Ares Management's Business Segments

We offer our investors a range of investment strategies and seek to deliver attractive performance to a growing investor base that includes approximately 680 direct institutional relationships and a significant retail investor base across our publicly traded and sub-advised funds. Since our inception in 1997, we have adhered to a disciplined investment philosophy that focuses on delivering strong risk-adjusted investment returns through market cycles. Ares believes each of its distinct but complementary investment groups, which were organized in four business lines comprised of Tradable Credit, Direct Lending, Private Equity and Real Estate, is a market leader based on assets under management and investment performance. In February 2016, we announced the combination of the Tradable Credit and Direct Lending Groups to form the Credit Group and now operate through three business lines. We believe we have created value for our stakeholders not only through our investment performance but also by expanding our product offering, enhancing our distribution channels, increasing our global presence, investing in our non-investment functions, securing strategic partnerships and completing accretive acquisitions and portfolio purchases.

Ares Management Corporation is a global alternative investment manager specialized in various asset classes and offering a broad spectrum of products and services across multiple investment groups. Below, I detail its primary segments, as well as the specific products and services that fall under each segment.

1. Tradable Credit Group
The Tradable Credit Group is a significant player in the non-investment-grade corporate credit markets, managing around $30 billion in assets. It operates with a multi-faceted approach, catering to both institutional and retail investors through various fund structures. The groups investment strategy is supported by a team of about 40 analysts and nearly 20 portfolio managers and traders, organized by industry to provide specialized insights.

Long-Only Credit
This segment seeks to outperform indices related to performing bank loans or high-yield markets through the following strategies:
- Leveraged Loans: Focuses on non-investment-grade senior secured loans, particularly first-lien and second-lien loans, while also evaluating mezzanine loans and unsecured loans.
- High Yield Bonds: Concentrates on identifying value in non-investment-grade corporate issuers through fundamental research, targeting high-yield bonds and corporate loans.

Alternative Credit
The alternative credit investments aim to achieve attractive absolute risk-adjusted returns through:
- Credit Opportunities: This event-oriented mandate capitalizes on market inefficiencies by investing in a broad spectrum of U.S. and European debt securities, dynamically managing risk.
- Global Special Situations: This strategy targets dislocated assets, allowing the group to leverage its credit expertise across diverse asset classes including distressed and specialty finance investments.

Direct Lending Group
Ares’ Direct Lending Group stands as one of the largest self-originating direct lenders in the U.S. and Europe, managing about $33 billion in assets. The groups strategy focuses on capturing middle-market investment opportunities, emphasizing its role as a lead or sole lender to maximize influence over financing terms and structures.

Key Investment Offerings:
- Senior Debt: Investments include first and second lien loans and revolving credit facilities.
- Mezzanine Financing: Providing subordinate debt with equity features in middle-market firms.
- Equity Co-Investments: Offering non-control equity investments in emerging growth companies, often in partnership with venture capital.

Private Equity Group
The Private Equity Group manages approximately $21 billion in assets, focusing on three core strategies:
- North American/European Flexible Capital: Deploying capital across various sectors, seeking value through operational enhancements and strategic growth.
- U.S. Power and Energy Assets: Targeting investments within the rapidly evolving energy sector, emphasizing renewable energy and traditional energy sources.
- China Growth Capital: Investing in growth-oriented companies within China, leveraging local expertise and market understanding.

Real Estate Group
The Real Estate Group engages in both real estate equity and debt investing across various regions, particularly concentrating on value creation opportunities in under-managed assets and new developments.

Investment Strategies Include:
- Equity Investments: Targeting mismanaged or capital-starved assets for value addition and stabilization before re-entering the market.
- Debt Investments: Directly originating commercial mortgage investments, managing properties that vary from stabilized to those requiring hands-on management.

Access Points for Investors:
- Investments are accessible through a diverse range of vehicles, including:
- Commingled Funds: U.S. and European real estate private equity funds.
- Separately Managed Accounts: Tailored options for institutional investors.
- Publicly Traded REIT: ACRE, a commercial mortgage real estate investment trust.

Overall Approach
Each of Ares Management Corporation’s groups operates with a robust decision-making framework, utilizing deep industry knowledge, rigorous research capabilities, and a strategic focus on risk-adjusted returns. The firm emphasizes relationship-building and capitalizes on its extensive networks to identify and execute attractive investment opportunities across global markets. This operational philosophy allows Ares to adapt to changing market conditions and innovate in their investment offerings, ensuring a competitive edge in the alternative investment landscape.