Ares Management Lp ((ARES)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Ares Management’s recent earnings call painted a picture of robust growth and strategic expansion, despite some challenges in the real estate sector. The company celebrated a record-breaking year with significant achievements in fundraising, deployment, and management fees, reflecting a strong financial performance and optimism for 2025.
Record-Breaking Fundraising and Deployment
Ares Management achieved unprecedented success in 2024 by setting a new fundraising record of $92.7 billion, surpassing their previous record by over $15 billion. The company also reported a remarkable increase in deployment, reaching $106.7 billion, which represents a more than 50% rise compared to 2023. This success underscores Ares’ ability to attract and utilize capital effectively.
Significant Growth in Management Fees and FRE
The company reported a 15% increase in management fees and a 17% rise in fee-related earnings (FRE), fueled by growth in fee-paying assets under management (AUM). The fourth quarter alone saw management fees hit a record $781 million, highlighting Ares’ strong financial foundation.
Expansion of Executive Management Team
Ares Management has bolstered its leadership by promoting Kip DeVeer and Blair Jacobs to co-presidents. This strategic expansion of the executive team aims to support critical strategic and operational initiatives, positioning the company for future growth.
Strong Performance in Private Credit and Real Estate
Investment activity in private credit and real estate surged by 34% year-over-year, marking significant growth in these sectors. The increase was driven by substantial investments in US private credit, real estate debt and equity, and secondary solutions.
Significant Dry Powder for Future Investments
Entering 2025, Ares Management boasts a record $133 billion in dry powder. This strong capital position equips the firm to capitalize on investment opportunities in a potentially more active market environment.
Increase in G&A Expenses
The company experienced a more than 20% rise in general and administrative expenses in 2024, attributed to supplemental distribution fees and occupancy costs from new office leases. Ares is addressing these cost increases to maintain operational efficiency.
Challenges in Real Estate Market
Despite signs of recovery, the real estate market continues to present challenges. Ares Management has not projected fee-related performance revenues from its real estate group for 2025, indicating a cautious approach to this sector.
Forward-Looking Guidance
Looking ahead, Ares Management has provided optimistic guidance for 2025, supported by a 20% increase in quarterly dividends to $1.12 per share. The firm anticipates continued growth, driven by a robust pipeline and favorable market conditions. Strategic initiatives, including the acquisition of GCP International and leadership enhancements, are expected to further boost investment capabilities and strategic direction.
In summary, Ares Management’s earnings call highlights a year of exceptional growth and strategic positioning. While challenges remain, particularly in the real estate sector, the company’s strong financial performance, record levels of fundraising and deployment, and strategic leadership expansions position it well for a promising 2025.
