 		Total Private
Equity Group
Balance at 12/31/2025 $ 21,875 $ 3,413 $ 25,288
New equity commitments 858 - 858
Capital reductions (1) - (1)
Distributions (1,822) (53) (1,875)
Change in fund value 490 (255) 235
Balance at 9/30/2026 $ 21,400 $ 3,105 $ 24,505
Corporate Private
Equity 		APAC Private
Equity 		Total Private
Equity Group
Balance at 12/31/2024 $ 21,064 $ 2,977 $ 24,041
Acquisitions - 856 856
New equity commitments 1,475 28 1,503
Capital reductions (55) - (55)
Distributions (1,275) (81) (1,356)
Change in fund value 515 (408) 107
Balance at 9/30/2025 $ 21,724 $ 3,372 $ 25,096
The components of our AUM for the Private Equity Group are presented below ($ in billions):
AUM: $24.5 AUM: $25.1
FPAUM
Non-fee paying(1)
AUM not yet paying fees
(1) Includes $1.0 billion and $1.1 billion of non-fee paying AUM from our general partner and employee commitments as of September 30, 2026 and 2025, respectively.
Private Equity Group-Fee Paying AUM
The tables below present rollforwards of fee paying AUM for the Private Equity Group ($ in millions):
Corporate Private
Equity 		APAC Private
Equity 		Total Private
Equity Group
Balance at 6/30/2026 $ 11,775 $ 2,132 $ 13,907
Distributions (65) - (65)
Change in fund value (51) (33) (84)
Change in fee basis (70) (211) (281)
Balance at 9/30/2026 $ 11,589 $ 1,888 $ 13,477
Corporate Private
Equity 		APAC Private
Equity 		Total Private
Equity Group
Balance at 6/30/2025 $ 9,491 $ 1,502 $ 10,993
Acquisitions - 1,118 1,118
Deployment/increase in leverage 1 - 1
Distributions (8) - (8)
Change in fund value (16) - (16)
Change in fee basis - (240) (240)
Balance at 9/30/2025 $ 9,468 $ 2,380 $ 11,848
Corporate Private
Equity 		APAC Private
Equity 		Total Private
Equity Group
Balance at 12/31/2025 $ 12,206 $ 2,231 $ 14,437
Deployment/increase in leverage 891 2 893
Distributions (493) - (493)
Change in fund value (52) (134) (186)
Change in fee basis (963) (211) (1,174)
Balance at 9/30/2026 $ 11,589 $ 1,888 $ 13,477
Corporate Private
Equity 		APAC Private
Equity 		Total Private
Equity Group
Balance at 12/31/2024 $ 9,860 $ 1,567 $ 11,427
Acquisitions - 1,118 1,118
Deployment/increase in leverage 26 7 33
Capital reductions (11) - (11)
Distributions (8) - (8)
Change in fund value (14) - (14)
Change in fee basis (385) (312) (697)
Balance at 9/30/2025 $ 9,468 $ 2,380 $ 11,848
The charts below present FPAUM for the Private Equity Group by its fee bases ($ in billions):
FPAUM: $13.5 FPAUM: $11.8
Invested capital Capital commitments
Private Equity Group-Fund Performance Metrics as of September 30, 2026
The significant funds presented in the table below collectively contributed approximately 55% of the Private Equity Group's management fees for the nine months ended September 30, 2026.
The following table presents the performance data of the Private Equity Group's significant drawdown funds as of September 30, 2026 ($ in millions):
Primary Investment Strategy Year of Inception AUM Original Capital Commitments Capital Invested to Date
Realized Value(1)
Unrealized Value(2)
Total Value MoIC IRR(%)
Fund
Gross(3)
Net(4)
Gross(5)
Net(6)
Funds Deploying Capital
ACOF VI Corporate Private Equity 2020 $ 8,988 $ 5,743 $ 5,981 $ 2,495 $ 8,538 $ 11,033 1.8x 1.5x 18.7 14.0
ACOF VII Corporate Private Equity 2023 3,961 3,846 1,049 - 1,293 1,293 NM NM NM NM
(1)Realized value represents the sum of all cash dividends, interest income, other fees and cash proceeds from realizations of interests in portfolio investments. Realized value excludes any proceeds related to bridge financings.
(2)Unrealized value represents the fair market value of remaining investments. Unrealized value does not take into account any bridge financings. There can be no assurance that unrealized investments will be realized at the valuations indicated.
(3)The gross MoIC is calculated at the fund-level and is based on the interests of the fee-paying limited partners and, if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The gross MoIC is before giving effect to management fees, carried interest, as applicable, and other expenses, but after giving effect to credit facility interest expenses, as applicable. The gross MoICs are also calculated before giving effect to any bridge financings. The funds may utilize a credit facility during the investment period and for general cash management purposes. Early in the life of a fund, the gross fund-level MoICs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
(4)The net MoIC is calculated at the fund-level. The net MoIC is based on the interests of the fee-paying limited partners and if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or performance fees. The net MoIC is after giving effect to management fees, carried interest, as applicable, and other expenses. The net MoIC is also calculated before giving effect to any bridge financings. Inclusive of bridge financings, the net MoIC would be 1.5x for ACOF VI. The fund may utilize a credit facility during the investment period and for general cash management purposes. Early in the life of a fund, the net fund-level MoIC would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
(5)The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the fund and the fund's residual value at the end of the measurement period. Gross IRRs reflect returns to the fee-paying limited partners and, if applicable, exclude interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the gross IRR calculation are based on the actual dates of the cash flows. The gross IRRs are calculated before giving effect to management fees, carried interest, as applicable, and other expenses, but after giving effect to credit facility interest expenses, as applicable. The gross IRRs are also calculated before giving effect to any bridge financings. The funds may utilize a credit facility during the investment period and for general cash management purposes. Gross fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.
(6)The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund's residual value at the end of the measurement period. Net IRR reflects returns to the fee-paying limited partners and if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the net IRR calculation are based on the actual dates of the cash flows. The net IRR is calculated after giving effect to management fees, carried interest as applicable, and other expenses and excludes commitments by the general partner and Schedule I investors who do not pay either management fees or carried interest. The fund may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRR would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility. The net IRR is also calculated before giving effect to any bridge financings. Inclusive of bridge financings, the net IRR would be 13.6% for ACOF VI.
Operations Management Group-Three and Nine Months Ended September 30, 2026 Compared to Three and Nine Months Ended September 30, 2025
Fee Related Earnings
The following table presents the components of the Operations Management Group's FRE ($ in thousands):
Three months ended September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Other fees $ 7,589 $ 9,235 $ (1,646) (18)% $ 26,549 $ 22,603 $ 3,946 17%
Compensation and benefits (156,201) (144,405) (11,796) (8) (459,318) (395,518) (63,800) (16)
General, administrative and other expenses (87,459) (81,746) (5,713) (7) (261,615) (214,949) (46,666) (22)
Fee Related Earnings $ (236,071) $ (216,916) (19,155) (9) $ (694,384) $ (587,864) (106,520) (18)
Other Fees. While lower facilitation fees from the 1031 exchange program associated with our non-traded REITs this quarter drove a decrease in other fees for the three months ended September 30, 2026 compared to the same period in 2025, higher facilitation fees recognized in the first half of 2026, along with an increase in capital markets transaction fees, contributed to an increase in other fees for the nine months ended September 30, 2026 compared to the same period in 2025. We expect capital markets transaction fees to increase in future periods as we build out our capital solutions team and capabilities.
Compensation and Benefits. The increases in compensation and benefits for the three and nine months ended September 30, 2026 compared to the same periods in 2025 were driven by increases in salary expenses of $11.0 million and $32.4 million, respectively, primarily attributable to the increase in headcount to expand our capabilities and support the growth of our business and other strategic initiatives, including the transfer of investment professionals from our operating segments to support the efforts of our Capital Solutions Group within OMG.
In addition, the increase in compensation and benefits for the nine months ended September 30, 2026 included $8.8 million from two additional months of activities from the operations that we acquired in connection with the GCP Acquisition.
Full-time equivalent headcount increased by 12% to 2,316 professionals for the year-to-date period in 2026 from 2,072 professionals in 2025.
General, Administrative and Other Expenses. The increases in general, administrative and other expenses for the three and nine months ended September 30, 2026 compared to the same periods in 2025 were driven by higher information technology and occupancy costs of $7.2 million and $18.2 million, respectively, to support our growing headcount, including the expansion of our New York headquarters.
The increase for the nine months ended September 30, 2026 compared to the same period in 2025 was also attributable to (i) higher marketing costs of $8.2 million, driven by program sponsorships and by investor events, including costs incurred during the second quarter of 2026 for our firmwide AGM event; (ii) higher professional service fees of $6.7 million, primarily from tax related service fees and from consulting fees to support various ongoing technology initiatives to enhance our operations; and (iii) $3.7 million from two additional months of activities from the operations that we acquired in connection with the GCP Acquisition.
Realized Income
The following table presents the components of the OMG's RI ($ in thousands):
Three months ended September 30, Favorable (Unfavorable) Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Fee Related Earnings $ (236,071) $ (216,916) $ (19,155) (9)% $ (694,384) $ (587,864) $ (106,520) (18)%
Investment income (loss)-realized 161 2,090 (1,929) (92) (418) 1,528 (1,946) NM
Interest income 1,469 853 616 72 3,724 2,102 1,622 77
Interest expense (160) (10) (150) NM (373) (272) (101) (37)
Realized net investment income 1,470 2,933 (1,463) (50) 2,933 3,358 (425) (13)
Realized Income $ (234,601) $ (213,983) (20,618) (10) $ (691,451) $ (584,506) (106,945) (18)
Liquidity and Capital Resources
Management assesses liquidity in terms of our ability to generate cash to fund operating, investing and financing activities. Management believes that we are well-positioned and our liquidity will continue to be sufficient for our foreseeable working capital needs, contractual obligations, dividend payments and strategic initiatives.
Sources and Uses of Liquidity
Our sources of liquidity are: (i) cash on hand; (ii) net working capital; (iii) cash from operations, including management fees, other fees, fee related performance revenues and net realized performance income; (iv) fund distributions related to our investments that are unpredictable as to amount and timing; and (v) net borrowings from the Credit Facility. As of September 30, 2026, our cash and cash equivalents were $597.7 million and we have $685.0 million available under our Credit Facility which also has an accordion feature of $500.0 million. Our ability to draw from the Credit Facility is subject to leverage and other covenants. We remain in compliance with all covenants as of September 30, 2026. We believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments in the ordinary course of business and under the current market conditions for the foreseeable future. Cash flows from management fees may be impacted by a slowdown in deployment, declines in valuations or negatively impacted fundraising. In addition, management fees may be subject to deferral and certain incentive fees may be subject to hold backs. Transfers of our financial interests, such as capital interests and rights to performance income earned by us from funds that we manage, to structured financing vehicles that we manage may reduce or delay our cash flows and liquidity associated with these financial interests. Declines or delays in transaction activity may also impact our fund distributions and net realized performance income, which could adversely impact our cash flows and liquidity. Market conditions may make it difficult to extend the maturity or refinance our existing indebtedness or obtain new indebtedness with similar terms.
One of our sources of cash from operations is Part I Fees that we receive from certain publicly-traded funds such as ARCC and certain perpetual wealth funds. We typically receive payments of Part I Fees in the quarter after they are earned. Under certain circumstances, the collection of ARCC Part I Fees that have been earned and recorded by us as revenue may be deferred under the terms of the investment advisory agreement. The collection of ARCC Part I Fees that we have earned are deferred if during the most recent four full calendar quarter period ending on or prior to the date such payment is to be made by ARCC, the sum of (a) aggregate distributions to ARCC's stockholders and (b) ARCC's change in net assets (defined as ARCC's total assets less indebtedness and before taking into account any income based fee and capital gains incentive fee accrued during the period) is less than 7.0% of ARCC's net assets (defined as total assets less indebtedness) at the beginning of such period. These calculations will be adjusted for any share issuances or repurchases. Once earned, ARCC Part I Fees are not reversible even when deferred. All deferred ARCC Part I Fees are carried over and paid by ARCC in the period when the payment hurdle is achieved in accordance with the investment advisory agreement with ARCC. In such cases, we may still recognize the revenue, however, it would also result in a larger receivable from affiliates. Collection of ARCC Part I Fees earned during the three months ended June 30, 2026 was deferred. No other funds from which we are entitled to earn Part I Fees have a deferral provision in their governing documents and accordingly, no other Part I Fees have been or can be deferred. The impact of ARCC's deferral provision to our liquidity is limited by the fact that 60% of ARCC Part I Fees are paid to certain professionals as compensation, which is recorded as a liability but will not be paid until the cash is received by us. Therefore, the deferral of the collection of ARCC Part I Fees is approximately 40% of the total amount earned, and our liquidity was temporarily impacted by $33.8 million. As of September 30, 2026, no collections were deferred and we have collected the previously deferred ARCC Part I Fees during the fourth quarter of 2026.
We expect that our primary liquidity needs will continue to be to: (i) provide capital to facilitate the growth of our existing investment management businesses; (ii) fund our investment commitments; (iii) provide capital to facilitate our expansion into businesses that are complementary to our existing investment management businesses as well as other strategic growth initiatives; (iv) pay operating expenses, including cash compensation to our employees and tax payments for net settlement of equity awards; (v) fund capital expenditures; (vi) service our debt; (vii) pay income taxes and make payments under the tax receivable agreement; (viii) make dividend payments to our Class A and non-voting common stockholders and our Series B mandatory convertible preferred stockholders in accordance with our dividend policies; and (ix) pay distributions to AOG unitholders.
Our ability to obtain debt financing and complete stock offerings provides us with additional sources of liquidity. For further discussion of financing transactions occurring in the current period, see "Cash Flows" within this section and "Note 6. Debt" and "Note 12. Equity and Redeemable Interest" within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Our unaudited condensed consolidated financial statements reflect the cash flows of our operating businesses as well
as those of our Consolidated Funds. The assets of our Consolidated Funds, on a gross basis, are significantly larger than the assets of our operating businesses and therefore have a substantial effect on the amounts reported within our condensed consolidated statements of cash flows. The primary cash flow activities of our Consolidated Funds include: (i) raising capital from third-party investors, which is reflected as non-controlling interests of our Consolidated Funds; (ii) financing certain investments by issuing debt; (iii) purchasing and selling investment securities; (iv) generating cash through the realization of certain investments; (v) collecting interest and dividend income; and (vi) distributing cash to investors. Our Consolidated Funds are generally accounted for as investment companies under GAAP; therefore, the character and classification of all Consolidated Fund transactions are presented as cash flows from operations. Liquidity available at our Consolidated Funds is not available for corporate liquidity needs, and the debt of these Consolidated Funds is non-recourse to us except to the extent of our investment in the fund or, in limited cases, where we provide temporary guarantees prior to certain funds obtaining sufficient equity commitments from third-party investors.
Cash Flows
The following tables summarize our condensed consolidated statements of cash flows by activities attributable to the Company and Consolidated Funds. For more details on the activity of the Company and Consolidated Funds, refer to "Note 14. Consolidation" within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Nine months ended September 30,
2026 2025
Net cash provided by the Company's operating activities $ 1,439,889 $ 1,745,161
Net cash provided by (used in) the Consolidated Funds' operating activities, net of eliminations (1,471,077) 2,005,486
Net cash provided by (used in) operating activities (31,188) 3,750,647
Net cash used in the Company's investing activities (75,572) (1,782,560)
Net cash used in the Company's financing activities (1,093,372) (604,930)
Net cash provided by (used in) the Consolidated Funds' financing activities, net of eliminations 1,337,823 (2,365,095)
Net cash provided by (used in) financing activities 244,451 (2,970,025)
Effect of exchange rate changes (28,882) (9,369)
Net change in cash and cash equivalents $ 108,809 $ (1,011,307)
The Consolidated Funds had no effect on cash flows attributable to the Company for the periods presented and are excluded from the discussion below. The following discussion focuses on cash flow by activities attributable to the Company.
Operating Activities
In the table below, cash flows from operations are summarized to present: (i) cash generated from our core operating activities, primarily consisting of profits generated principally from fee revenues after covering for operating expenses and fee related performance compensation; (ii) net realized performance income; and (iii) net cash from investment related activities including purchases, sales, realized net investment income and interest expense. We generated meaningful cash flow from operations in each period presented.
Nine months ended September 30, Favorable (Unfavorable)
2026 2025 $ Change % Change
Core operating activities $ 1,813,763 $ 1,596,238 $ 217,525 14%
Net realized performance income 14,201 98,959 (84,758) (86)
Net cash provided by (used in) investment related activities (388,075) 49,964 (438,039) NM
Net cash provided by the Company's operating activities $ 1,439,889 $ 1,745,161 (305,272) (17)
Cash from our core operating activities increased as a result of growing fee revenues and sustained profitability.
Net realized performance income includes (i) carried interest distributions that may represent either tax distributions or other distributions of income and (ii) incentive fees that are realized periodically at the end of the measurement period, which is typically at the end of the calendar year. Cash received from carried interest distributions and the subsequent payments to employees may not necessarily occur in the same quarter. Cash from incentive fees is generally received in the period subsequent to the measurement period. The decrease in net realized performance income over the comparative period was primarily due to timing of payments to employees as a portion of the distributions we received in the fourth quarter of 2025 were paid to our employees in the first quarter of 2026, while distributions received in the fourth quarter of 2024 were paid to our employees in the same quarter in 2024.
Net cash from investment related activities for the nine months ended September 30, 2026 and 2025 primarily includes: (i) purchases associated with funding capital commitments, short-term capital market activities and strategic investments in our investment portfolio; (ii) interest payments on our debt obligations; (iii) distributions received from our capital investments and the collection of principal and interest from loans that we have made; and (iv) sales of certain capital investments to employees. Net cash provided by investment related activities for the nine months ended September 30, 2025 also included the rebalancing of and associated return of our capital commitments upon admitting new limited partners in an insurance fund, as well as interest income from treasury-backed securities that were sold in the first quarter of 2025 to provide proceeds to support the GCP Acquisition. As we are committed to invest alongside the investors in our funds, our capital commitments will increase with our growing assets under management and our investment related activities may fluctuate depending on timing of capital investments and distributions of each fund from year to year. For further discussion of our capital commitments, see "Note 7. Commitments and Contingencies" within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Our working capital needs are generally rising to support the growth of our business, while the capital requirements needed to support fund-related activities vary based upon the specific investment activities being conducted during each period.
Investing Activities
Nine months ended September 30,
2026 2025
Purchase of furniture, equipment and leasehold improvements $ (83,902) $ (56,385)
Acquisitions, net of cash acquired 8,330 (1,726,175)
Net cash used in investing activities $ (75,572) $ (1,782,560)
Net cash used in investing activities for both periods included cash to purchase furniture, equipment and leasehold improvements to support our growing headcount, including the expansion of our New York headquarters. Acquisitions, net of cash acquired for the nine months ended September 30, 2026 resulted from cash retained in the business at the closing of the BlueCove Acquisition exceeding the cash portion of the purchase consideration. Net cash used in investing activities for the nine months ended September 30, 2025 was predominately cash used to complete the GCP Acquisition.
Financing Activities
Nine months ended September 30,
2026 2025
Net borrowings of Credit Facility $ 435,000 $ 1,115,000
Borrowings from Term Loan 399,411 -
Dividends and distributions (1,569,033) (1,296,937)
Taxes paid related to net share settlement of equity awards (371,887) (425,623)
Other financing activities 13,137 2,630
Net cash used in the Company's financing activities $ (1,093,372) $ (604,930)
As a result of generating higher fee related earnings, we increased the level of dividends paid to a growing shareholder base of Class A and non-voting common stockholders and distributions paid to AOG unitholders, representing net cash used for the nine months ended September 30, 2026 and 2025. In addition, net cash used in the Company's financing activities included dividend payments on the Series B mandatory convertible preferred stock made during the nine months ended September 30, 2026 and 2025 to our preferred stockholders.
Net cash used in the Company's financing activities for the nine months ended September 30, 2026 and 2025 included net borrowings under the Credit Facility. These proceeds were used primarily to support general operating needs in the current period and to fund the GCP Acquisition in the prior year period. Net cash used in the Company's financing activities for the nine months ended September 30, 2026 also included borrowings under the Term Loan that were used to repay a portion of our Credit Facility.
In connection with the vesting of equity awards that are granted to our employees under the Equity Incentive Plan, we withhold shares equal to the fair value of our employees' tax withholding liabilities and pay the taxes on their behalf in cash and thus issue fewer net shares. For the nine months ended September 30, 2026, we net settled and did not issue 2.6 million shares. For the nine months ended September 30, 2025, we net settled and did not issue 2.2 million shares. Cash used in connection
with these awards decreased during the current year period primarily as a result of the lower stock price on the vesting date.
Capital Resources
We intend to use a portion of our available liquidity to pay cash dividends and distributions to our Series B mandatory convertible preferred stockholders, Class A and non-voting common stockholders and AOG unitholders on a quarterly basis in accordance with our dividend and distribution policies. Our ability to make cash dividends and distributions is dependent on a myriad of factors, including: (i) general economic and business conditions; (ii) our strategic plans and prospects; (iii) our business and investment opportunities; (iv) timing of capital calls by our funds in support of our commitments; (v) our financial condition and operating results; (vi) working capital requirements and other anticipated cash needs; (vii) contractual restrictions and obligations; (viii) legal, tax and regulatory restrictions; (ix) restrictions on the payment of distributions by our subsidiaries to us; and (x) other relevant factors.
We are required to maintain minimum net capital balances for regulatory purposes for our registered broker-dealers. These net capital requirements are met in part by retaining cash, cash equivalents and investment securities. Additionally, certain of our subsidiaries operating outside the U.S. are also subject to capital adequacy requirements in each of the applicable jurisdictions. As a result, we may be restricted in our ability to transfer cash between different operating entities and jurisdictions. As of September 30, 2026, we were required to maintain approximately $138.9 million in net assets within these subsidiaries to meet regulatory net capital and capital adequacy requirements. We remain in compliance with these regulatory requirements.
Holders of AOG Units, subject to the terms of the exchange agreement, may exchange their AOG Units for shares of our Class A common stock on a one-for-one basis. These exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of AMC that otherwise would not have been available. These increases in tax basis may increase depreciation and amortization for U.S. income tax purposes and thereby reduce the amount of tax that we would otherwise be required to pay in the future. We entered into the tax receivable agreement (the "TRA") that provides payment to the TRA recipients of 85% of the amount of actual cash savings, if any, in U.S. federal, state, local and foreign income tax or franchise tax that we actually realize as a result of these increases in tax basis and of certain other tax benefits related to entering into the TRA, including tax benefits attributable to payments under the TRA and interest accrued thereon. Future payments under the TRA in respect of subsequent exchanges are expected to be substantial. The TRA liability balance was $624.4 million and $579.9 million as of September 30, 2026 and December 31, 2025, respectively. For the nine months ended September 30, 2026 and 2025, payments under the TRA were $18.0 million and $8.1 million, respectively.
For a discussion of our debt obligations, including the debt obligations of our consolidated funds, see "Note 6. Debt" within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
For a discussion of our equity, see "Note 12. Equity and Redeemable Interest" within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Critical Accounting Estimates
We prepare our unaudited condensed consolidated financial statements in accordance with GAAP. In applying many of these accounting principles, we need to make assumptions, estimates or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our unaudited condensed consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates or judgments, however, are both subjective and subject to change, and actual results may differ from our assumptions and estimates. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. For a summary of our significant accounting policies, see "Note 2. Summary of Significant Accounting Policies," to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025. For a summary of our critical accounting estimates, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates" in our Annual Report on Form 10-K.
Recent Accounting Pronouncements
Information regarding recent accounting pronouncements and their impact on Ares can be found in "Note 2. Summary of Significant Accounting Policies," within our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Commitments and Contingencies
In the normal course of business, we enter into contractual obligations that may require future cash payments. We may also engage in off-balance sheet arrangements, including transactions in derivatives, guarantees, capital commitments to funds, indemnifications and potential contingent payment obligations. For further discussion of these arrangements, see "Note 7. Commitments and Contingencies" to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
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