Income tax expense (benefit)

Total other income

96,242

174,674

59,967

Income before taxes

184,341

149,859

297,920

32,202

(23,052)

11,019

Net income

152,139

172,911

286,901

Net income attributable to Ares Management Corporation

57,020

76,178

111,808

Less: Series A Preferred Stock dividends paid

21,700

12,176

Net income attributable to Ares Management Corporation Class A common stockholders

$ 35,320

$ 54,478

$ 99,632

Weighted-average shares of Class A common stock:(1)

Basic (in shares)

^[1]

96,023,147

81,838,007

80,749,671

Diluted (in shares)

^[1]

96,023,147

81,838,007

82,937,030

Ares Management L.P

Compensation and benefits

$ 958,461

$ 1,479,943

$ 1,254,373

Expenses

570,380

514,109

447,725

Performance related compensation

30,254

479,722

387,846

General, administrative and other expenses

215,964

196,730

159,776

Transaction support expense

0

275,177

0

Total expenses

870,362

1,504,758

1,016,420

Net realized and unrealized gain (loss) on investments

(1,884)

8,262

(7,629)

Interest and dividend income

7,028

7,043

4,493

Interest expense

(21,448)

(21,219)

(17,981)

Other income (expense), net

(851)

19,470

35,650

Total other income

96,242

174,674

59,967

Income tax expense (benefit)

32,071

(24,939)

11,756

Consolidated Funds

Expenses

Expenses of Consolidated Funds

53,764

39,020

21,073

Net realized and unrealized gain (loss) on investments

(1,583)

100,124

(2,057)

Interest and dividend income

337,875

187,721

138,943

Interest expense

(222,895)

(126,727)

(91,452)

Interest and other income of Consolidated Funds

337,875

187,721

138,943

Less: Net income attributable to non-controlling interests

20,512

60,818

3,386

AOG

Less: Net income attributable to non-controlling interests

74,607

35,915

171,251

Less: Net income attributable to redeemable interests in Ares Operating Group entities

0

456

Management fees | Ares Management L.P

Carried interest allocation | Ares Management L.P

802,502

722,419

642,068

Incentive fees | Ares Management L.P

42,410

620,454

494,580

Principal investment income (loss) | Ares Management L.P

63,380

16,220

23,272

Administrative, transaction and other fees

(1,455)

64,444

55,168

Administrative, transaction and other fees | Ares Management L.P

0

Net income attributable to Ares Management Corporation per share of Class A common stock:

$ 51,624

$ 56,406

$ 39,285

Common Class A

Basic (in dollars per share)

$ 0.30

$ 0.62

$ 1.22

Diluted (in dollars per share)

$ 0.30

$ 0.62

$ 1.20

[1]	(1) Years ended December 31, 2017 and 2016 represent common units.

Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Ares Management L.P \| Affiliated entity \| ARCC
Management fees, part I fees	$ 128,805	$ 105,467	$ 121,181

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Net income	$ 152,139	$ 172,911	$ 286,901
Ares Management L.P
Other comprehensive income:
Foreign currency translation adjustments, net of tax	(13,190)	13,927	(15,754)
Total comprehensive income	138,949	186,838	271,147
Comprehensive income	52,704	80,909	107,488
Consolidated Funds
Other comprehensive income:
Less: Comprehensive income (loss) attributable to non-controlling interests	15,575	62,165	3,336
Ares Operating Group
Other comprehensive income:
Less: Comprehensive income (loss) attributable to non-controlling interests	70,670	43,764	159,914
Less: Comprehensive income attributable to redeemable interests in Ares Operating Group entities	$ 0	$ 0	$ 409

Consolidated Statements of Changes in Equity - USD ($) $ in Thousands	Total	Series A Preferred Stock	Partners' Capital Preferred Partner	Ares Management L.P Partners' Capital	Common Stock Ares Management L.P Common Class A	Additional Paid-in-Capital Ares Management L.P	Retained Earnings Ares Management L.P	Accumulated Other Comprehensive Income (Loss) Ares Management L.P	Non-Controlling interest Ares Management L.P	Non-Controlling interest Consolidated Funds	Equity Appropriated for Consolidated Funds Consolidated Funds
Increase (Decrease) in Stockholders' Equity
Cumulative effect of accounting change	$ (3,367)										$ (3,367)
Balance at Dec. 31, 2015	968,406			$ 251,537				$ (4,619)	$ 397,883	$ 320,238	3,367
Increase (Decrease) in Stockholders' Equity
Issuance of preferred equity	298,761		$ 298,761
Changes in ownership interests	(881)			1,446					(2,327)
Reallocation of equity due to redemption of ownership interest	3,337			1,276					2,061
Deferred tax assets effects arising from allocation of Partners' capital	727			724					3
Contributions	132,932									132,932
Dividends/distributions	(330,649)		(12,176)	(67,041)					(132,961)	(118,471)
Net income (loss)	286,445		12,176	99,632					171,251	3,386
Currency translation adjustment	(15,707)							(4,320)	(11,337)	(50)
Equity compensation	37,258			14,216					23,042
Balance at Dec. 31, 2016	1,377,262		298,761	301,790				(8,939)	447,615	338,035	0
Increase (Decrease) in Stockholders' Equity
Changes in ownership interests	(15,656)			(5,370)					(10,286)
Deferred tax assets effects arising from allocation of Partners' capital	(6,520)			(6,609)					89
Contributions	195,403			1,036					4,213	190,154
Dividends/distributions	(345,222)		(21,700)	(92,587)					(169,069)	(61,866)
Net income (loss)	172,911		21,700	54,478					35,915	60,818
Currency translation adjustment	13,927							4,731	7,849	1,347
Equity compensation	68,187			26,327					41,860
Balance at Dec. 31, 2017	1,460,292		298,761	279,065				(4,208)	358,186	528,488	0
Increase (Decrease) in Stockholders' Equity
As adjusted balance at January 1, 2018	1,437,681	$ 0	298,761	268,238	$ 0	$ 0	$ 0	(4,208)	341,069	533,821	0
Cumulative effect of accounting change	0			1,202				(1,202)
Changes in ownership interests	(1,211)			(26,712)		9,140			16,361
Consolidation of new fund	42,942									42,942
Reallocation of equity due to redemption of ownership interest	0	298,761	(298,761)	(315,063)	1,016	314,047
Contributions	180,420			106,283					3,128	71,009
Dividends/distributions	(494,056)	(5,425)	(16,275)	(104,501)			(30,348)		(177,797)	(159,710)
Net income (loss)	152,139	5,425	16,275	34,308			1,012		74,607	20,512
Currency translation adjustment	(11,988)							(3,114)	(3,937)	(4,937)
Equity compensation	88,414			36,245		2,820			49,349
Balance at Dec. 31, 2018	$ 1,394,341	$ 298,761	$ 0	$ 0	$ 1,016	$ 326,007	$ (29,336)	$ (8,524)	$ 302,780	$ 503,637	$ 0

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash flows from operating activities:
Net income	$ 152,139	$ 172,911	$ 286,901
Allocable to non-controlling interest in Consolidated Funds:
Net cash used in operating activities	(1,417,102)	(1,863,095)	(625,655)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net	(18,419)	(33,160)	(11,913)
Net cash used in investing activities	(18,419)	(33,160)	(11,913)
Allocable to non-controlling interest in Consolidated Funds:
Net cash provided by financing activities	1,405,339	1,654,958	880,764
Ares Management L.P
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity compensation expense	89,724	69,711	39,065
Depreciation and amortization	28,517	32,809	37,455
Net realized and unrealized gain on investments	12,935	(67,034)	(28,251)
Contingent consideration	0	(20,156)	(17,674)
Other non-cash amounts	10	(1,731)	0
Investments purchased	(248,460)	(257,295)	(120,413)
Proceeds from sale of investments	381,703	154,278	145,439
Cash flows due to changes in operating assets and liabilities:
Net performance income receivable	29,578	(90,444)	(28,306)
Due to/from affiliates	33,023	(2,483)	(26,000)
Other assets	(49,789)	(28,674)	(162)
Accrued compensation and benefits	114	(105,109)	9,181
Accounts payable, accrued expenses and other liabilities	2,262	14,559	5,328
Deferred taxes	(17,006)	(8,112)	(28,463)
Cash flows from financing activities:
Proceeds from credit facility	680,000	455,000	147,000
Proceeds from term notes	44,050	100,459	26,036
Repayments of credit facility	(655,000)	(245,000)	(257,000)
Repayments of term notes	(206,089)	0	0
Proceeds from issuance of common shares	105,333	0	0
Proceeds from the issuance of preferred equity, net of issuance costs	0	0	298,761
Dividends and distributions	(312,646)	(261,656)	(200,663)
Preferred equity dividends and distributions	(21,700)	(21,700)	(12,176)
Redemption of redeemable interest and put option liability	0	0	(40,000)
Taxes paid in net settlement of vested common units	(18,014)	(14,308)	0
Stock option exercise	950	1,036	0
Tax benefit from share-based payment	44	81	0
Other financing activities	3,128	2,819	(701)
Allocable to non-controlling interest in Consolidated Funds:
Effect of exchange rate changes	21,500	17,365	(21,818)
Net change in cash and cash equivalents	(8,682)	(223,932)	221,378
Cash and cash equivalents, beginning of period	118,929	342,861	121,483
Cash and cash equivalents, end of period	110,247	118,929	342,861
Supplemental information:
Cash paid during the period for interest	19,881	17,222	15,390
Cash paid during the period for income taxes	26,740	18,034	26,402
Consolidated Funds
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Net realized and unrealized gain on investments	1,583	(100,124)	2,057
Investments purchased	(4,919,118)	(4,058,936)	(2,263,891)
Allocable to non-controlling interests in Consolidated Funds:
Receipt of non-cash interest income and dividends from investments	(2,372)	(453)	(7,720)
Amortization on debt and investments	(2,147)	(4,017)	(4,566)
Proceeds from sale or pay down of investments	2,756,924	2,303,315	1,498,398
Allocable to non-controlling interest in Consolidated Funds:
Change in cash and cash equivalents held at Consolidated Funds	171,856	(101,224)	(295,769)
Cash acquired/relinquished with consolidation/deconsolidation of Consolidated Funds	11,915	198,297	0
Change in other assets and receivables held at Consolidated Funds	11,962	(48,837)	3,872
Change in other liabilities and payables held at Consolidated Funds	137,545	85,654	167,864
Allocable to non-controlling interest in Consolidated Funds:
Contributions from non-controlling interests in Consolidated Funds	71,009	190,154	132,932
Distributions to non-controlling interests in Consolidated Funds	(159,710)	(61,866)	(118,471)
Borrowings under loan obligations by Consolidated Funds	2,901,633	2,949,949	1,621,514
Repayments under loan obligations by Consolidated Funds	(1,027,649)	(1,440,010)	(716,468)
Cash and cash equivalents, beginning of period	556,500
Cash and cash equivalents, end of period	384,644	556,500
Supplemental information:
Cash paid during the period for interest	165,070	76,889	53,704
Cash paid during the period for income taxes	$ 742	$ 145	$ 378

ORGANIZATION AND BASIS OF PRESENTATION	12 Months Ended
ORGANIZATION AND BASIS OF PRESENTATION	Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
ORGANIZATION AND BASIS OF PRESENTATION	ORGANIZATION AND BASIS OF PRESENTATION Ares Management Corporation (the "Company"), a Delaware corporation, is a leading global alternative asset management firm that operates three distinct but complementary investment groups: the Credit Group, the Private Equity Group and the Real Estate Group. Information about segments should be read together with Note 16, “Segment Reporting.” Subsidiaries of the Company serve as the general partners and/or investment managers to various investment funds and managed accounts within each investment group (the “Ares Funds”). Such subsidiaries provide investment advisory services to the Ares Funds in exchange for management fees. Ares is managed and operated by its Board of Directors and Executive Management Committee. Unless the context requires otherwise, references to “Ares” or the “Company” refer to Ares Management, L.P., together with its subsidiaries prior to November 26, 2018 and thereafter to Ares Management Corporation, together with its subsidiaries. The accompanying financial statements include the consolidated results of the Company and its subsidiaries. The Company is a holding company, and the Company’s sole assets are equity interests in Ares Holdings Inc. (“AHI”), Ares Offshore Holdings, Ltd., and Ares AI Holdings L.P. In this annual report, the following of the Company’s subsidiaries are collectively referred to as the “Ares Operating Group”: Ares Offshore Holdings L.P. (“Ares Offshore”), Ares Holdings L.P. (“Ares Holdings”), and Ares Investments L.P. (“Ares Investments”). The Company, indirectly through its wholly owned subsidiaries, is the general partner of each of the Ares Operating Group entities. The Company operates and controls all of the businesses and affairs of and conducts all of its material business activities through the Ares Operating Group. In addition, certain Ares-affiliated funds, related co-investment entities and collateralized loan obligations (“CLOs”) (collectively, the “Consolidated Funds”) managed by Ares Management LLC (“AM LLC”) and its wholly owned subsidiaries have been consolidated in the accompanying financial statements as described in Note 2, “Summary of Significant Accounting Policies.” Including the results of the Consolidated Funds significantly increases the reported amounts of the assets, liabilities, revenues, expenses and cash flows in the accompanying consolidated financial statements; however, the Consolidated Funds results included herein have no direct effect on the net income attributable to Ares Management Corporation or to Stockholders' Equity. Instead, economic ownership interests of the investors in the Consolidated Funds are reflected as non-controlling interests in Consolidated Funds. Further, cash flows allocable to non-controlling interest in Consolidated Funds are specifically identifiable in the Consolidated Statements of Cash Flows. Conversion to a Corporation The Company completed its conversion from a Delaware limited partnership to a Delaware corporation (the "Conversion") effective on November 26, 2018 (the "Effective Date"). At the Effective Date, (i) each common share of the Company outstanding immediately prior to the Effective Date converted into one issued and outstanding, fully paid and nonassessable share of Class A common stock, $0.01 par value per share, of the Company, (ii) the general partner share of the Company outstanding immediately prior to the Effective Date converted into 1,000 issued and outstanding, fully paid and nonassessable shares of Class B common stock, $0.01 par value per share of the Company, (iii) the special voting share of the Company outstanding immediately prior to the Effective Date converted into one issued and outstanding, fully paid and nonassessable share of Class C common stock, $0.01 par value per share, of the Company, and (iv) each preferred share of the Company outstanding immediately prior to the Effective Date converted into one issued and outstanding, fully paid and nonassessable share of preferred stock, $0.01 par value per share, of the Company, designated as “7.00% Series A Preferred Stock” (the “Series A Preferred Stock”). As a result of the Conversion, except as otherwise expressly provided in the Company’s Certificate of Incorporation (the “Certificate of Conversion”), the Company’s common stockholders are entitled to vote on all matters on which stockholders of a corporation are generally entitled to vote under the Delaware General Corporation Law (the “DGCL”), including the election of the Company’s board of directors. Holders of shares of the Company’s Class A common stock became entitled to one vote per share of the Company’s Class A common stock. On any date on which the Ares Ownership Condition (as defined in the Certificate of Incorporation) is satisfied, holders of shares of the Company’s Class B common stock are, in the aggregate, entitled to a number of votes equal to (x) four times the aggregate number of votes attributable to the Company’s Class A common stock minus (y) the aggregate number of votes attributable to the Company’s Class C common stock. On any date on which the Ares Ownership Condition is not satisfied, holders of shares of the Company’s Class B common stock are not entitled to vote on any matter submitted to a vote of the Company’s stockholders. The holder of shares of the Company’s Class C common stock is generally entitled to a number of votes equal to the number of Ares Operating Group Units (as defined in the Certificate of Incorporation) held of record by each Ares Operating Group Limited Partner (as defined in the Certificate of Incorporation) other than the Company and its subsidiaries. The Company’s Class B common stock and the Company’s Class C common stock are non-economic and holders thereof shall not be entitled to (i) dividends from the Company or (ii) receive any assets of the Company in the event of any dissolution, liquidation or winding up of the Company. Except as provided in the Certificate of Incorporation and the Company’s Bylaws and under the DGCL and the rules of the NYSE, shares of the Series A Preferred Stock are generally non-voting. Further, other terminology has been modified to be consistent with a corporation’s, as opposed to a limited partnership’s, results; distributions are now referred to as dividends. Comparative periods conform with the current period’s presentation. As a result of the Conversion, the financial impact to the Company's consolidated financial statements consisted of reclassifications from partnership capital to equity accounts reflective of a corporation. See Note 14, "Equity" for detailed description of the Company's capital accounts. Since March 1, 2018, the Company has been treated as a corporation for federal and state income tax purposes and ownership of its shares does not generate any unrelated business taxable income ("UBTI") or income effectively connected with a U.S. trade or business ("ECI"). The Conversion did not impact this treatment. Non-Controlling Interests in Ares Operating Group Entities The non-controlling interests in the Ares Operating Group (“AOG”) entities represent a component of equity and net income attributable to the owners of the AOG Units that are not held directly or indirectly by the Company. These interests are adjusted for contributions to and distributions from AOG during the reporting period and are allocated income from the AOG entities based on their historical ownership percentage for the proportional number of days in the reporting period.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The accompanying consolidated financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”). The Company’s Consolidated Funds are investment companies under GAAP based on the following characteristics: the Consolidated Funds obtain funds from one or more investors and provide investment management services and the Consolidated Funds’ business purpose and substantive activities are investing funds for returns from capital appreciation and/or investment income. Therefore, investments of Consolidated Funds are recorded at fair value and the unrealized appreciation (depreciation) in an investment’s fair value is recognized on a current basis in the Consolidated Statements of Operations. Additionally, the Consolidated Funds do not consolidate their majority-owned and controlled investments in portfolio companies. In the preparation of these consolidated financial statements, the Company has retained the investment company accounting for the Consolidated Funds under GAAP.

All of the investments held and CLO loan obligations issued by the Consolidated Funds are presented at their estimated fair values in the Company’s Consolidated Statements of Financial Condition. Net income attributable to holders of subordinated notes of the CLOs is included in net income (loss) attributable to non-controlling interests in Consolidated Funds in the Consolidated Statements of Operations.

The Company has reclassified certain prior period amounts to conform to the current year presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses and other income (expense) during the reporting periods. Assumptions and estimates regarding the valuation of investments involve a high degree of judgment and complexity and may have a significant impact on net income. Actual results could differ from these estimates and such differences could be material to the consolidated financial statements.

Principles of Consolidation

The Company consolidates those entities in which it has a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. As such, the Company consolidates (a) entities in which it holds a majority voting interest or has majority ownership and control over the operational, financial and investing decisions of that entity, including Ares affiliates and affiliated funds and co-investment entities and (b) entities that the Company concludes are variable interest entities (“VIEs”), including limited partnerships and CLOs, in which the Company has more than insignificant economic interest and power to direct the activities that most significantly impact the entities, and for which the Company is deemed to be the primary beneficiary.

The Company determines whether an entity should be consolidated by first evaluating whether it holds a variable interest in the entity. Fees that are customary and commensurate with the level of services provided by the Company, and where the Company does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, would not be considered a variable interest. The Company factors in all economic interests, including proportionate interests through related parties, to determine if fees are considered a variable interest. As the Company’s interests in funds are primarily management fees, performance income, and/or insignificant direct or indirect equity interests through related parties, the Company is not considered to have a variable interest in many of these entities. Entities that are not VIEs are further evaluated for consolidation under the voting interest model (“VOE”).

Variable Interest Model

An entity is considered to be a variable interest entity (“VIE”) if any of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) the holders of equity investment at risk, as a group, lack either the direct or indirect ability through voting rights or similar rights to make decisions that have a significant effect on the success of the entity or the obligation to absorb the expected losses or right to receive the expected residual returns, or (c) the voting rights of some equity investors are disproportionate to their obligation to absorb losses of the entity, their rights to receive returns from an entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor with disproportionately few voting rights.

The Company consolidates all VIEs for which it is the primary beneficiary. An entity is determined to be the primary beneficiary if it holds a controlling financial interest, which is defined as having (a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE.

The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and continuously reconsiders the conclusion. In evaluating whether the Company is the primary beneficiary, the Company evaluates its direct and indirect economic interests in the entity. The consolidation analysis is generally performed qualitatively, however, if the primary beneficiary is not readily determinable, a quantitative analysis may also be performed. This analysis requires judgment. These judgments include: (1) determining whether the equity investment at risk is sufficient to permit the entity to finance its activities without additional subordinated financial support, (2) evaluating whether the equity holders, as a group, can make decisions that have a significant effect on the success of the entity, (3) determining whether two or more parties' equity interests should be aggregated, (4) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive returns from an entity and (5) evaluating the nature of relationships and activities of the parties involved in determining which party within a related-party group is most closely associated with a VIE and hence would be deemed the primary beneficiary.

Voting Interest Model

The Company consolidated entities, including limited partnerships and similar entities, in which it held a majority voting interest and those entities in which it had majority ownership and control over the operational, financial and investing decisions, including Ares affiliates and affiliated funds and co-investment entities.

The Company’s total exposure to consolidated VOEs represents the value of its economic ownership interest in these entities. Valuation changes associated with investments held at fair value by these consolidated VOEs are reflected in non-operating income (expense) and partially offset in net income (loss) attributable to non-controlling interests for the portion not attributable to the Company.

Consolidated CLOs

As of December 31, 2018 and 2017, the Company consolidated thirteen and ten CLOs, respectively.

Beginning January 1, 2016, the Company has determined that the fair value of the financial assets of the consolidated CLOs, which are mostly Level II assets within the GAAP fair value hierarchy, are more observable than the fair value of the financial liabilities of its consolidated CLOs, which are mostly Level III liabilities within the GAAP fair value hierarchy. As a result, the financial assets of consolidated CLOs are measured at fair value and the financial liabilities of the consolidated CLOs are measured in consolidation as: (1) the sum of the fair value of the financial assets, and the carrying value of any nonfinancial assets held temporarily, less (2) the sum of the fair value of any beneficial interests retained by the Company (other than those that represent compensation for services), and the Company’s carrying value of any beneficial interests that represent compensation for services. The resulting amount is allocated to the individual financial liabilities (other than the beneficial interests retained by the Company).

The loan obligations issued by the CLOs are collateralized by diversified asset portfolios and by structured debt or equity. In exchange for managing the collateral for the CLOs, the Company typically earns a variety of management fees, including senior and subordinated management fees, and in some cases, contingent incentive fee income. In cases where the Company earns fees from a CLO that it consolidates, those fees have been eliminated as intercompany transactions. The Company's holdings in these CLOs are generally subordinated to other interests in the entities and entitle the Company to receive a pro rata portion of the residual cash flows, if any, from the entities. Additionally, the Company may invest in other senior secured notes, which are repaid based on available cash flows subject to priority of payments under each consolidated CLO's governing documents. Investors in the CLOs generally have no recourse against the Company for any losses sustained in the capital structure of each CLO.

Fair Value Measurements

GAAP establishes a hierarchal disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market observability. Market price observability is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:


•	Level I—Quoted prices in active markets for identical instruments.

•

Level II—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in inactive markets; and model‑derived valuations with directly or indirectly observable significant inputs. Level II inputs include prices in markets with few transactions, non-current prices, prices for which little public information exists or prices that vary substantially over time or among brokered market makers. Other inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates.


•	Level III—Valuations that rely on one or more significant unobservable inputs. These inputs reflect the Company’s assessment of the assumptions that market participants would use to value the instrument based on the best information available.

In some instances, an instrument may fall into more than one level of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. The Company accounts for the transfer of assets into or out of each fair value hierarchy level as of the beginning of the reporting period. (See Note 5 for further detail).

Cash and Cash Equivalents

Cash and cash equivalents for the Company includes investments with maturities at purchase of less than three months, money market funds and demand deposits. Cash and cash equivalents held at Consolidated Funds represents cash that, although not legally restricted, is not available to support the general liquidity needs of the Company, as the use of such amounts is generally limited to the activities of the Consolidated Funds.

As the servicer to certain real estate investments, certain subsidiaries of the Company collect escrow deposits from borrowers to ensure the borrowers’ obligations are met. These escrow deposits are represented as cash and cash equivalents for the Company and escrow liability is reported within accounts payable, accrued expenses and other liabilities in the Consolidated Statements of Financial Condition.

At December 31, 2018 and 2017, the Company had cash balances with financial institutions in excess of Federal Deposit Insurance Corporation insured limits. The Company monitors the credit standing of these financial institutions.

Investments

The Company has retained the specialized investment company accounting guidance under GAAP with respect to its Consolidated Funds, which hold substantially all of its investments. Thus, the consolidated investments are reflected in the Consolidated Statements of Financial Condition at fair value, with unrealized appreciation (depreciation) resulting from changes in fair value reflected as a component of net realized and unrealized gain (loss) on investments in the Consolidated Statements of Operations. Fair value is the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., the exit price).

Equity Method Investments

The Company accounts for its investments in which it has or is otherwise presumed to have significant influence, including investments in unconsolidated funds, strategic investments and carried interest, using the equity method of accounting. The carrying amounts of equity method investments are reflected in investments in the Consolidated Statements of Financial Condition. As the underlying investments of the Company's equity method investments are reported at fair value, the carrying value of the equity method investments approximates fair value. The carrying value of investments accounted for using equity method accounting is determined based on amounts invested by the Company, adjusted for the equity in earnings or losses of the investee allocated based on the respective partnership agreements, less distributions received. The Company evaluates the equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. Except for carried interest, the Company’s share of the investee’s income and expenses for the Company’s equity method investments is included within principal investment income (loss) and net realized and unrealized gain (loss) on investments within the Consolidated Statements of Operations. Carried interest allocation is presented separately as a revenue line item within the Consolidated Statements of Operations, and the accrued but unpaid carried interest as of the reporting date is reported in within investments in the Consolidated Statements of Financial Condition.

Derivative Instruments

The Company recognizes all derivatives as either assets or liabilities in the Consolidated Statements of Financial Condition within other assets or accounts payable, accrued expenses and other liabilities, respectively, and reports them at fair value.

Goodwill and Intangible Assets

The Company's finite-lived intangible assets consist of contractual rights to earn future management fees from the acquired management contracts. Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from approximately 3.5 to 13.5 years. The purchase price of the acquired management contract is treated as an intangible asset and is amortized over the life of the contract. Amortization is included as part of general, administrative and other expenses in the Consolidated Statements of Operations.

The Company tests finite‑lived intangible assets for impairment if certain events occur or circumstances change indicating that the carrying amount of the intangible asset may not be recoverable. The Company evaluates impairment by comparing the estimated fair value attributable to the intangible asset being evaluated with its carrying amount. If an impairment is determined to exist by management, the Company accelerates amortization expense so that the carrying amount represents fair value. The Company estimates fair value using undiscounted future cash flow.

Goodwill represents the excess cost over identifiable net assets of an acquired business. The Company tests goodwill annually for impairment. If, after assessing qualitative factors, the Company believes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company will evaluate impairment quantitatively to determine and record the amount of goodwill impairment as the excess of the carrying amount of the reporting unit over its fair value.

The Company also tests goodwill for impairment in other periods if an event occurs or circumstances change such that is more likely than not to reduce the fair value of the reporting unit below its carrying amount. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including the Company’s interpretation of current economic indicators and market valuations, and assumptions about the Company’s strategic plans with regard to its operations. Due to the uncertainties associated with such estimates, actual results could differ from such estimates.

Fixed Assets

Fixed assets, consisting of furniture, fixtures and equipment, leasehold improvements, computer hardware and internal-use software, are recorded at cost, less accumulated depreciation and amortization. Fixed assets are included within other assets on the Company’s Consolidated Statements of Financial Condition.

Direct costs associated with developing, purchasing or otherwise acquiring software for internal use (“Internal-Use Software”) are capitalized and amortized on a straight-line basis over the expected useful life of the software, beginning when the software is ready for its intended purpose. Costs incurred for upgrades and enhancements that will not result in additional functionality are expensed as incurred.

Fixed assets are depreciated or amortized on a straight-line basis over an asset's estimated useful life, with the corresponding depreciation and amortization expense included within general, administrative and other expenses on the Company’s Consolidated Statements of Operations. The estimated useful life for leasehold improvements is the lesser of the lease term or the life of the asset while other fixed assets and internal-use software are generally depreciated between three and seven years. Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Revenue Recognition

Revenues primarily consist of management fees, carried interest allocation, incentive fees, principal investment income and administrative, transaction and other fees.

Adoption of ASC 606

Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) Topic 606 (“ASC 606”), Revenue from Contracts with Customers. The Company adopted ASC 606 to all applicable contracts under the modified retrospective approach using the practical expedient provided for within paragraph 606-10-65-1(f)(3); therefore, the presentation of prior year periods has not been adjusted. The Company recognized the cumulative effect of initially adopting ASC 606 as an adjustment to the opening balance of components of equity as of January 1, 2018.

Pursuant to ASC 606, the Company recognizes revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Under this standard, revenue is based on a contract with a determinable transaction price and distinct performance obligations with probable collectability. Revenues cannot be recognized until the performance obligation(s) are satisfied and control is transferred to the customer. The Company's adoption of ASC 606 impacted the timing and recognition of incentive fees in the Company’s consolidated statements of operations. The adoption of ASC 606 did not have an impact on the Company’s management fees, administrative fees, transaction fees or other fees. The details of the significant changes and quantitative impact of the adoption of ASC 606 are further discussed below.

The adoption of ASC 606 had the following impact on the Company’s revenue streams:



Revenues of the Company	Impact of ASC 606
Management fees	No impact - Management fees are recognized as revenue in the period advisory services are rendered.
Performance income - Carried interest allocation	No impact. See discussion below for change in accounting policy.
Performance income - Incentive fees	See discussion below for impact.
Administrative, transaction and other fees	No impact - Administrative, transaction and other fees are recognized as revenue in the period in which the related services are rendered.

Management Fees

Management fees are generally based on a defined percentage of fair value of assets, total commitments, invested capital, net asset value ("NAV"), net investment income, total assets or par value of the investment portfolios managed by the Company. Principally all management fees are earned from affiliated funds of the Company. The contractual terms of management fees vary by fund structure and investment strategy. Management fees are recognized as revenue in the period advisory services are rendered, subject to the Company’s assessment of collectability.

Management fees also include a quarterly incentive fee based on the investment income ("ARCC Part I Fees") from Ares Capital Corporation (NASDAQ: ARCC) ("ARCC"), a publicly traded business development company registered under the Investment Company Act and managed by a subsidiary of the Company.

ARCC Part I Fees are equal to 20.0% of its net investment income (before ARCC Part I Fees and incentive fees payable based on capital gains), subject to a fixed "hurdle rate" of 1.75% per quarter, or 7.0% per annum. No fee is recognized until ARCC's net investment income exceeds a 1.75% hurdle rate, with a "catch-up" provision such that the Company receives 20% of ARCC's net investment income from the first dollar earned. Such fees from ARCC are classified as management fees as they are paid quarterly, predictable and recurring in nature, not subject to contingent repayment and are typically cash settled each quarter.

Performance Income

Performance income revenues consist of carried interest allocation and incentive fees. Performance income is based on certain specific hurdle rates as defined in the applicable investment management agreements or governing documents. Substantially all performance income is earned from affiliated funds of the Company.

Carried Interest Allocation

In certain fund structures, typically in private equity and real estate equity funds, carried interest is allocated to the Company based on cumulative fund performance to date, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. At the end of each reporting period, a fund will allocate carried interest applicable to the Company based upon an assumed liquidation of that fund's net assets on the reporting date, irrespective of whether such amounts have been realized. Carried interest is recorded to the extent such amounts have been allocated, and may be subject to reversal to the extent that the amount allocated exceeds the amount due to the general partner or investment manager based on a fund’s cumulative investment returns.

As the fair value of underlying assets varies between reporting periods, it is necessary to make adjustments to amounts recorded as carried interest to reflect either (i) positive performance resulting in an increase in the carried interest allocated to the Company or (ii) negative performance that would cause the amount due to the Company to be less than the amount previously recognized as revenue, resulting in a reversal of previously recognized carried interest allocated to the Company. Accrued but unpaid carried interest as of the reporting date is recorded within investments in the Consolidated Statements of Financial Condition.

Carried interest is realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the specific hurdle rates as defined in the applicable investment management agreements or governing documents. Since carried interest is subject to reversal, the Company may need to accrue for potential repayment of previously received carried interest. This accrual represents all amounts previously distributed to the Company that would need to be repaid to the funds if the funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual repayment obligations, however, generally does not become realized until the end of a fund’s life. As of December 31, 2018, if the funds were liquidated at their fair values, there would be a $0.4 million repayment obligation, and accordingly, the Company recorded a contingent repayment liability as of December 31, 2018. As of December 31, 2017, if the funds were liquidated at their fair values, there would be no repayment obligation, and accordingly, the Company did not record a contingent repayment liability as of December 31, 2017.

Prior to January 1, 2018, the Company accounted for carried interest under Method 2 described in ASC 605-20-S99-1, which provided guidance on accounting for incentive-based performance income, including carried interest. The Company has reassessed its accounting policy for carried interest, and has determined that carried interest is addressed within scope of ASC 323, Investments-Equity Method and Joint Ventures, and out of scope under the scoping provision of ASC 606. Therefore, following the application of ASC 323, the Company accounted for carried interest, which represents a performance-based capital allocation from an investment fund to the Company, as earnings from financial assets within the scope of ASC 323. Accordingly, the Company recognizes carried interest allocation as a separate revenue line item in the Consolidated Statements of Operations with uncollected carried interest as of the reporting date reported within investments in the Consolidated Statements of Financial Condition.

The Company has applied the change in accounting principle on a full retrospective basis, and prior periods presented herein have been recast to conform with the current period's presentation. The change in accounting principle did not change the timing or the amount of carried interest recognized. Instead, the change in accounting principle resulted in reclassification from performance income to carried interest allocation, and therefore did not have any impact on net income. See the tables below for the impact of the change in accounting principle of carried interest.

Incentive Fees

Incentive fees earned on the performance of certain fund structures, typically in credit funds, are recognized based on the fund’s performance during the period, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. Incentive fees are realized at the end of a measurement period, typically annually. Once realized, such fees are no longer subject to reversal.

Prior to January 1, 2018, the Company accounted for incentive fees under Method 2 as described above. However, the accounting for incentive fees is separate and distinct from the accounting for carried interest because the incentive fees are contractual fee arrangements and do not represent allocations of returns from partners' capital accounts. The Company now accounts for incentive fees in accordance with ASC 606. Accordingly, the Company recognizes incentive fee revenue only when the amount is realized and no longer subject to reversal. Therefore, the Company no longer recognizes unrealized incentive fees in revenues in the consolidated financial statements. The adoption of ASC 606 results in the delayed recognition of unrealized incentive fees in the consolidated financial statements until they become realized at the end of the measurement period, which is typically annually.

The Company adopted ASC 606 for incentive fees using the modified retrospective approach with an effective date of January 1, 2018. The cumulative effect of the adoption resulted in the reversal of $22.6 million of unrealized incentive fees and is presented as a reduction to the opening balances of components of equity as of January 1, 2018.

Principal Investment Income

Principal investment income consists of interest and dividend income and net realized and unrealized gain (loss) from the equity method investments that the Company manages.

Administrative, Transaction and Other Fees

The Company provides administrative services to certain of its affiliated funds that are reported within administrative and other fees. The administrative fees generally represent expense reimbursements for a portion of overhead and other expenses incurred by certain Operations Management Group professionals directly attributable to performing services for a fund but may also be based on a fund’s NAV for certain funds domiciled outside the U.S. The Company also receives transaction fees from certain affiliated funds for activities related to fund transactions, such as loan originations. These fees are recognized as other revenue in the period in which the administrative services and the transaction related services are rendered.

The following tables present the adjustments made in connection with the Company's change in accounting principle related to carried interest under ASC 323, Investments-Equity Method and Joint Ventures on the financial statement line items for the periods presented in the consolidated financial statements:



Consolidated Statement of Financial Condition

	As of December 31, 2017
	As Previously Reported		Adjustments				As Adjusted
	(audited)
Assets
Investments ($1,077,236 of accrued carried interest)	$	647,335	$	1,077,236			$	1,724,571
Performance income receivable	1,099,847		(1,099,847		)		—
Other assets	107,730		22,611			(1)	130,341


(1)	Unrealized incentive fees receivable balance as of December 31, 2017 that was reversed in connection with the adoption of ASC 606.



Consolidated Statement of Operations

	For the Year Ended December 31, 2017
	As Previously Reported		Adjustments			As Adjusted

Revenues
Performance income	$	636,674	$	(636,674	)	$	—
Carried interest allocation	—		620,454			620,454
Incentive fees	—		16,220			16,220
Principal investment income	—		64,444			64,444
Total revenues	1,415,499		64,444			1,479,943
Other income (expense)
Net realized and unrealized gain on investments	67,034		(58,772		)	8,262
Interest and dividend income	12,715		(5,672		)	7,043



Consolidated Statement of Operations

	For the Year Ended December 31, 2016
	As Previously Reported		Adjustments			As Adjusted

Revenues
Performance income	$	517,852	$	(517,852	)	$	—
Carried interest allocation	—		494,580			494,580
Incentive fees	—		23,272			23,272
Principal investment income	—		55,168			55,168
Total revenues	1,199,205		55,168			1,254,373
Other income (expense)
Net realized and unrealized gain on investments	28,251		(35,880		)	(7,629		)
Interest and dividend income	23,781		(19,288		)	4,493

The Company's change in accounting policy related to carried interest did not impact the Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Equity or Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016.

The following tables present the impact of incentive fees on the condensed consolidated financial statements upon the adoption of ASC 606 effective January 1, 2018:

Consolidated Statement of Financial Condition



	As of January 1, 2018
	As adjusted December 31, 2017		Adjustments				As Adjusted for ASC 606 adoption
Investments	$	1,724,571	$	—			$	1,724,571
Other assets	130,341		(22,611		)	(1)	107,730
Total assets	8,563,522		(22,611		)		8,540,911
Total liabilities	7,103,230		—				7,103,230
Cumulative effect adjustment to equity(2)	—		(22,611		)		(22,611		)
Total equity	1,460,292		(22,611		)		1,437,681
Total liabilities, non-controlling interests and equity	8,563,522		(22,611		)		8,540,911


(1)	Unrealized incentive fees receivable balance as of December 31, 2017.


(2)	See detail below.

Consolidated Statement of Changes in Equity



	Preferred Equity		Shareholders' Capital			Accumulated Other Comprehensive Loss			Non-controlling interest in Ares Operating Group Entities			Non-Controlling Interest in Consolidated Funds		Total Equity
Balance at December 31, 2017	$	298,761	$	279,065		$	(4,208	)	$	358,186		$	528,488	$	1,460,292
Cumulative effect of the adoption of ASC 606	—		(10,827		)	—			(17,117		)	5,333		(22,611		)
As adjusted balance at January 1, 2018	$	298,761	$	268,238		$	(4,208	)	$	341,069		$	533,821	$	1,437,681

In accordance with the ASC 606 disclosure requirements, the following tables present the adjustments made by the Company to remove the effects of adopting ASC 606 on the consolidated financial statements as of and for the year ended December 31, 2018:



Consolidated Statement of Financial Condition

	As of December 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Assets
Cash and cash equivalents	$	110,247		$	—		$	110,247
Investments ($841,079 of accrued carried interest)	1,326,137			—			1,326,137
Due from affiliates	199,377						199,377
Deferred tax asset, net	42,137			(2,474		)	39,663
Other assets	160,150			42,848			202,998
Total assets	10,154,692			40,373			10,195,065
Commitments and contingencies
Non-controlling interest in Consolidated Funds	503,637			(7,574		)	496,063
Non-controlling interest in Ares Operating Group entities	302,780			29,663			332,443
Stockholders' Equity
Additional paid-in-capital	326,007			23,587			349,594
Retained earnings	(29,336		)	(5,095		)	(34,431		)
Accumulated other comprehensive loss, net of tax	(8,524		)	(208		)	(8,732		)
Total stockholders' equity	587,924			18,284			606,208
Total equity	1,394,341			40,373			1,434,714
Total liabilities and equity	10,154,692			40,373			10,195,065



Consolidated Statement of Operations

	For the Year Ended December 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Revenues
Incentive fees	$	63,380		$	20,997		$	84,377
Total revenues	958,461			20,997			979,458
Expenses
Expenses of Consolidated Funds	53,764			—			53,764
Total expenses	870,362			—			870,362
Other income (expense)
Other income, net	(851		)	30			(821		)
Total other income	96,242			30			96,272
Income before taxes	184,341			21,027			205,368
Income tax expense	32,202			2,475			34,677
Net income	152,139			18,552			170,691
Less: Net income attributable to non-controlling interests in Consolidated Funds	20,512			(1,921		)	18,591
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	74,607			12,808			87,415
Net income attributable to Ares Management Corporation	57,020			7,665			64,685
Less: Series A Preferred Stock dividends paid	21,700			—			21,700
Net income attributable to Ares Management Corporation Class A common stockholders	35,320			7,665			42,985

Consolidated Statement of Comprehensive Income



	For the Year Ended December 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606

Net income	$	152,139		$	18,552		$	170,691
Other comprehensive income:
Foreign currency translation adjustments	(13,190		)	(470		)	(13,660		)
Total comprehensive income	138,949			18,082			157,031
Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds	15,575			(1,921		)	13,654
Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities	70,670			12,546			83,216
Comprehensive income attributable to Ares Management Corporation	$	52,704		$	7,457		$	60,161

Condensed Consolidated Statement of Cash Flows



	For the Year Ended December 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606

Cash flows from operating activities:
Net income	$	152,139		$	18,552		$	170,691
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Other assets	(49,789		)	(22,948		)	(72,737		)
Deferred taxes	(17,006		)	2,475			(14,531		)
Change in other liabilities and payables held at Consolidated Funds	137,545			1,921			139,466
Net cash used in operating activities	$	(1,417,102	)	$	—		(1,417,102		)

Equity-Based Compensation

The Company recognizes expense related to equity-based compensation in which it receives employee services in exchange for (a) equity instruments of the Company, (b) derivatives based on the Company’s Class A common stock or (c) liabilities that are based on the fair value of the Company’s equity instruments. Equity-based compensation expense represents expenses associated with restricted units, options and phantom shares granted under the Second Amended and Restated Ares Management Corporation 2014 Equity Incentive Plan (“the 2014 Equity Incentive Plan”).

Equity-based compensation expense for restricted units and options is determined based on the fair value of the respective equity award on the grant date and is recognized on a straight-line basis over the requisite service period, with a corresponding increase in additional paid-in-capital. Grant date fair value of the restricted units was determined to be the most recent closing price of shares of the Company's Class A common stock. Certain restricted units are subject to a lock-up provision that expires on the fifth anniversary of the IPO. The Company used Finnerty’s average strike-price put option model to estimate the discount associated with this lack of marketability. The Company estimated the grant date fair value of the options as of the grant date using Black-Scholes option pricing model. The phantom shares will be settled in cash and therefore represent a liability that is required to be remeasured at each reporting period. Fair value of phantom shares was determined to be the most recent closing price each reporting period.

The Company recognizes share-based award forfeitures in the period they occur as a reversal of previously recognized compensation expense. The reduction in compensation expense is determined based on the specific awards forfeited during that period.

The Company records deferred tax assets or liabilities for equity compensation plan awards based on deductions for income tax purposes of equity-based compensation recognized at the statutory tax rate in the jurisdiction in which the Company is expected to receive a tax deduction. In addition, differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the Company’s income tax returns are recorded as adjustments to additional paid-in-capital. If the tax deduction is less than the deferred tax asset, the calculated shortfall reduces the pool of excess tax benefits. If the pool of excess tax benefits is reduced to zero, then subsequent shortfalls would increase the income tax expense.

Equity-based compensation expense is presented within compensation and benefits in the Consolidated Statements of Operations.

Performance Related Compensation

The Company has agreed to pay a portion of the performance income earned from certain funds, including income from Consolidated Funds that is eliminated in consolidation, to investment and non-investment professionals. Depending on the nature of each fund, the performance income allocation may be structured as a fixed percentage subject to vesting based on continued employment or service (generally over a period of five years) or as an annual award that is fully vested for the particular year. Other limitations may apply to performance income allocation as set forth in the applicable governing documents of the fund or award documentation. Performance related compensation is recognized in the same period that the related performance income is recognized. Performance related compensation can be reversed during periods when there is a reversal of performance income that was previously recognized.

Performance related compensation payable represents the amounts payable to professionals who are entitled to a proportionate share of performance income in one or more funds. The liability is calculated based upon the changes to realized and unrealized performance income but not payable until the performance income itself is realized.

Net Realized and Unrealized Gain (Loss) on Investments

Realized gain (loss) occurs when the Company redeems all or a portion of its investment or when the Company receives cash income, such as dividends or distributions. Unrealized appreciation (depreciation) results from changes in the fair value of the underlying investment as well as from the reversal of previously recognized unrealized appreciation (depreciation) at the time an investment is realized. Realized and unrealized gains (losses) are presented together as net realized and unrealized gain (loss) on investments in the Consolidated Statements of Operations. Also, the Company’s share of the investee’s income and expenses for the Company’s equity method investments is included within net realized and unrealized gain (loss) on investments.

Interest and Dividend Income

Interest, dividends and other investment income are included in interest and dividend income. Interest income is recognized on an accrual basis to the extent that such amounts are expected to be collected using the effective interest method. Dividends and other investment income are recorded when the right to receive payment is established.

Foreign Currency

The U.S. dollar is the Company's functional currency; however, certain transactions of the Company may not be denominated in U.S. dollars. Foreign exchange revaluation arising from these transactions is recognized within other income (expense) in the Consolidated Statements of Operations. For the years ended December 31, 2018 and 2017, the Company recognized $0.1 million and $1.7 million, respectively, in transaction losses related to foreign currencies revaluation. For the year ended December 31, 2016, the Company recognized $16.2 million in transaction gain related to foreign currencies revaluation.

In addition, the combined and consolidated results include certain foreign subsidiaries and Consolidated Funds that use functional currencies other than the U.S. dollar. Assets and liabilities of these foreign subsidiaries are translated to U.S. dollars at the prevailing exchange rates as of the reporting date. Income and expense and gain and loss transactions denominated in foreign currencies are generally translated into U.S. dollars monthly using the average exchange rates during the respective transaction period. Translation adjustments resulting from this process are recorded to currency translation adjustment in accumulated other comprehensive income.

Income Taxes

The Company elected to be taxed as a corporation effective March 1, 2018 (the “Tax Election”). Prior to the Tax Election, the Company's share of carried interest and investment income generally were not subject to U.S. corporate income taxes. Upon the effectiveness of the Tax Election, all earnings allocated to the Company is subject to U.S. corporate income taxes. Prior to March 1, 2018, a significant portion of Company's share of carried interest and investment income flowed through to investors without being subject to entity level income taxes. Consequently, we did not reflect a provision for income taxes on such income except those for foreign, state, and local income taxes at the entity level. Beginning March 1, 2018, the Company's share of unrealized gains and income items became subject to U.S. corporate tax. A provision for corporate level income taxes imposed on these previously unrealized gains and income items as well as taxes imposed on certain subsidiaries’ earnings is included in the consolidated tax provision. Also included in the consolidated tax provision are entity level income taxes incurred by certain affiliated funds and co‑investment entities that are consolidated in these financial statements. The portion of consolidated earnings not allocated to the Company continues to flow through to owners of the Ares Operating Group entities without being taxed at the corporate level.

Income taxes are accounted for using the liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis, using tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred assets and liabilities of a change in tax rates is recognized as income, in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current and deferred tax liabilities are reported on a net basis in the Consolidated Statements of Financial Condition.

The Company analyzes its tax filing positions in all U.S. federal, state, local and foreign tax jurisdictions where it is required to file income tax returns for all open tax years in these jurisdictions. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized. The amount of unrecognized tax benefits (“UTBs”) is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax law, new regulations or interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination. Both accrued interest and penalties, where appropriate, related to UTBs are shown in general, administrative and other expenses in the Consolidated Statements of Operations.

Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties under GAAP. The Company reviews its tax positions quarterly and adjusts its tax balances as new legislation is passed or new information becomes available.

Income Allocation

Income (loss) before taxes is allocated based on each partner’s average daily ownership of the Ares Operating Group entities for each year presented.

Earnings Per Share

Basic earnings per share of Class A common stock is computed by dividing income available to Class A common stockholders by the weighted-average number shares of Class A common stock outstanding during the period. Income available to Class A common stockholders represents net income attributable to Ares Management Corporation after giving effect to the Series A Preferred stock dividends paid.

Diluted earnings per share of Class A common stock is computed by dividing income available to Class A common stockholders by the weighted-average number of shares of Class A common stock outstanding during the period, increased to include the number of additional shares of Class A common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding options to acquire shares of Class A common stock, unvested restricted units and AOG Units exchangeable for shares of Class A common stock. The effect of potentially dilutive securities is reflected in diluted earnings per share of Class A common stock using the more dilutive result of the treasury stock method or the two-class method.

Unvested share-based payment awards that contain non-forfeitable rights to dividend or dividend equivalents (whether paid or unpaid) are participating securities and are considered in the computation of earnings per share of Class A common stock pursuant to the two-class method. Unvested restricted units that pay dividend equivalents are deemed participating securities and are included in basic and diluted earnings per share of Class A common stock calculation under the two-class method.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other appreciation (depreciation) affecting stockholders' equity that, under GAAP, are excluded from net income (loss). The Company's other comprehensive income (loss) includes foreign currency translation adjustments.

Recent Accounting Pronouncements

The Company considers the applicability and impact of all ASUs issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The objective of the guidance in ASU 2016-02 is to increase transparency and comparability among organizations by recognizing lease assets and liabilities in the balance sheet and disclosing key information. ASU 2016-02 amends previous lease guidance, which required a lessee to categorize and account for leases as either operating leases or capital leases, and instead requires a lessee to recognize a lease liability and a right-of-use asset on the entity’s balance sheet for all leases with terms that exceed one year. The lease liability and right-of-use asset are to be carried at the present value of remaining expected future lease payments. The guidance should be applied using a modified retrospective approach. ASU 2016-02 is effective for public entities for annual reporting periods beginning after December 15, 2018 and interim periods within those reporting periods, with early adoption permitted. The Company has completed its compilation of all leases and right–of–use terms, and has preliminary concluded that the impact of the adoption of ASU 2016-02 is expected to be a recognition of right-of-use assets and lease liabilities of approximately between $135.0 million and $150.0 million on its Consolidated Statements of Financial Condition. The adoption is not expected to have a material impact on its Consolidated Statements of Operations or on other consolidated financial statements. The Company used the practical expedients provided in the guidance for its adoption of ASU 2016-02. The Company plans on using its Credit Facility rate as its incremental borrowing rate based on information available at the time of implementation of ASU 2016-02 as the Company leases do not provide an implicit rate.

In May 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The objective of the guidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs. ASU 2016-13 requires an entity to present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses. Available for sale and held to maturity debt securities are also required to be held net of an allowance for credit losses. The guidance should be applied using a modified retrospective approach. ASU 2016-13 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods. Early adoption is permitted for annual and quarterly reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Public Law No. 115-97 (the “Tax Cuts and Jobs Act”). Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. This ASU also requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The guidance should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company adopted ASU 2018-02 in the three months ended March 31, 2018. As a result of the adoption of ASU 2018-02, $1.2 million of stranded tax effects resulting from the Tax Cuts and Jobs Act were reclassified from accumulated other comprehensive income to shareholders' equity during the three months ended March 31, 2018.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). ASU 2018-15, amends ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This ASU aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, ASU 2018-15 amends ASC 350 to include in its scope implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a cloud computing arrangement that is considered a service contract. The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. In addition, this ASU states that a cloud computing arrangement that is a service contract does not give rise to a recognizable intangible asset because it is an executory service contract. Consequently, any costs incurred to implement a cloud computing arrangement that is a service contract would not be capitalized as an intangible asset since they do not form part of an intangible asset but instead would be characterized in the financial statements in the same manner as other service costs and assets related to service contracts such as prepaid expense. That is, these costs would be capitalized as part of the service contract and the related amortization would be consistent with the ongoing periodic costs of the underlying cloud computing arrangement. ASU 2018-15 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods, with early adoption permitted. The guidance may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. ASU 2018-17, amends ASC 810 to address whether indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. This is consistent with how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE. For example, if a decision maker or service provider owns a 20 percent interest in a related party and that related party owns a 40 percent interest in the legal entity being evaluated, the decision maker’s or service provider’s indirect interest in the VIE held through the related party under common control should be considered the equivalent of an eight percent direct interest for determining whether its fees are variable interests. ASU 2018-17 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods, with early adoption permitted. The guidance should be applied retrospectively. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the carrying value for the Company's intangible assets:



	Weighted Average Amortization Period as of	As of December 31,
	December 31, 2018	2018			2017
Management contracts	2.8 years	$	42,335		$	67,306
Client relationships	9.5 years	38,600			38,600
Trade name	3.5 years	3,200			3,200
Other	Less than 1 year	342			—
Intangible assets, gross		84,477			109,106
Less: accumulated amortization		(52,899		)	(68,641		)
Intangible assets, net		$	31,578		$	40,465

Amortization expense associated with intangible assets was $9.3 million, $17.9 million and $26.6 million for the years ended December 31, 2018, 2017 and 2016, respectively, and is presented within general, administrative and other expenses within the Consolidated Statements of Operations. During 2018, the Company removed $25.0 million of intangible assets that were fully amortized.

At December 31, 2018, future annual amortization of finite-lived intangible assets for the years 2019 through 2023 and thereafter is estimated to be:



Year	Amortization
2019	$	4,602
2020	4,071
2021	3,987
2022	3,192
2023	2,859
Thereafter	12,867
Total	$	31,578

Goodwill

The following table summarizes the carrying value of the Company's goodwill assets:



	Credit		Private Equity		Real Estate			Total
Balance as of December 31, 2016	$	32,196	$	58,600	$	52,928		$	143,724
Foreign currency translation	—		—		171			171
Balance as of December 31, 2017	32,196		58,600		53,099			143,895
Foreign currency translation	—		—		(109		)	(109		)
Balance as of December 31, 2018	$	32,196	$	58,600	$	52,990		$	143,786

There was no impairment of goodwill recorded during the years ended December 31, 2018, 2017 and 2016. The impact of foreign currency translation is reflected within other comprehensive income.

INVESTMENTS

12 Months Ended

Dec. 31, 2018

Investments in and Advances to Affiliates, Schedule of Investments [Abstract]

INVESTMENTS

The Company’s investments are comprised of the following:



					Percentage of total investments
	December 31,				December 31,
	2018		2017		2018		2017
Private Investment Partnership Interests and Other:
Equity method private investment partnership interests - principal (1)	$	357,655	$	340,354	27.0	%	19.7	%
Equity method - carried interest (1)	841,079		1,077,236		63.4	%	62.5	%
Equity method private investment partnership interests and other (held at fair value)	46,449		80,767		3.5	%	4.7	%
Equity method private investment partnership interests and other	18,846		29,420		1.4	%	1.7	%
Total private investment partnership interests and other	1,264,029		1,527,777		95.3	%	88.6	%
Collateralized loan obligations	20,824		195,158		1.6	%	11.3	%
Other fixed income	40,000		—		3.0	%	—	%
Collateralized loan obligations and other fixed income, at fair value	60,824		195,158		4.6	%	11.3	%
Common stock, at fair value	1,284		1,636		0.1	%	0.1	%
Total investments	$	1,326,137	$	1,724,571


(1)	Investment or portion of the investment is denominated in foreign currency and is translated into U.S. dollars at each reporting date.

Equity Method Investments

The Company’s equity method investments include investments that are not consolidated but over which the Company exerts significant influence. The Company evaluates each of its equity method investments to determine if any were significant as defined by guidance from the United States Securities and Exchange Commission. As of and for the years ended December 31, 2018, 2017 and 2016, no individual equity method investment held by the Company met the significance criteria. As such, the Company is not required to present separate financial statements for any of its equity method investments.

The following tables present summarized financial information for the Company's equity method investments, which are primarily funds managed by the Company, for the years ended December 31, 2018, 2017 and 2016.



	As of December 31, 2018 and the Year then Ended
	Credit			Private Equity			Real Estate			Total
Statement of Financial Condition
Investments	$	8,210,094		$	9,574,998		$	3,337,076		$	21,122,168
Total assets	8,799,290			9,785,312			3,763,907			22,348,509
Total liabilities	1,542,058			423,687			813,269			2,779,014
Total equity	7,257,232			9,361,625			2,950,638			19,569,495

Statement of Operations
Revenues	$	766,009		$	264,376		$	144,706		$	1,175,091
Expenses	(189,432		)	(85,801		)	(96,353		)	(371,586		)
Net realized and unrealized gain from investments	(67,477		)	(892,800		)	417,974			(542,303		)
Income tax expense	(2,526		)	(20,554		)	(4,075		)	(27,155		)
Net income	$	506,574		$	(734,779	)	$	462,252		$	234,047



	As of December 31, 2017 and the Year then Ended
	Credit			Private Equity			Real Estate			Total
Statement of Financial Condition
Investments	$	5,903,009		$	9,849,829		$	2,997,789		$	18,750,627
Total assets	6,435,364			10,033,790			3,174,149			19,643,303
Total liabilities	665,680			519,349			202,174			1,387,203
Total equity	5,769,684			9,514,441			2,971,975			18,256,100

Statement of Operations
Revenues	$	603,682		$	144,829		$	154,967		903,478
Expenses	(169,086		)	(91,803		)	(67,396		)	(328,285		)
Net realized and unrealized gain from investments	41,185			2,335,027			365,091			2,741,303
Income tax expense	(2,700		)	(31,359		)	(13,092		)	(47,151		)
Net income	$	473,081		$	2,356,694		$	439,570		$	3,269,345



	For the Year Ended December 31, 2016
	Credit			Private Equity			Real Estate			Total
Statement of Operations
Revenues	$	416,228		$	839,723		$	114,937		$	1,370,888
Expenses	(107,465		)	(134,573		)	(77,021		)	(319,059		)
Net realized and unrealized gain from investments	36,316			1,489,624			171,467			1,697,407
Income tax expense	(345		)	(27,587		)	(5,380		)	(33,312		)
Net income	$	344,734		$	2,167,187		$	204,003		$	2,715,924

The Company recognized net losses related to its equity method investments of $3.8 million for the year ended December 31, 2018. The Company recognized net gains related to its equity method investments of $78.3 million and $51.0 million for the years ended December 31, 2017 and 2016, respectively. The net gains and losses are included within principal investment income, net realized and unrealized gain on investments, and interest and dividend income within the Consolidated Statements of Operations.

The material assets of the Company's equity method investments are expected to generate either long-term capital appreciation and or interest income, the material liabilities are debt instruments collateralized by, or related to, the financing of the assets and net income is materially comprised of the changes in fair value of these net assets.

Investments of the Consolidated Funds

Investments held in the Consolidated Funds are summarized below:



	Fair value at				Fair value as a percentage of total investments at
	December 31,		December 31,		December 31,		December 31,
	2018		2017		2018		2017
United States:
Fixed income securities:
Consumer discretionary	$	1,675,863	$	1,295,732	22.0	%	23.2	%
Consumer staples	58,602		55,073		0.8	%	1.0	%
Energy	198,631		176,836		2.6	%	3.2	%
Financials	476,542		270,520		6.2	%	4.8	%
Healthcare, education and childcare	707,881		449,888		9.2	%	8.1	%
Industrials	396,767		370,926		5.2	%	6.6	%
Information technology	196,586		167,089		2.6	%	3.0	%
Materials	193,378		185,170		2.5	%	3.3	%
Telecommunication services	665,576		399,617		8.7	%	7.2	%
Utilities	80,233		77,102		1.0	%	1.4	%
Total fixed income securities (cost: $4,876,915 and $3,459,318 at December 31, 2018 and December 31, 2017, respectively)	4,650,059		3,447,953		60.8	%	61.8	%
Equity securities:
Equity securities	335		126		0.0	%	0.0	%
Total equity securities (cost: $354 and $2 at December 31, 2018 and December 31, 2017, respectively)	335		126		0.0	%	0.0	%
Partnership interests:
Partnership interests	271,447		232,332		3.5	%	4.2	%
Total partnership interests (cost: $210,000 and $190,000 at December 31, 2018 and December 31, 2017, respectively)	271,447		232,332		3.5	%	4.2	%



	Fair value at				Fair value as a percentage of total investments at
	December 31,		December 31,		December 31,		December 31,
	2018		2017		2018		2017
Europe:
Fixed income securities:
Consumer discretionary	$	946,434	$	604,608	12.3	%	10.8	%
Energy	16,840		2,413		0.2	%	0.0	%
Consumer staples	105,464		76,361		1.4	%	1.4	%
Financials	273,492		81,987		3.6	%	1.5	%
Healthcare, education and childcare	384,350		209,569		5.0	%	3.8	%
Industrials	124,469		145,706		1.6	%	2.6	%
Information technology	32,632		21,307		0.4	%	0.4	%
Materials	222,237		213,395		2.9	%	3.8	%
Telecommunication services	297,101		182,543		3.9	%	3.3	%
Utilities	14,453		—		0.2	%	—	%
Total fixed income securities (cost: $2,478,349 and $1,545,297 at December 31, 2018 and December 31, 2017, respectively)	2,417,472		1,537,889		31.5	%	27.6	%
Equity securities:
Healthcare, education and childcare	23,536		63,155		0.3	%	1.1	%
Total equity securities (cost: $56,154 and $67,198 at December 31, 2018 and December 31, 2017, respectively)	23,536		63,155		0.3	%	1.1	%
Asia and other:
Fixed income securities:
Consumer discretionary	1,686		2,008		0.0	%	0.0	%
Financials	5,878		12,453		0.1	%	0.2	%
Telecommunication services	19,753		21,848		0.3	%	0.4	%
Total fixed income securities (cost: $28,974 and $36,180 at December 31, 2018 and December 31, 2017, respectively)	27,317		36,309		0.4	%	0.6	%
Equity securities:
Consumer discretionary	41,820		59,630		0.5	%	1.1	%
Consumer staples	41,979		45,098		0.5	%	0.8	%
Healthcare, education and childcare	41,562		44,637		0.5	%	0.8	%
Industrials	47,238		16,578		0.6	%	0.3	%
Total equity securities (cost: $122,418 and $122,418 at December 31, 2018 and December 31, 2017, respectively)	172,599		165,943		2.1	%	3.0	%



	Fair value at				Fair value as a percentage of total investments at
	December 31,		December 31,		December 31,		December 31,
	2018		2017		2018		2017
Canada:
Fixed income securities:
Consumer discretionary	$	8,625	$	6,757	0.1	%	0.1	%
Consumer staples	33,722		15,351		0.4	%	0.3	%
Energy	503		33,715		0.0	%	0.6	%
Industrials	46,307		18,785		0.6	%	0.3	%
Telecommunication services	13,835		6,189		0.2	%	0.1	%
Total fixed income securities (cost: $109,084 and $80,201 at December 31, 2018 and December 31, 2017, respectively)	102,992		80,797		1.3	%	1.4	%
Equity securities:
Consumer discretionary	—		5,912		—	%	0.1	%
Total equity securities (cost: $0 and $17,202 at December 31, 2018 and December 31, 2017, respectively)	—		5,912		—	%	0.1	%
Australia:
Fixed income securities:
Consumer discretionary	5,973		10,863		0.1	%	0.2	%
Energy	1,435		1,563		0.0	%	0.0	%
Total fixed income securities (cost: $8,249 and $12,714 at December 31, 2018 and December 31, 2017, respectively)	7,408		12,426		0.1	%	0.2	%
Total fixed income securities	7,205,248		5,115,374		94.1	%	91.6	%
Total equity securities	196,470		235,136		2.4	%	4.2	%
Total partnership interests	271,447		232,332		3.5	%	4.2	%
Total investments, at fair value	$	7,673,165	$	5,582,842

At December 31, 2018 and 2017, no single issuer or investments, including derivative instruments and underlying portfolio investments of the Consolidated Funds, had a fair value that exceeded 5.0% of the Company’s total assets.

FAIR VALUE

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE

Financial Instrument Valuations

The valuation techniques used by the Company to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The valuation techniques applied to investments held by the Company and by the Consolidated Funds vary depending on the nature of the investment.

CLOs and CLO loan obligations: The fair value of CLOs held by the Company are estimated based on various third-party pricing services or broker quotes and are classified as Level III. The Company measures its CLO loan obligations of the Consolidated Funds by first determining whether the fair values of the financial assets or financial liabilities of its consolidated CLOs are more observable. The Company has determined that the fair value of the financial assets of the consolidated CLOs, which are mostly Level II assets, are more observable than the fair value of the financial liabilities of its consolidated CLOs, which are mostly Level III liabilities. As a result, the financial assets of consolidated CLOs are measured at fair value and the financial liabilities of the consolidated CLOs are measured in consolidation as: (1) the sum of the fair value of the financial assets, and the carrying value of any nonfinancial assets held temporarily, less (2) the sum of the fair value of any beneficial interests retained by the Company (other than those that represent compensation for services), and the Company’s carrying value of any beneficial interests that represent compensation for services. The resulting amount is allocated to the individual financial liabilities (other than the beneficial interests retained by the Company).

Corporate debt, bonds, bank loans and derivative instruments: The fair value of corporate debt, bonds, bank loans and derivative instruments is estimated based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs. These investments are generally classified as Level II. The Company obtains prices from independent pricing services that generally utilize broker quotes and may use various other pricing techniques, which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data. If management is only able to obtain a single broker quote, or utilizes a pricing model, such securities will generally be classified as Level III.

Equity and equity-related securities: Securities traded on a national securities exchange are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified as Level I. Securities that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs obtained by the Company from independent pricing services are classified as Level II.

Partnership interests: The Company generally values its investments using the NAV per share equivalent calculated by the investment manager as a practical expedient to determining an independent fair value or estimates based on various valuation models of third-party pricing services, as well as internal models. The Company does not categorize within the fair value hierarchy investments where fair value is measured using the net asset value per share practical expedient.

Certain investments of the Company are valued at NAV per share of the fund. In limited circumstances, the Company may determine, based on its own due diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, the Company will estimate the fair value in good faith and in a manner that it reasonably chooses, in accordance with the requirements of GAAP. As of December 31, 2018 and 2017, NAV per share represents the fair value of the investments for the Company and discounted cash flow analysis is used to determine the fair value for an investment held by the Consolidated Funds.

The substantial majority of the Company's private commingled funds are closed-ended, and accordingly, do not permit investors to redeem their interests other than in limited circumstances that are beyond the control of the Company, such as instances in which retaining the interest could cause the investor to violate a law, regulation or rule. Investors in open-ended and evergreen funds have the right to withdraw their capital, subject to the terms of the respective constituent documents, over periods ranging from one month to three years. In addition, separately managed investment vehicles for a single fund investor may allow such investors to terminate the fund at the discretion of the investor pursuant to the terms of the applicable constituent documents of such vehicle.

Fair Value of Financial Instruments Held by the Company and Consolidated Funds

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of December 31, 2018:



Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Collateralized loan obligations and other fixed income	$	—	$	—		$	60,824	$	—	$	60,824
Common stock and other equity securities	280		1,004			10,397		—		11,681
Partnership interests	—		—			35,192		861		36,053
Total investments, at fair value	280		1,004			106,413		861		108,558
Derivatives-foreign exchange contracts	—		1,066			—		—		1,066
Total assets, at fair value	$	280	$	2,070		$	106,413	$	861	$	109,624
Liabilities, at fair value
Derivatives-foreign exchange contracts			$	(869	)	$	—	$	—	$	(869	)
Total liabilities, at fair value	$	—	$	(869	)	$	—	$	—	$	(869	)



Financial Instruments of Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	316,850		$	1,649		$	318,499
Loans	—		6,340,440			546,309			6,886,749
Total fixed income investments	—		6,657,290			547,958			7,205,248
Equity securities	45,718		—			150,752			196,470
Partnership interests	—		—			271,447			271,447
Total investments, at fair value	45,718		6,657,290			970,157			7,673,165
Derivatives:
Foreign exchange contracts	—		1,881			—			1,881
Asset swaps - other	—		—			1,328			1,328
Total derivative assets, at fair value	—		1,881			1,328			3,209
Total assets, at fair value	$	45,718	$	6,659,171		$	971,485		$	7,676,374
Liabilities, at fair value
Foreign exchange contracts	$	—	$	(1,864	)	$	—		$	(1,864	)
Asset swaps - other	—		—			(648		)	(648		)
Loan obligations of CLOs	—		(6,678,091		)	—			(6,678,091		)
Total liabilities, at fair value	$	—	$	(6,679,955	)	$	(648	)	$	(6,680,603	)

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of December 31, 2017:



Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV(1)		Total
Assets, at fair value
Investments:
Fixed income - collateralized loan obligations	$	—	$	—		$	195,158	$	—	$	195,158
Equity securities - common stock	520		1,116			—		—		1,636
Partnership interests	—		—			44,769		35,998		80,767
Total investments, at fair value	520		1,116			239,927		35,998		277,561
Derivatives-foreign exchange contracts	—		498			—		—		498
Total assets, at fair value	$	520	$	1,614		$	239,927	$	35,998	$	278,059
Liabilities, at fair value
Derivatives-foreign exchange contracts	$	—	$	(2,639	)	$	—	$	—	$	(2,639	)
Total liabilities, at fair value	$	—	$	(2,639	)	$	—	$	—	$	(2,639	)



Financial Instruments of Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	82,151		$	7,041		$	89,192
Loans	—		4,755,335			260,848			5,016,183
Collateralized loan obligations	—		10,000			—			10,000
Total fixed income investments	—		4,847,486			267,889			5,115,375
Equity securities	72,558		—			162,577			235,135
Partnership interests	—		—			232,332			232,332
Total investments, at fair value	72,558		4,847,486			662,798			5,582,842
Derivatives:
Asset swaps - other	—		—			1,366			1,366
Total derivative assets, at fair value	—		—			1,366			1,366
Total assets, at fair value	$	72,558	$	4,847,486		$	664,164		$	5,584,208
Liabilities, at fair value
Asset swaps - other	$	—	$	—		$	(462	)	$	(462	)
Loan obligations of CLOs	—		(4,963,194		)	—			(4,963,194		)
Total liabilities, at fair value	$	—	$	(4,963,194	)	$	(462	)	$	(4,963,656	)

The following tables set forth a summary of changes in the fair value of the Level III measurements for the year ended December 31, 2018:



	Level III Assets
Level III Assets and Liabilities of the Company	Equity Securities		Fixed Income			Partnership Interests			Total
Balance, beginning of period	$	—	$	195,158		$	44,769		$	239,927
Transfer in	250		—						250
Purchases(1)	1,000		92,797			—			93,797
Sales/settlements(2)	—		(222,934		)	—			(222,934		)
Deconsolidation of fund	—		78			—			78
Realized and unrealized appreciation (depreciation), net	9,147		$	(4,275	)	(9,577		)	(4,705		)
Balance, end of period	$	10,397	$	60,824		$	35,192		$	106,413
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	9,147	$	(3,923	)	$	(9,577	)	$	(4,353	)



Level III Assets of Consolidated Funds	Equity Securities			Fixed Income			Partnership Interests			Derivatives, Net			Total
Balance, beginning of period	$	162,577		$	267,889		$	232,332		$	904		$	663,702
Additions(3)	506			46,829			—			—			47,335
Transfer in	—			86,995			—			—			86,995
Transfer out	—			(45,647		)	—			—			(45,647		)
Purchases(1)	203			492,142			25,000			—			517,345
Sales/settlements(2)	(21,141		)	(283,620		)	(5,000		)	(186		)	(309,947		)
Amortized discounts/premiums	—			380			—			(140		)	240
Realized and unrealized appreciation (depreciation), net	8,607			(17,010		)	19,115			102			10,814
Balance, end of period	$	150,752		$	547,958		$	271,447		$	680		$	970,837
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	8,686		$	(13,157	)	$	19,115		$	(57	)	$	14,587


(1)	Purchases include paid‑in‑kind interest and securities received in connection with restructurings.


(2)	Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.


(3)	Additions relate to net increase from consolidation of a new fund.

The following tables set forth a summary of changes in the fair value of the Level III measurements for the year ended December 31, 2017:



	Level III Assets								Level III Liabilities
Level III Assets and Liabilities of the Company	Fixed Income			Partnership Interests		Total			Contingent Considerations
Balance, beginning of period	$	89,111		$	33,410	$	122,521		$	22,156
Purchases(1)	143,579			169		143,748			—
Sales/settlements(2)	(39,047		)	—		(39,047		)	(1,000		)
Expired contingent considerations	—			—		—			(1,000		)
Realized and unrealized appreciation (depreciation), net	1,515			11,190		12,705			(20,156		)
Balance, end of period	$	195,158		$	44,769	$	239,927		$	—
Increase in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	2,752		$	11,359	$	14,111		$	—



Level III Assets of Consolidated Funds	Equity Securities			Fixed Income			Partnership Interests			Derivatives, Net			Total
Balance, beginning of period	$	130,690		$	242,253		$	171,696		$	(2,708	)	$	541,931
Transfer in	—			45,526			—			—			45,526
Transfer out	(6,581		)	(100,643		)	—			—			(107,224		)
Purchases(1)	6,691			240,723			88,000			—			335,414
Sales/settlements(2)	(3,701		)	(180,248		)	(45,000		)	(2,192		)	(231,141		)
Additions(3)				14,479						1,393			15,872
Amortized discounts/premiums	—			247			—			244			491
Realized and unrealized appreciation (depreciation), net	35,478			5,552			17,636			4,167			62,833
Balance, end of period	$	162,577		$	267,889		$	232,332		$	904		$	663,702
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	33,990		$	31		$	17,636		$	(705	)	$	50,952


(1)	Purchases include paid‑in‑kind interest and securities received in connection with restructurings.


(2)	Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.


(3)	Additions relates to a CLO that was refinanced and restructured that is now consolidated.

The Company recognizes transfers between the levels as of the beginning of the period. Transfers out of Level III were generally attributable to certain investments that experienced a more significant level of market activity during the period and thus were valued using observable inputs either from independent pricing services or multiple brokers. Transfers into Level III were generally attributable to certain investments that experienced a less significant level of market activity during the period and thus were only able to obtain one or fewer quotes from a broker or independent pricing service.

The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2018:



	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Equity securities	$	10,397	Transaction price(1)	N/A	N/A
Partnership interests	35,192		Discounted cash flow	Discount rate	8.0%
Collateralized loan obligations	20,824		Broker quotes and/or 3rd party pricing services	N/A	N/A
Other fixed income	40,000		Other	N/A	N/A
Total	$	106,413


(1)	Transaction price consists of securities recently purchased or restructured. The Company determined that there was no change to the valuation based on the underlying assumptions used at the closing of such transactions.

The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2017:



	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Partnership interests	$	44,769	Other	N/A	N/A
Collateralized loan obligations	195,158		Broker quotes and/or 3rd party pricing services	N/A	N/A
Total	$	239,927

The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of December 31, 2018:



	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	23,871		Enterprise value market multiple analysis	EBITDA multiple(1)	7.2x - 22.9x	7.7x
	41,562			Other	Net income multiple	38.8x	38.8x
					Illiquidity discount	25%	25%
	271,447			Discounted cash flow	Discount rate	20.8%	20.8%
	85,319			Transaction price(2)	N/A	N/A	N/A
Fixed income securities
	441,368			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	106,590			Income approach	Yield	1.0% - 14.8%	9.6%
Derivative instruments	1,328			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	971,485
Liabilities
Derivatives instruments	$	(648	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(648	)


(1)	“EBITDA” in the table above is a Non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.


(2)	Transaction price consists of securities recently purchased or restructured. The Company determined that there was no change to the valuation based on the underlying assumptions used at the closing of such transactions.

The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of December 31, 2017:



	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	63,155		Enterprise value market multiple analysis	EBITDA multiple(1)	2.7x	2.7x
	61,215			Other	Net income multiple Illiquidity discount	27.0x - 36.2x 25.0%	33.7x 25.0%
	126			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	38,081			Transaction price(2)	N/A	N/A	N/A
Partnership interests	232,332			Discounted cash flow	Discount rate	19.0%	19.0%
Fixed income securities
	222,413			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	45,243			Income approach	Yield	10.8% - 22.5%	12.1%
	233			Market approach (comparable companies)	EBITDA multiple(1)	6.5x	6.5x
Derivative instruments	1,366			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	664,164
Liabilities
Derivatives instruments	$	(462	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(462	)


(1)	“EBITDA” in the table above is a Non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.


(2)	Transaction price consists of securities recently purchased or restructured. The Company determined that there has been no change to the valuation based on the underlying assumptions used at the closing of such transactions.

The Company's investments valued using net asset value (“NAV”) have terms and conditions that do not allow for redemption without certain events or approvals that are outside the Company's control.



	As of December 31, 2018				As of December 31, 2017
	Fair Value		Unfunded Commitments		Fair Value		Unfunded Commitments
Non Ares managed fund investments(1)	$	861	$	—	$	35,998	$	16,492
Totals	$	861	$	—	$	35,998	$	16,492

(1) As of December 31, 2018 amount represents a private fund focused on insurance type investments. As of December 31, 2017 amount represents private funds focused on energy related investments that were sold during 2018.

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2018

DERIVATIVE FINANCIAL INSTRUMENTS

In the normal course of business, the Company and the Consolidated Funds are exposed to certain risks relating to their ongoing operations and use various types of derivative instruments primarily to mitigate against credit and foreign exchange risk. The derivative instruments used by the Company and Consolidated Funds include warrants, currency options, interest rate swaps, credit default swaps and forward contracts. The derivative instruments are not designated as hedging instruments under the accounting standards for derivatives and hedging. The Company recognizes all of its derivative instruments at fair value as either assets or liabilities in the Consolidated Statements of Financial Condition within other assets or accounts payable, accrued expenses and other liabilities, respectively.

By using derivatives, the Company and the Consolidated Funds are exposed to counterparty credit risk if counterparties to the derivative contracts do not perform as expected. If a counterparty fails to perform, the Company's counterparty credit risk is equal to the amount reported as a derivative asset in the Consolidated Statements of Financial Condition. The Company minimizes counterparty credit risk through credit approvals, limits, monitoring procedures, executing master netting arrangements and obtaining collateral, where appropriate.

To the extent the master netting arrangements and other criteria meet the applicable requirements, which includes determining the legal enforceability of the arrangements, the Company may choose to offset the derivative assets and liabilities in the same currency by specific derivative type, or in the event of default by the counterparty, offset derivative assets and liabilities with the same counterparty. The Company generally presents derivative and other financial instruments on a gross basis within the Consolidated Statements of Financial Condition, with certain instruments subject to enforceable master netting arrangements that could allow for the derivative and other financial instruments to be offset. The Consolidated Funds present derivative and other financial instruments on a net basis. This election is determined at management's discretion on a fund by fund basis. The Company has retained each Consolidated Fund's presentation upon consolidation.

Qualitative Disclosures of Derivative Financial Instruments

Derivative instruments are marked-to-market daily based upon quotations from pricing services or by the Company and the change in value, if any, is recorded as an unrealized gain (loss) within net realized and unrealized gain (loss) on investments in the Consolidated Statements of Operations. Upon settlement of the instrument, the Company records the realized gain (loss) within net realized and unrealized gain (loss) on investments in the Consolidated Statements of Operations.

Significant derivative instruments utilized by the Company and the Consolidated Funds during the reporting periods presented include the following:

Forward Foreign Currency Contracts: The Company and the Consolidated Funds enter into foreign currency forward exchange contracts to hedge against foreign currency exchange rate risk on certain non-U.S. dollar denominated cash flows. When entering into a forward currency contract, the Company and the Consolidated Funds agree to receive and/or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed-upon future date. Forward foreign currency contracts involve elements of market risk in excess of the amounts reflected in the Consolidated Statements of Financial Condition. The Company and the Consolidated Funds bear the risk of an unfavorable change in the foreign exchange rate underlying the forward foreign currency contract. In addition, the potential inability of the counterparties to meet the terms of their contracts poses a risk to the Company and the Consolidated Funds.

Interest Rate Swaps: The Company and the Consolidated Funds enter into interest rate swap contracts to mitigate their interest rate risk exposure to higher floating interest rates. Interest rate swaps represent an agreement between two counterparties to exchange cash flows based on the difference in two interest rates, applied to the notional principal amount for a specified period. The payment flows are generally netted, with the difference being paid by one party to the other. The interest rate swap contracts effectively mitigate the Company and the Consolidated Funds’ exposure to interest rate risk by converting a portion of the Company and the Consolidated Funds’ floating rate debt to a fixed rate basis.

Asset Swap: The Consolidated Funds enter into asset swap contracts to hedge against foreign currency exchange rate risk on certain non-Euro denominated loans. Assets swap contracts provide the Consolidated Funds with the opportunity to purchase or sell an underlying asset that are not denominated in Euros and a pre-agreed exchange rate and receive Euro interest payments from the swap counter party in exchange for non-Euro interest payments pegged to the currency of the underlying loan and applicable interest rates. The swap contracts can be optionally cancelled at any time, normally due the disposal or redemption of the underlying asset, however in the absence of sale or redemption the swap contracts maturity matches that of the underlying asset. By entering into asset swap contracts to exchange interest payments and principal on equally valued loans denominated in a different currency than that of the underlying assets the Consolidated Funds can mitigate the risk of exposure to foreign currency fluctuations. Generally, the fair value of asset swap contracts are calculated using a model that utilizes the spread between the fair value of the underlying asset and the exercise value of the contract, as well as any other relevant inputs. Broker quotes may also be used to calculate the fair value of asset swaps, if available.

Quantitative Disclosures of Derivative Financial Instruments

The following tables identify the fair value and notional amounts of derivative contracts by major product type on a gross basis for the Company and the Consolidated Funds as of December 31, 2018 and 2017. These amounts may be offset (to the extent that there is a legal right to offset) and presented on a net basis within other assets or accounts payable, accrued expenses and other liabilities in the Consolidated Statements of Financial Condition:



	As of December 31, 2018								As of December 31, 2017
	Assets				Liabilities				Assets				Liabilities
The Company	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign exchange contracts	$	33,026	$	1,066	$	27,140	$	869	$	13,724	$	498	$	51,026	$	2,639
Total derivatives, at fair value	$	33,026	$	1,066	$	27,140	$	869	$	13,724	$	498	$	51,026	$	2,639



	As of December 31, 2018								As of December 31, 2017
	Assets				Liabilities				Assets				Liabilities
Consolidated Funds	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign exchange contracts	$	1,881	$	1,881	$	1,881	$	1,864	$	—	$	—	$	—	$	—
Asset swap - other	5,226		1,328		2,605		648		5,363		1,366		1,840		462
Total derivatives, at fair value	7,107		3,209		4,486		2,512		5,363		1,366		1,840		462


(1)	Represents the total contractual amount of derivative assets and liabilities outstanding.

The following tables present a summary of net realized gains (losses) and unrealized appreciation (depreciation) on the Company's derivative instruments, which are included within net realized and unrealized gain (loss) on investments in the Consolidated Statements of Operations, for the years ended December 31, 2018, 2017 and 2016:



	For the Year Ended December 31,
The Company	2018			2017			2016
Net realized gain (loss) on derivatives
Interest rate contracts—Swaps	$	—		$	—		$	(337	)
Foreign currency forward contracts	(1,197		)	(1,830		)	1,783
Net realized gain (loss) on derivatives	$	(1,197	)	$	(1,830	)	$	1,446
Net change in unrealized appreciation (depreciation) on derivatives
Interest rate contracts—Swaps	$	—		$	—		$	214
Foreign currency forward contracts	2,338			(5,299		)	2,008
Net change in unrealized appreciation (depreciation) on derivatives	$	2,338		$	(5,299	)	$	2,222



	For the Year Ended December 31,
Consolidated Funds	2018			2017			2016
Net realized gain (loss) on derivatives of Consolidated Funds
Foreign currency forward contracts	$	96		$	(181	)	$	(1,008	)
Asset swap - other	(795		)	903			(1,322		)
Net realized gain (loss) on derivatives of Consolidated Funds	$	(699	)	$	722		$	(2,330	)
Net change in unrealized appreciation (depreciation) on derivatives of Consolidated Funds
Equity contracts: Warrants(1)	$	—		$	—		$	26
Foreign currency forward contracts	15			(529		)	900
Asset swap - other	(183		)	2,338			7,685
Net change in unrealized appreciation (depreciation) on derivatives of Consolidated Funds	$	(168	)	$	1,809		$	8,611


(1)	Realized and unrealized gains (losses) on warrants are also reflected within investments of Consolidated Funds.

The table below sets forth the rights of offset and related arrangements associated with the Company's derivative and other financial instruments as of December 31, 2018 and 2017. The column titled "Gross Amounts Not Offset in the Statement of Financial Position" in the table below relates to derivative instruments that are eligible to be offset in accordance with applicable accounting guidance but for which management has elected not to offset in the Consolidated Statements of Financial Condition.



									Gross Amount Not Offset in the Statement of Financial Position
The Company as of December 31, 2018	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in Assets (Liabilities)		Net Amounts of Assets (Liabilities) Presented			Financial Instruments			Net Amount
Assets:
Derivatives	$	1,066		$	—	$	1,066		$	(869	)	$	197
Liabilities:
Derivatives	(869		)	—		(869		)	869			—
Net derivative assets	$	197		$	—	$	197		$	—		$	197



									Gross Amount Not Offset in the Statement of Financial Position
The Company as of December 31, 2017	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in Assets (Liabilities)		Net Amounts of Assets (Liabilities) Presented			Financial Instruments			Net Amount
Assets:
Derivatives	$	498		$	—	$	498		$	(498	)	$	—
Liabilities:
Derivatives	(2,639		)	—		(2,639		)	498			(2,141		)
Net derivative liabilities	$	(2,141	)	$	—	$	(2,141	)	$	—		$	(2,141	)

The table below sets forth the rights of offset and related arrangements associated with the Consolidated Funds' derivative and other financial instruments as of December 31, 2018 and 2017. The column titled "Gross Amounts Not Offset in the Statement of Financial Position" in the table below relates to derivative instruments that are eligible to be offset in accordance with applicable accounting guidance but for which management has elected not to offset in the Consolidated Statements of Financial Condition.



										Gross Amounts Not Offset in the Statement of Financial Position
Consolidated Funds as of December 31, 2018	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in Assets (Liabilities)			Net Amounts of Assets (Liabilities) Presented			Financial Instruments		Net Amount
Assets:
Derivatives	$	8,942		$	(5,733	)	$	3,209		$	—	$	3,209
Liabilities:
Derivatives	(8,245		)	5,733			(2,512		)	—		(2,512		)
Net derivatives assets	$	697		$	—		$	697		$	—	$	697



										Gross Amounts Not Offset in the Statement of Financial Position
Consolidated Funds as of December 31, 2017	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in Assets (Liabilities)			Net Amounts of Assets (Liabilities) Presented			Financial Instruments		Net Amount
Assets:
Derivatives	$	1,750		$	(384	)	$	1,366		$	—	$	1,366
Liabilities:
Derivatives	(846		)	384			(462		)	—		(462		)
Net derivatives liabilities	$	904		$	—		$	904		$	—	$	904

DEBT

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

DEBT

The following table summarizes the Company’s and its subsidiaries’ debt obligations:



					As of December 31, 2018				As of December 31, 2017
	Debt Origination Date	Maturity	Original Borrowing Amount		Carrying Value		Interest Rate		Carrying Value		Interest Rate
Credit Facility(1)	Revolver	2/24/2022	N/A		$	235,000	4.00	%	$	210,000	3.09%
Senior Notes(2)	10/8/2014	10/8/2024	$	250,000	245,952		4.21	%	245,308		4.21%
2015 Term Loan(3)	9/2/2015	7/29/2026	$	—	—		N/A		35,037		2.86%
2016 Term Loan(4)	12/21/2016	1/15/2029	$	—	—		N/A		25,948		3.08%
2017 Term Loan A(4)	3/22/2017	1/22/2028	$	—	—		N/A		17,407		2.90%
2017 Term Loan B(4)	5/10/2017	10/15/2029	$	—	—		N/A		35,062		2.90%
2017 Term Loan C(4)	6/22/2017	7/30/2029	$	—	—		N/A		17,078		2.88%
2017 Term Loan D(4)	11/16/2017	10/15/2030	$	—	—		N/A		30,336		2.77%
Total debt obligations					$	480,952			$	616,176

(1)

The AOG entities are borrowers under the Credit Facility, which provides a $1.065 billion revolving line of credit. It has a variable interest rate based on LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. As of December 31, 2018, base rate loans bear interest calculated based on the base rate plus 0.50% and the LIBOR rate loans bear interest calculated based on LIBOR plus 1.50%. The unused commitment fee is 0.20% per annum. There is a base rate and LIBOR floor of zero.


(2)	The Senior Notes were issued in October 2014 by Ares Finance Co. LLC, a subsidiary of the Company, at 98.268% of the face amount with interest paid semi-annually. The Company may redeem the Senior Notes prior to maturity, subject to the terms of the indenture.

(3)

The 2015 Term Loan was entered into in August 2015 by a subsidiary of the Company that acted as a manager to a CLO. The 2015 Term Loan was secured by collateral in the form of CLO senior tranches owned by the Company. To the extent the assets were not sufficient to cover the Term Loan, there was no further recourse to the Company to fund or repay the remaining balance. Interest was paid quarterly, and the Company also paid a fee of 0.025% of a maximum investment amount.

(4)

The 2016 and 2017 Term Loans (the “Term Loans”) were entered into by a subsidiary of the Company that acted as a manager to CLOs. The Term Loans were secured by collateral in the form of CLO senior tranches and subordinated notes owned by the Company. Collateral associated with one of the Term Loans could have been used to satisfy outstanding liabilities of another Term Loan should the collateral fall short. To the extent the assets associated with these Term Loans were not sufficient to cover the Term Loans, there was no further recourse to the Company to fund or repay the remaining balance. Interest was paid quarterly, and the Company also paid a fee of 0.03% of a maximum investment amount.

As of December 31, 2018, the Company and its subsidiaries were in compliance with all covenants under the Credit Facility, Senior Notes and Term Loan obligations.

Subsequent to the removal of the U.S. risk retention requirements related to open–market CLO managers, the Company sold $219.3 million of its CLO securities and used the proceeds to pay off the related 2015-2017 Term Loans and settle a repurchase agreement of $206.0 million during the year ended December 31, 2018. There was an immaterial loss on the debt extinguishment.

The Company typically incurs and pays debt issuance costs when entering into a new debt obligation or when amending an existing debt agreement. Debt issuance costs related to the Company's Senior Notes and Term Loans are recorded as a reduction of the corresponding debt obligation, and debt issuance costs related to the Credit Facility are included in other assets in the Consolidated Statements of Financial Condition. All debt issuance costs are amortized over the term of the related obligation.

The following table shows the activity of the Company's debt issuance costs:



	Credit Facility			Senior Notes			Term Loans			Repurchase Agreement Loan
Unamortized debt issuance costs as of December 31, 2016	$	4,800		$	1,803		$	526		$	—
Debt issuance costs incurred	3,394			—			733			—
Amortization of debt issuance costs	(1,651		)	(232		)	(88		)	—
Unamortized debt issuance costs as of December 31, 2017	6,543			1,571			1,171			—
Debt issuance costs incurred	—			—			98			259
Amortization of debt issuance costs	(1,571		)	(237		)	(56		)	(7		)
Debt extinguishment expense	—			—			(1,213		)	(252		)
Unamortized debt issuance costs as of December 31, 2018	$	4,972		$	1,334		$	—		$	—

Loan Obligations of the Consolidated CLOs

Loan obligations of the Consolidated Funds that are CLOs (the "Consolidated CLOs") represent amounts due to holders of debt securities issued by the Consolidated CLOs. The Company measures the loan obligations of the Consolidated CLOs using the fair value of the financial assets of its Consolidated CLOs.

As of December 31, 2018 and 2017, the following loan obligations were outstanding and classified as liabilities of the Consolidated CLOs:



	As of December 31, 2018					As of December 31, 2017
	Loan Obligations		Fair Value of Loan Obligations		Weighted Average Remaining Maturity In Years	Loan Obligations		Fair Value of Loan Obligations		Weighted Average Remaining Maturity In Years
Senior secured notes(1)	$	6,642,616	$	6,391,643	10.94	$	4,801,582	$	4,776,883	10.57
Subordinated notes(2)	455,333		286,448		11.21	276,169		186,311		11.25
Total loan obligations of Consolidated CLOs	$	7,097,949	$	6,678,091		$	5,077,751	$	4,963,194


(1)	Original borrowings under the senior secured notes totaled $6.6 billion, with various maturity dates ranging from December 2025 to October 2031. The weighted average interest rate as of December 31, 2018 was 4.93%.


(2)	Original borrowings under the subordinated notes totaled $455.3 million, with various maturity dates ranging from December 2025 to October 2031. They do not have contractual interest rates, but instead receive distributions from the excess cash flows generated by each Consolidated CLO.

Loan obligations of the Consolidated CLOs are collateralized by the assets held by the Consolidated CLOs, consisting of cash and cash equivalents, corporate loans, corporate bonds and other securities. The assets of one Consolidated CLO may not be used to satisfy the liabilities of another Consolidated CLO. Loan obligations of the Consolidated CLOs include floating rate notes, deferrable floating rate notes, revolving lines of credit and subordinated notes. Amounts borrowed under the notes are repaid based on available cash flows subject to priority of payments under each Consolidated CLO’s governing documents. Based on the terms of these facilities, the creditors of the facilities have no recourse to the Company.

Credit Facilities of the Consolidated Funds

Certain Consolidated Funds maintain credit facilities to fund investments between capital drawdowns. These facilities generally are collateralized by the unfunded capital commitments of the Consolidated Funds’ limited partners, bear an annual commitment fee based on unfunded commitments and contain various affirmative and negative covenants and reporting obligations, including restrictions on additional indebtedness, liens, margin stock, affiliate transactions, dividends and distributions, release of capital commitments and portfolio asset dispositions. The creditors of these facilities have no recourse to the Company. Credit facilities of the Consolidated Funds are reflected at cost in the Consolidated Statements of Financial Condition. As of December 31, 2018 and 2017, the Consolidated Funds were in compliance with all financial and non‑financial covenants under such credit facilities.

The Consolidated Funds had the following revolving bank credit facilities and term loans outstanding as of December 31, 2018 and 2017:



				As of December 31, 2018				As of December 31, 2017
Type of Facility	Maturity Date	Total Capacity		Carrying Value(1)		Effective Rate		Carrying Value(1)		Effective Rate
Credit Facilities:
	1/1/2023	$	18,000	$	14,953	3.98%		$	12,942	2.88%
	6/29/2019	45,800		43,624		1.55%	(2)	48,042		1.55%	(2)
	3/7/2019	71,500		71,500		3.47%		71,500		2.89%
	6/30/2021	200,375		38,844		1.00%	(2)	—		—%
	7/15/2028	75,000		39,000		4.75%		—		—%
Revolving Term Loan	8/19/2019	11,429		—		—%		5,714		5.86%
	1/31/2022	1,900		1,363		8.07%		—		—%
Total borrowings of Consolidated Funds				$	209,284			$	138,198


(1)	The fair values of the borrowings approximate the carrying value as the interest rate on the borrowings is a floating rate.


(2)	The effective rate is based on the three month EURIBOR or zero, whichever is higher, plus an applicable margin.

OTHER ASSETS

12 Months Ended

Dec. 31, 2018

Other Assets [Abstract]

OTHER ASSETS

The components of other assets as of December 31, 2018 and 2017 were as follows:



	As of December 31,
	2018		2017
Other assets of the Company:
Accounts and interest receivable	$	11,624	$	3,025
Fixed assets, net	65,069		61,151
Incentive fees receivable	49,697		22,611
Other assets	33,760		43,554
Total other assets of the Company	$	160,150	$	130,341
Other assets of Consolidated Funds:
Income tax and other receivables	4,456		1,989
Total other assets of Consolidated Funds	$	4,456	$	1,989

Fixed Assets, Net

Fixed assets included the following as of December 31, 2018 and 2017:



	Year Ended December 31,
	2018			2017
Furniture	$	9,536		$	9,303
Office and computer equipment	21,671			19,164
Internal-use software	29,005			19,055
Leasehold improvements	53,494			52,021
Fixed assets, at cost	113,706			99,543
Less: accumulated depreciation	(48,637		)	(38,392		)
Fixed assets, net	$	65,069		$	61,151

For the years ended December 31, 2018, 2017 and 2016, depreciation expense was $16.1 million, $12.6 million and $8.2 million, respectively, which is included in general, administrative and other expense in the Consolidated Statements of Operations. During 2018, the Company disposed of approximately $5.6 million of fixed assets that were fully depreciated.

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Indemnification Arrangements

Consistent with standard business practices in the normal course of business, the Company enters into contracts that contain indemnities for affiliates of the Company, persons acting on behalf of the Company or such affiliates and third parties. The terms of the indemnities vary from contract to contract and the Company’s maximum exposure under these arrangements cannot be determined and has not been recorded in the Consolidated Statements of Financial Condition. As of December 31, 2018, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

Commitments

As of December 31, 2018 and 2017, the Company had aggregate unfunded commitments of $267.6 million and $285.7 million, respectively, including commitments to both non-consolidated funds and Consolidated Funds. There were no unfunded commitments to funds not managed by the Company as of December 31, 2018. Total unfunded commitments included $16.5 million in commitments to funds not managed by the Company as of December 31, 2017.

In connection with the acquisition of EIF, contingent consideration was payable to EIF’s former membership interest holders if certain funds and co-investment vehicles met certain revenue and fee paying commitment targets during their commitment period. Since the revenue and fee paying targets were not met, the liability associated with the EIF contingent consideration, which was $20.3 million as of December 31, 2016, was reversed in the first quarter of 2017, resulting in a $20.3 million gain recorded within other income on the Company's Consolidated Statements of Operations.

ARCC Fee Waiver

In conjunction with the ARCC-ACAS Transaction, the Company agreed to waive up to $10 million per quarter of ARCC's Part I Fees for ten calendar quarters, which began in the second quarter of 2017. ARCC Part I Fees will only be waived to the extent they are paid. If ARCC Part I Fees are less than $10 million in any single quarter, the shortfall will not carryover to the subsequent quarters. As of December 31, 2018, there are three remaining quarters as part of the fee waiver agreement, with a maximum of $30 million in potential waivers. ARCC Part I Fees are reported net of the fee waiver.

Operating Leases

The Company leases certain property, computer and communication equipment and other equipment through operating leases. Some of the operating lease agreements are generally subject to escalation provisions on base rental payments, as well as certain costs incurred by the property owner and are recognized on a straight-line basis over the term of the lease agreement. Rent expense includes base contractual rent. Rent expense for the years ended December 31, 2018, 2017 and 2016 was $30.5 million, $26.1 million and $26.4 million, respectively, and is recorded within general, administrative and other expenses in the Consolidated Statements of Operations. The leases expire in various years ranging from 2019 to 2030.

The future minimum commitments for the Company's operating leases are as follows:



2019	$	32,039
2020	26,799
2021	20,765
2022	22,502
2023	20,290
Thereafter	45,141
Total	$	167,536

Guarantees

The Company guaranteed loans provided to certain professionals to support these professionals' investments in affiliated co-investment entities, permitting these professionals to invest alongside the Company and its investors in the funds managed by the Company. The total committed and outstanding loan balances were not material as of December 31, 2018 and 2017.

Performance Income

Generally, if at the termination of a fund (and increasingly at interim points in the life of a fund), the fund has not achieved investment returns that (in most cases) exceed the preferred return threshold or (in all cases) the general partner receives net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Company will be obligated to repay carried interest that was received by the Company in excess of the amounts to which the Company is entitled. This contingent obligation is normally reduced by income taxes paid by the Company related to its carried interest.

At December 31, 2018 and 2017, if the Company assumed all existing investments were worthless, the amount of performance income subject to potential repayment, net of tax, which may differ from the recognition of revenue, would have been approximately $469.0 million and $476.1 million, respectively, of which approximately $364.4 million and $370.0 million, respectively, is reimbursable to the Company by certain professionals. Management believes the possibility of all of the investments becoming worthless is remote. As of December 31, 2018, if the funds were liquidated at their fair values, there would be $0.4 million of repayment obligations, and accordingly, the Company recorded a contingent repayment liability as of December 31, 2018 which is presented on a net basis within carried interest allocation on the Company's Consolidated Statements of Financial Condition. As of December 31, 2017, if the funds were liquidated at their fair values, there would be no repayment obligation, and accordingly, the Company did not record a contingent repayment liability as of December 31, 2017.

Litigation

From time to time, the Company is named as a defendant in legal actions relating to transactions conducted in the ordinary course of business. Although there can be no assurance of the outcome of such legal actions, in the opinion of management, the Company does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial condition or cash flows.

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2018

RELATED PARTY TRANSACTIONS

Substantially all of the Company’s revenue is earned from its affiliates, including management fees, carried interest allocation, incentive fees, and administrative expense reimbursements. The related accounts receivable are included within due from affiliates within the Consolidated Statements of Financial Condition, except that accrued carried interest allocation and incentive fees receivable, which are predominantly due from affiliated funds, are presented separately within investments and other assets, respectively, within the Consolidated Statements of Financial Condition.

The Company has investment management agreements with Ares Funds that it manages. In accordance with these agreements, these Ares Funds may bear certain operating costs and expenses which are initially paid by the Company and subsequently reimbursed by the Ares Funds.

The Company also has entered into agreements with related parties to be reimbursed for its expenses incurred for providing administrative services to such related parties, including ARCC, ACRE, ARDC, Ivy Hill Asset Management, L.P., ACF FinCo I L.P and CION Ares Diversified Credit Fund.

Employees and other related parties may be permitted to participate in co-investment vehicles that generally invest in Ares funds alongside fund investors. Participation is limited by law to individuals who qualify under applicable securities laws. These co-investment vehicles generally do not require these individuals to pay management or incentive fees.

Performance income the Company earns from the funds can be distributed to professionals or their related entities on a current basis, subject to repayment by the subsidiary of the Company that acts as general partner of the relevant fund in the event that certain specified return thresholds are not ultimately achieved. The professionals have personally guaranteed, subject to certain limitations, the obligations of these subsidiaries in respect of this general partner obligation. Such guarantees are several, and not joint and are limited to distributions received by the relevant recipient.

The Company considers its professionals and non-consolidated funds to be affiliates. Amounts due from and to affiliates were composed of the following:



	As of December 31,
	2018		2017
Due from affiliates:
Management fees receivable from non-consolidated funds	$	151,455	$	126,506
Payments made on behalf of and amounts due from non-consolidated funds and employees	47,922		39,244
Due from affiliates—Company	$	199,377	$	165,750
Amounts due from portfolio companies and non-consolidated funds	$	17,609	$	15,884
Due from affiliates—Consolidated Funds	$	17,609	$	15,884
Due to affiliates:
Management fee rebate payable to non-consolidated funds	$	2,105	$	5,213
Management fees received in advance	5,491		1,729
Tax receivable agreement liability	24,927		3,503
Undistributed carried interest and incentive fees(1)	31,162		24,542
Payments made by non-consolidated funds on behalf of and amounts due from the Company	18,726		4,197
Due to affiliates—Company	$	82,411	$	39,184


(1)	Prior year amount of $24.5 million was reclassified from performance related compensation payable to due to affiliates to conform with current year presentation.

Due from Ares Funds and Portfolio Companies

In the normal course of business, the Company pays certain expenses on behalf of Consolidated Funds and non-consolidated funds for which it is reimbursed. Amounts advanced on behalf of Consolidated Funds are eliminated in consolidation. Certain expenses initially paid by the Company, primarily professional services, travel and other costs associated with particular portfolio company holdings are subject to reimbursement by the portfolio companies. The Company reimbursed ARCC approximately $0.6 million for certain recurring rent and utilities incurred by ARCC during the first quarter of 2018. In addition, in the quarter ended June 30, 2018, the Company reimbursed ARCC approximately $2.2 million, $3.0 million, $3.2 million and $2.9 million of rent and utilities for the years ended 2017, 2016, 2015 and 2014, respectively, for an aggregate reimbursement to ARCC of $11.8 million. Beginning April 1, 2018, the Company directly incurs these expenses.

ARCC Investment Advisory and Management Agreement

In connection with ARCC's board approval of the modification of the asset coverage requirement applicable to senior securities from 200% to 150% effective on June 21, 2019, (unless ARCC receives earlier stockholder approval), the investment advisory and management agreement will be amended prior to June 21, 2019 (or such earlier date) to reduce the annual base management fee paid to the Company from 1.5% to 1.0% on all assets financed using leverage over 1.0 times debt to equity.

Transaction Support Expense

On January 3, 2017, ARCC and American Capital, Ltd. (“ACAS”) consummated a merger transaction valued at approximately $4.2 billion (the "ARCC-ACAS Transaction"). To support the ARCC-ACAS Transaction, the Company, through its subsidiary Ares Capital Management LLC, which serves as the investment adviser to ARCC, paid $275.2 million to ACAS shareholders in accordance with the terms and conditions set forth in the merger agreement.

INCOME TAXES

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

Effective March 1, 2018, the Company has been treated as a corporation for U.S. federal and state income tax purposes. Upon the effectiveness of the Tax Election, all earnings allocated to the Company is subject to U.S. federal, state and local income taxes and certain of its foreign subsidiaries are subject to foreign income taxes (for which a foreign tax credit can generally offset U.S. corporate taxes imposed on the same income). Prior to March 1, 2018, a substantial portion of the Company's share of carried interest and investment income flowed through to investors without being subject to entity level income taxes. Consequently, we did not reflect a provision for income taxes on such income except those for foreign, state and local income taxes incurred at the entity level. Beginning March 1, 2018, the Company's share of unrealized gains and income items became subject to U.S. corporate tax.

The Company’s effective income tax rate is dependent on many factors, including the estimated nature of many amounts and the mix of revenues and expenses between U.S. corporate subsidiaries that are subject to income taxes and those subsidiaries that are not. Additionally, the Company’s effective tax rate is influenced by the amount of income tax provision recorded for any affiliated funds and co-investment entities that are consolidated in these financial statements. Consequently, the effective income tax rate is subject to significant variation from period to period.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by U.S. federal, state, local and foreign tax authorities. With limited exceptions, the Company is no longer subject to income tax audits by taxing authorities for any years before 2015. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s consolidated financial statements.

On December 22, 2017, the Tax Cuts and Jobs Act ("TCJA") was enacted into law creating significant and material updates to the Internal Revenue Code. The most significant change is a decrease of the corporate tax rate from 35% to 21%. The reduction in the corporate tax rate is effective for tax years beginning on or after January 1, 2018. The Company estimated the tax effects of the TCJA in its fourth quarter 2017 tax provision (the enactment date of the TCJA) in accordance with its understanding of the changes and guidance available under Staff Accounting Bulletin (“SAB”) 118. Under SAB 118, companies had a measurement period of up to one year to further analyze and quantify the impacts of tax reform. The measurement period ended on December 22, 2018 and although management no longer deems the provision recorded in 2017 to be an estimate, the income tax effects of the TCJA will continued to be monitored as additional guidance is published.

The provision for income taxes attributable to the Company and the Consolidated Funds, consisted of the following for the years ended December 31, 2018, 2017 and 2016. Supplemental information on an unaudited pro forma basis assumes that the Company's election to be taxed as a corporation for U.S. federal income tax purposes was effective for the years ended December 31, 2017 and 2016.



	Year Ended December 31,
Provision for Income Taxes	2018			2017			2016			Unaudited 2017 Pro Forma			Unaudited 2016 Pro Forma
The Company
Current:
U.S. federal income tax expense (benefit)	$	16,859		$	(21,559	)	$	19,419		$	2,634		$	36,326
State and local income tax expense	4,306			454			3,706			2,963			5,583
Foreign income tax expense	6,607			3,741			8,458			3,741			8,458
	27,772			(17,364		)	31,583			9,338			50,367
Deferred:
U.S. federal income tax expense (benefit)	10,572			(3,466		)	(14,247		)	18,297			(4,306		)
State and local income tax benefit	(4,789		)	(2,414		)	(1,400		)	(721		)	(487		)
Foreign income tax benefit	(1,484		)	(1,695		)	(4,180		)	(1,695		)	(4,180		)
	4,299			(7,575		)	(19,827		)	15,881			(8,973		)
Total:
U.S. federal income tax expense (benefit)	27,431			(25,025		)	5,172			20,931			32,020
State and local income tax expense (benefit)	(483		)	(1,960		)	2,306			2,242			5,096
Foreign income tax expense	5,123			2,046			4,278			2,046			4,278
Income tax expense (benefit)	32,071			(24,939		)	11,756			25,219			41,394

Consolidated Funds
Current:
Foreign income tax expense (benefit)	131			1,887			(737		)	1,887			(737		)
Income tax expense (benefit)	131			1,887			(737		)	1,887			(737		)

Total Provision for Income Taxes
Total current income tax expense (benefit)	27,903			(15,477		)	30,846			11,225			49,630
Total deferred income tax expense (benefit)	4,299			(7,575		)	(19,827		)	15,881			(8,973		)
Total income tax expense (benefit)	$	32,202		$	(23,052	)	$	11,019		$	27,106		$	40,657

The effective income tax rate differed from the federal statutory rate for the following reasons for the years ended December 31, 2018, 2017 and 2016. Supplemental information on an unaudited pro forma basis assumes that the Company's election to be taxed as a corporation for U.S. federal income tax purposes was effective for the years ended December 31, 2017 and 2016.



	Year Ended December 31,
	2018		2017		2016		Unaudited 2017 Pro Forma		Unaudited 2016 Pro Forma
Income tax expense at federal statutory rate	21.0	%	35.0	%	35.0	%	35.0	%	35.0	%
Income passed through to non-controlling interests	(9.9	)	(51.1	)	(27.6	)	(23.2	)	(18.3	)
State and local taxes, net of federal benefit	2.1		(1.4	)	0.9		0.4		1.5
Foreign taxes	0.3		0.3		(0.9	)	0.3		(0.9	)
Permanent items	(0.8	)	0.3		(2.2	)	0.3		(2.2	)
Tax Cuts and Jobs Act	(0.4	)	(0.4	)	—		3.3		—
Corporate conversion expense	5.4		—		—		—		—
Other, net	(0.3	)	0.4		(1.7	)	0.4		(1.7	)
Valuation allowance	0.1		1.3		0.2		1.3		0.2
Total effective rate	17.5	%	(15.6	)%	3.7	%	17.8	%	13.6	%

Deferred Taxes

The income tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities were as follows as of December 31, 2018 and 2017. Supplemental information on an unaudited pro forma basis assumes that the Company's election to be taxed as a corporation for U.S. federal income tax purposes was effective for the years ended December 31, 2017 and 2016.



	As of December 31,
Deferred Tax Assets and Liabilities of the Company	2018			2017			Unaudited 2017 Pro Forma
Deferred tax assets
Net operating losses	$	865		$	2,827		$	2,827
Investment in partnerships	11,527			—			(10,552		)
Amortizable tax basis for AOG unit exchanges	25,928			1,775			1,775
Other, net	5,416			4,767			4,767
Total gross deferred tax assets	43,736			9,369			(1,183		)
Valuation allowance	(22		)	(15		)	(15		)
Total deferred tax assets, net	43,714			9,354			(1,198		)
Deferred tax liabilities
Investment in partnerships	(1,577		)	(1,028		)	(1,028		)
Total deferred tax liabilities	(1,577		)	(1,028		)	(1,028		)
Net deferred tax assets	$	42,137		$	8,326		$	(2,226	)



	As of December 31,
Deferred Tax Assets and Liabilities of the Consolidated Funds	2018			2017			Unaudited 2017 Pro Forma
Deferred tax assets
Net operating loss	$	5,525		$	4,703		$	4,703
Other, net	2,173			2,173			2,173
Total gross deferred tax assets	7,698			6,876			6,876
Valuation allowance	(7,698		)	(6,876		)	(6,876		)
Total deferred tax assets, net	$	—		$	—		$	—

The 2017 and 2016 pro forma tax information was calculated as if the Company's Tax Election was effective for the years ended December 31, 2017 and 2016.

In assessing the realizability of deferred tax assets, the Company considers whether it is probable that some or all of the deferred tax assets will not be realized. In determining whether the deferred taxes are realizable, the Company considers the period of expiration of the tax asset, historical and projected taxable income, and tax liabilities for the tax jurisdiction in which the tax asset is located. Valuation allowances are provided to reduce the amounts of deferred tax assets to an amount that is more likely than not to be realized based on an assessment of positive and negative evidence, including estimates of future taxable income necessary to realize future deductible amounts.

The Company’s income tax provision includes corporate income taxes and other entity level income taxes, as well as income taxes incurred by certain affiliated funds that are consolidated in these financial statements. In connection with its election to be taxed as a corporation effective March 1, 2018, the Company recorded a significant one-time deferred tax liability arising from the embedded net unrealized gains of both carried interest and the investment portfolio that were not previously subject to corporate taxes. Cash taxes will be paid only on gains to the extent realized.

The valuation allowance for deferred tax assets increased by $0.8 million in 2018 due to additional net valuation allowances recorded related to operating losses that generated deductible temporary differences in various jurisdictions in which the Company operates, offset by the reduction of valuation allowances recorded in prior years for which the Company is able to conclude that as of December 31, 2018 the related deferred tax asset is more likely than not to be realized. The valuation allowance for deferred tax assets increased by $1.9 million in 2017 due to additional net valuation allowances recorded related to operating losses that generated deductible temporary differences in various jurisdictions in which the Company operates, offset by the reduction of valuation allowances recorded in prior years for which the Company is able to conclude that as of December 31, 2017 the related deferred tax asset is more likely than not to be realized.

At December 31, 2018, the Company had $39.8 million of foreign net operating loss ("NOL") carryforwards attributable to its consolidated funds available to reduce future foreign income taxes for which a full valuation allowance has been provided. The majority of the foreign NOLs have no expiry.

As of, and for the three years ended December 31, 2018, 2017 and 2016, the Company had no significant uncertain tax positions.

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

EARNINGS PER SHARE

Basic earnings per share of Class A common stock is computed by dividing income available to Class A common stockholders by the weighted‑average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed using the more dilutive method of either the two-class method or the treasury stock method.

The treasury stock method is used to determine potentially dilutive securities resulting from options and unvested restricted units granted under the 2014 Equity Incentive Plan. The two-class method is an earnings allocation method under which earnings per share is calculated for shares of Class A common stock and participating securities considering both dividends declared (or accumulated) and participation rights in undistributed earnings as if all such earnings had been distributed during the period. Because the holders of unvested restricted units have the right to participate in dividends when declared, the unvested restricted units are considered participating securities to the extent they are expected to vest.

For the years ended December 31, 2018 and 2017, the two-class method was the more dilutive method for the unvested restricted units. For the year ended December 31, 2016 the treasury stock method was the more dilutive method for the unvested restricted units. No participating securities had rights to undistributed earnings during any period presented.

The computation of diluted earnings per share of Class A common stock for the years ended December 31, 2018, 2017 and 2016 excludes the following options, restricted units and AOG Units, as their effect would have been anti-dilutive:



	For the Year Ended December 31,
	2018	2017	2016
Options	19,194,615	21,001,916	22,781,597
Restricted units	15,970,004	14,105,481	47,182
AOG Units	121,296,583	130,244,013	131,499,652

The following table presents the computation of basic and diluted earnings per common share:



	For the Year Ended December 31,
	2018			2017			2016
Net income attributable to Ares Management Corporation Class A common stockholders	$	35,320		$	54,478		$	99,632
Distributions on unvested restricted units	(6,948		)	(3,588		)	(1,257		)
Preferred stock dividends(1)	—			—			(8		)
Net income available to Class A common stockholders	$	28,372		$	50,890		$	98,367
Basic weighted-average shares of Class A common stock	96,023,147			81,838,007			80,749,671
Basic earnings per share of Class A common stock	$	0.30		$	0.62		$	1.22
Net income (loss) attributable to Ares Management Corporation Class A common stockholders	$	35,320		$	54,478		$	99,632
Distributions on unvested restricted units	(6,948		)	(3,588		)	—
Preferred stock dividends(1)	—			—			(8		)
Net income available to Class A common stockholders	$	28,372		$	50,890		$	99,624
Effect of dilutive shares:
Restricted units	—			—			2,187,359
Diluted weighted-average shares of Class A common stock	96,023,147			81,838,007			82,937,030
Diluted earnings per share of Class A common stock	$	0.30		$	0.62		$	1.20

Dividend declared and paid per Class A common stock	$	1.33		$	1.13		$	0.83


(1)	Dividends relate to the preferred shares that were issued by Ares Real Estate Holdings LLC and were redeemed on July 1, 2016.

EQUITY COMPENSATION

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

EQUITY COMPENSATION

Equity Incentive Plan

In 2014, the Company adopted the 2014 Equity Incentive Plan, as amended and restated on March 1, 2018 and as further amended and restated effective November 26, 2018. Under the 2014 Equity Incentive Plan, the Company has granted options to acquire 24,835,227 shares of Class A common stock, 4,936,051 restricted units to be settled in shares of Class A common stock and 686,395 phantom shares to be settled in cash. Based on a formula as defined in the 2014 Equity Incentive Plan, the total number of shares available to be issued under the 2014 Equity Incentive Plan resets and may increase on January 1 each year. Accordingly, on January 1, 2018, the total number of shares available for issuance under the 2014 Equity Incentive Plan reset to 31,853,504 shares, and as of December 31, 2018, 27,281,855 shares of Class A common stock remain available for issuance.

Generally, unvested phantom shares, restricted units and options are forfeited upon termination of employment in accordance with the 2014 Equity Incentive Plan. The Company recognizes forfeitures as a reversal of previously recognized compensation expense in the period the forfeiture occurs.

Equity-based compensation expense, net of forfeitures is included in the following table:



	For the Year Ended December 31,
	2018		2017		2016
Restricted units	$	74,441	$	54,339	$	21,894
Restricted units with a market condition	1,524		—		—
Options	12,449		13,848		15,450
Phantom shares	1,310		1,524		1,721
Equity-based compensation expense	$	89,724	$	69,711	$	39,065

Restricted Units

During July 2018, the Company granted 2,000,000 restricted units to an executive of which 1,333,334 restricted units are subject to vesting based on the future price of shares of the Company's Class A common stock (described in greater detail below under the heading "Restricted Unit Awards with a Market Condition") and 666,666 restricted units that vest subject to the executive's continued service on terms similar to those described below.

Each restricted unit represents an unfunded, unsecured right of the holder to receive a share of the Company's Class A common stock on a specific date. The restricted units generally vest and are settled in shares of Class A common stock either (i) at a rate of one‑third per year, beginning on the third anniversary of the grant date, (ii) in their entirety on the fifth anniversary of the grant date, or (iii) at a rate of one quarter per year, beginning on either the first or second anniversary of the grant date or the holder's employment commencement date in each case generally subject to the holder’s continued employment as of the applicable vesting date (subject to accelerated vesting upon certain qualifying terminations of employment). Compensation expense associated with restricted units is recognized on a straight-line basis over the requisite service period of the award.

The holders of restricted units other than the market condition awards described below generally have the right to receive as current compensation an amount in cash equal to (i) the amount of any dividend paid with respect to a share of Class A common stock multiplied by (ii) the number of restricted units held at the time such dividends are declared (“Dividend Equivalent”). During the year ended December 31, 2018, the Company declared dividends of $0.40, $0.0933, $0.28, $0.28 per share to common shareholders at the close of business on February 26, April 16, June 15, and September 14; and $0.28 per share to Class A common stockholders at the close of business on December 17. For the year ended December 31, 2018, Dividend Equivalents were made to the holders of restricted units in the aggregate amount of $21.5 million, which are presented as dividends within the Consolidated Statement of Changes in Equity. When units are forfeited, the cumulative amount of distribution equivalents previously paid is reclassified to compensation and benefits expense in the Consolidated Statements of Operations.

The following table presents unvested restricted unit activity during the year ended December 31, 2018:



	Restricted Units		Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2018	13,751,888		$	17.58
Granted	4,957,869		22.86
Vested	(2,035,909	)	17.12
Forfeited	(418,373	)	19.15
Balance - December 31, 2018	16,255,475		$	19.21

The total compensation expense expected to be recognized in all future periods associated with the restricted units is approximately $200.3 million as of December 31, 2018 and is expected to be recognized over the remaining weighted average period of 3.26 years.

Restricted Unit Awards with a Market Condition

In July 2018, the Company granted certain restricted units with a vesting condition based upon the volume-weighted, average closing price of shares of the Company’s Class A common stock meeting or exceeding a stated price for 30 consecutive calendar days on or prior to January 1, 2028, referred to as a market condition. 666,667 restricted units with a market condition of $35.00 per share (“Tranche I”) and 666,667 restricted units with a market condition of $45.00 per share (“Tranche II”) were granted. Vesting is also generally subject to continued employment at the time such market condition is achieved. Under the terms of the awards, if the price target is not achieved by the close of business on January 1, 2028, the unvested market condition awards will be automatically canceled and forfeited. Restricted units subject to a market condition are not eligible to receive a Dividend Equivalent.

The grant date fair values for Tranche I and Tranche II awards were $10.92 and $7.68 per share, respectively, based on a probability distributed Monte-Carlo simulation. Due to the existence of the market condition, the vesting period for the awards is not explicit, and as such, compensation expense is recognized on a straight-line basis over the median vesting period derived from the positive iterations of the Monte Carlo simulations where the market condition was achieved. The median vesting period is 3.0 years and 4.3 years for Tranche I and Tranche II, respectively.

Below is a summary of the significant assumptions used to estimate the grant date fair value of the market condition awards:



Closing price of the Company's common shares as of valuation date	$	20.95
Risk-free interest rate	2.95		%
Volatility	30.0		%
Dividend yield	5.0		%
Cost of equity	10.0		%

The following table presents the unvested market condition awards' activity during the year ended December 31, 2018:



	Market Condition Award Units	Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2018	—	$	—
Granted	1,333,334	9.30
Vested	—	—
Forfeited	—	—
Balance - December 31, 2018	1,333,334	$	9.30

The total compensation expense expected to be recognized in all future periods associated with the market condition awards is approximately $10.9 million as of December 31, 2018 and is expected to be recognized over the remaining weighted average period of 3.13 years.

Options

Each option entitles the holders to purchase from the Company, upon exercise thereof, one share of Class A common stock at the stated exercise price. The term of the options is generally ten years, beginning on the grant date. The options generally vest at a rate of one-third per year, beginning on the third anniversary of the grant date. Compensation expense associated with these options is being recognized on a straight-line basis over the requisite service period of the respective award. As of December 31, 2018, there was $4.6 million of total unrecognized compensation expense that is expected to be recognized over the remaining weighted average period of 0.38 years. Net cash proceeds from the exercises of stock options was $1.0 million for the year end December 31, 2018. The Company realized an immaterial amount of tax benefits from those exercises.

A summary of unvested options activity during the year ended December 31, 2018 is presented below:



	Options		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)	Aggregate Intrinsic Value
Balance - January 1, 2018	20,495,025		$	18.99	6.09	$	20,611
Granted	—		—		—	—
Expired	(907,046	)	19.00		—	—
Exercised	(50,000	)	19.00		—	90
Forfeited	(796,475	)	19.00		—	—
Balance - December 31, 2018	18,741,504		$	18.99	4.88	$	—
Exercisable at December 31, 2018	13,032,852		$	19.00	4.66	$	—

Aggregate intrinsic value represents the value of the Company’s closing share price of Class A common stock on the last trading day of the period in excess of the weighted-average exercise price multiplied by the number of options exercisable or expected to vest.

The fair value of an award is affected by the Company’s share price of Class A common stock on the date of grant as well as other assumptions including the estimated volatility of the Company’s share price of Class A common stock over the term of the awards and the estimated period of time that management expects employees to hold their unit options. The estimated period of time that management expects employees to hold their options was estimated as the midpoint between the vesting date and maturity date.

The fair value of each option granted was measured on the date of the grant using the Black‑Scholes option pricing model. No new options have been granted since 2014.

Phantom Shares

Each phantom share represents an unfunded, unsecured right of the holder to receive an amount in cash per phantom share equal to the average closing price of a share of Class A common stock for the 15 trading days immediately prior to, and the 15 trading days immediately following, the vesting date. The phantom shares will vest in equal installments over five years at the anniversaries of the IPO date. The phantom shares are accounted for as liability awards with compensation expense being recognized on a straight-line basis based on the number of unvested shares. Forfeitures will reduce the expenses in the period in which the forfeiture occurs.

A summary of unvested phantom shares’ activity during the year ended December 31, 2018 is presented below:




	Phantom Shares		Weighted Average Grant Date Fair Value Per Share
Balance - January 1, 2018	156,153		$	19.00
Vested	(70,352	)	19.00
Forfeited	(19,514	)	19.00
December 31, 2018	66,287		$	19.00

The fair value of the awards is remeasured at each reporting period and was $17.78 per phantom share as of December 31, 2018. Based on the fair value of the awards at December 31, 2018, $0.4 million of unrecognized compensation expense in connection with phantom shares outstanding is expected to be recognized over a weighted average period of 0.38 years. For the year ended December 31, 2018, the Company paid $1.6 million to settle vested phantom shares.

EQUITY

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

EQUITY

Common Stock

Since the Conversion on November 26, 2018, the Company's common stock consists of Class A, Class B and Class C common stock. As a result of the Conversion on November 26, 2018, (i) each outstanding common share representing limited partner interests in the Company before the Conversion converted into one issued and outstanding, fully paid and nonassessable share of Class A common stock, $0.01 par value per share, of the Company, (ii) the general partner share of the Company before the Conversion converted into 1,000 issued and outstanding, fully paid and nonassessable shares of Class B common stock, $0.01 par value per share, of the Company and (iii) the special voting share of the Company before the Conversion converted into one issued and outstanding, fully paid and nonassessable share, of Class C common stock, $0.01 par value per share of the Company.

Holders of shares of Class A common stock are entitled to one vote per share of Class A common stock. On any date on which the Ares Ownership Condition (as defined in the Certificate of Incorporation) is satisfied, holders of shares of Class B common stock are, in the aggregate, entitled to a number of votes equal to four times the aggregate number of votes attributable to the shares of Class A common stock minus the aggregate number of votes attributable to the shares of Class C common stock. However, on any date on which the Ares Ownership Condition is not satisfied, holders of shares of Class B common stock are not entitled to vote on any matter submitted to a vote of the stockholders of the Company. The holder of shares of Class C common stock is generally entitled to a number of votes equal to the number of Ares Operating Group Units held of record by each Ares Operating Group Limited Partner, other than the Company and its subsidiaries.

The Class B common stock and Class C common stock are non-economic and holders are not entitled to (i) dividends from the Company or (ii) receive any assets of the Company in the event of any dissolution, liquidation or winding up of the Company. Ares Management GP LLC is the sole holder of the Class B common stock and Ares Voting LLC is the sole holder of the Class C common stock.

The following table presents the changes in each class of common stock for the year ended December 31, 2018:



	Class A Common Stock	Class B Common Stock	Class C Common Stock	Total

Balance - January 1, 2018	—	—	—	—
Conversion of partnership units to outstanding shares of common stock	101,530,174	1,000	1	101,531,175
AOG units conversions	28,120	—	—	28,120
Vesting of restricted stock awards	35,801	—	—	35,801
Balance outstanding - December 31, 2018	101,594,095	1,000	1	101,595,096

Preferred Stock

In connection with the Conversion on November 26, 2018, each 7.00% Series A preferred share of the Company before the Conversion was converted into one share of 7.00% Series A Preferred Stock, $0.01 par value per share. As of December 31, 2018 and 2017, the Company had 12,400,000 shares of the Series A Preferred Stock outstanding. When, as and if declared by the Company’s board of directors, dividends on the Series A Preferred Stock are payable quarterly at a rate per annum equal to 7.00%. The Series A Preferred Stock may be redeemed at the Company’s option, in whole or in part, at any time on or after June 30, 2021, at a price of $25.00 per share.

In July 2018, the Company's board of directors authorized the repurchase, from time to time in open market purchases or privately negotiated transactions of the Series A Preferred Stock with an aggregate liquidation preference of up to $50.0 million. Such repurchases, if any, will depend on the prevailing market conditions and other factors.

AOG Units Exchange

During the quarter ended March 31, 2018, an affiliate of Alleghany Corporation (“Alleghany”) exchanged 9,750,000 of its AOG Units into 9,750,000 common shares. During the quarter ended September 30, 2018, Alleghany exchanged its remaining 2,750,000 of AOG Units into 2,750,000 common shares.

Common Share Offering

On March 12, 2018, AREC Holdings Ltd., a wholly owned subsidiary of Abu Dhabi Investment Authority (collectively, “ADIA”), and the Company completed a public offering of 15,000,000 common shares. In connection with this offering, ADIA sold 10,000,000 of its previously issued and outstanding common shares from which the Company received no proceeds. Additionally, the Company issued 5,000,000 common shares from which it received $105.9 million in gross proceeds. The Company incurred approximately $0.5 million of expenses in connection with this offering transaction. The expenses have been treated as a reduction of the proceeds received from the offering and are presented on a net basis together with the proceeds from the offering in shareholders' equity in the Condensed Consolidated Statements of Changes in Equity.

In April 2018, the underwriters in the offering exercised a portion of their option to purchase 1,130,000 additional common shares from ADIA. The Company did not receive any of the proceeds from the underwriters' exercise. The expenses incurred by the Company related to the option exercise have been included in other income (expense), net in the Condensed Consolidated Statements of Operations. ADIA paid the underwriting discounts and commissions and/or similar charges incurred for the sale of the common shares.

Prior to the Conversion on November 26, 2018, common shares represented limited partnership interests in the Company. The holders of common shares were entitled to participate pro rata in distributions from the Company and to exercise the rights or privileges that were available to common shareholders under the Company’s limited partnership agreement. The common shareholders had limited voting rights and had no right to remove the Company’s general partner, Ares Management GP LLC, or, except in limited circumstances, to elect the directors of the general partner.

The following table presents each partner's AOG Units and corresponding ownership interest in each of the Ares Operating Group entities as of December 31, 2018 and 2017, as well as its daily average ownership of AOG Units in each of the Ares Operating Group entities for the years ended December 31, 2018, 2017 and 2016.



	As of December 31,						Daily Average Ownership
	2018			2017			For the Year Ended December 31,
	AOG Units	Direct Ownership Interest		AOG Units	Direct Ownership Interest		2018		2017		2016
Ares Management Corporation	101,594,095	46.47	%	82,280,033	38.75	%	44.19	%	38.59	%	38.04	%
Ares Owners Holding L.P.	117,019,274	53.53	%	117,576,663	55.36	%	53.99	%	55.52	%	56.07	%
Affiliate of Alleghany Corporation	—	—	%	12,500,000	5.89	%	1.82	%	5.89	%	5.89	%
Total	218,613,369	100.00	%	212,356,696	100.00	%

The Company’s ownership percentage of the AOG Units will continue to change upon: (i) the vesting of restricted units and exercise of options that were granted under the 2014 Equity Incentive Plan; (ii) the exchange of AOG Units for shares of Class A common stock; (iii) the cancellation of AOG Units in connection with certain individuals’ forfeiture of AOG Units upon termination of employment and (iv) the issuance of new AOG Units, including in connection with acquisitions. Holders of the AOG Units, subject to any applicable transfer restrictions, may up to four times each year (subject to the terms of the exchange agreement) exchange their AOG Units for shares of Class A common stock on a one-for-one basis. Equity is reallocated among partners upon a change in ownership to ensure each partners’ capital account properly reflects their respective claim on the residual value of the Company. This change is reflected as either a reallocation of interest or as dilution in the Consolidated Statements of Changes in Equity.

MARKET AND OTHER RISK FACTORS	12 Months Ended
MARKET AND OTHER RISK FACTORS	Dec. 31, 2018
Risks and Uncertainties [Abstract]
MARKET AND OTHER RISK FACTORS	MARKET AND OTHER RISK FACTORS Due to the nature of the Company's investment strategy, the Company's portfolio of investments has significant market and credit risk. As a result, the Company is subject to market, credit and other risk factors, including, but not limited to the following: Market Risk The market price of investments may significantly fluctuate during the period of investment. Investments may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of an investment may decline due to general market conditions which are not specifically related to such investment, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Limited Liquidity of Investments The Company invests in securities that may not be readily marketable. Illiquid investments may trade at a discount from comparable, more liquid investments, and at times there may be no market at all for such investments. Subordinate investments may be less marketable, or in some instances illiquid, because of the absence of registration under federal securities laws, contractual restrictions on transfer, the small size of the market and the small size of the issue (relative to issues of comparable interests). As a result, the Company may encounter difficulty in selling its investments or may, if required to liquidate investments to satisfy redemption requests of its investors or debt service obligations, be compelled to sell such investments at less than fair value. Counterparty Risk Some of the markets in which the Company invests are over-the-counter or interdealer markets. The participants in such markets are typically not subject to credit evaluation and regulatory oversight unlike members of exchange-based markets. The lack of oversight exposes the Company to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the applicable contract (whether or not such dispute is bona fide) or because of a credit or liquidity problem, causing the Company to suffer losses. Such counterparty risk is accentuated for contracts with longer maturities where events may intervene to prevent settlement, or where the Company has concentrated its transactions with a single or small group of counterparties. Credit Risk There are no restrictions on the credit quality of the investments the Company makes. Investments may be deemed by nationally recognized rating agencies to have substantial vulnerability to default in payment of interest and/or principal. Some investments may have low-quality ratings or be unrated. Lower rated and unrated investments have major risk exposure to adverse conditions and are considered to be predominantly speculative. Generally, such investments offer a higher return potential than higher rated investments, but involve greater volatility of price and greater risk of loss of income and principal. In general, the ratings of nationally recognized rating organizations represent the opinions of agencies as to the quality of the securities they rate. Such ratings, however, are relative and subjective; they are not absolute standards of quality and do not evaluate the market value risk of the relevant securities. It is also possible that a rating agency might not change its rating of a particular issue on a timely basis to reflect subsequent events. The Company may use these ratings as initial criteria for the selection of portfolio assets for the Company but is not required to utilize them. Currency Risk The Company may invest in financial instruments and enter into transactions denominated in currencies other than US dollars, its functional currency. Although the Company may seek to hedge currency exposure through financial instruments, the Company may still be exposed to risks that the exchange rate of its currency relative to other foreign currencies may change in a manner that has an adverse effect on the value of that portion of the Company's assets or liabilities denominated in currencies other than the functional currency.

SEGMENT REPORTING

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

SEGMENT REPORTING

The Company operates through its three distinct operating segments. In 2018, the Company reclassified certain expenses from OMG to its operating segments. The Company has modified historical results to conform with its current presentation.

The Company’s three operating segments are:

Credit Group: The Company’s Credit Group is a leading manager of credit strategies across the non-investment grade credit universe in the U.S. and Europe, with approximately $95.9 billion of AUM and 156 funds as of December 31, 2018. The Credit Group offers a range of credit strategies across the liquid and illiquid spectrum, including syndicated loans, high yield bonds, credit opportunities, alternative credit investments and U.S. and European direct lending. The Credit Group provides solutions for traditional fixed income investors seeking to access the syndicated loans and high yield bond markets and capitalizes on opportunities across traded corporate credit. It additionally provides investors access to directly originated fixed and floating rate credit assets and the ability to capitalize on illiquidity premiums across the credit spectrum. The Credit Group’s syndicated loans strategy focuses on liquid, traded non-investment grade secured loans to corporate borrowers. The high yield bond strategy seeks to deliver a diversified portfolio of liquid, traded non-investment grade corporate bonds, including secured, unsecured and subordinated debt instruments. Credit opportunities is a “go anywhere” strategy seeking to capitalize on market inefficiencies and relative value opportunities across the capital structure. The alternative credit strategy seeks investment opportunities that fall outside of traditional, well-defined markets such as corporate debt, real estate and private equity. Alternative credit investments include certain structural features designed to protect value and minimize loss such as asset security, seniority, covenants, and cash flow prioritization. These investments include asset-backed securities, specialty assets, real assets, and structured credit. The Company has one of the largest self-originating direct lending platforms in the U.S. and European middle markets, providing one-stop financing solutions for small-to-medium sized companies, which the Company believes are increasingly underserved by traditional lenders. The Company provides investors access to these capabilities through several vehicles, including commingled funds, separately managed accounts and a publicly traded vehicle. The Credit Group conducts its U.S. lending activities primarily through ARCC, the largest business development company as of December 31, 2018, by both market capitalization and total assets. In addition, the Credit Group manages a commercial finance business that provides asset-based and cash flow loans to small and middle-market companies, as well as asset-based facilities to specialty finance companies. The Credit Group’s European direct lending platform is one of the most significant participants in the European middle-market, focusing on self-originated investments in illiquid middle-market credits.

Private Equity Group: The Company’s Private Equity Group has approximately $23.5 billion of AUM as of December 31, 2018, broadly categorizing its investment strategies as corporate private equity, infrastructure and power, special opportunities and energy opportunities. As of December 31, 2018, the group managed five corporate private equity commingled funds focused on North America and Europe and three focused on greater China, five commingled funds and six related co-investment vehicles focused on infrastructure and power, two commingled special opportunities funds and the Company's first energy opportunities fund. In its North American and European flexible capital strategy, the Company targets opportunistic majority or shared-control investments in businesses with strong franchises and attractive growth opportunities in North America and Europe. The infrastructure and power strategy targets infrastructure-related assets across the power generation, transmission, midstream sectors and renewables seeking attractive risk-adjusted equity returns with current cash flow and capital appreciation. The special opportunities strategy seeks to invest opportunistically across a broad spectrum of distressed or mispriced investments, including corporate debt, rescue capital, private asset-backed investments, post-reorganization securities and non-performing portfolios. The energy opportunities strategy targets investments in the energy industry where its flexible capital can provide attractive risk-adjusted returns while mitigating commodity risk.

Real Estate Group: The Company’s Real Estate Group manages comprehensive equity and debt strategies, with approximately $11.3 billion of AUM across 43 funds as of December 31, 2018. Real Estate equity strategies focus on applying hands-on value creation initiatives to mismanaged and capital-starved assets, as well as new development, ultimately selling stabilized assets back into the market. The Real Estate Group manages both a value-add strategy and an opportunistic strategy. The value-add strategy seeks to create value by buying assets at attractive valuations and through active asset management of income-producing properties across the U.S. and Western Europe. The opportunistic strategy focuses on manufacturing core assets through development, redevelopment and fixing distressed capital structures across major properties in the U.S. and Europe. The Company’s debt strategies leverage the Real Estate Group’s diverse sources of capital to directly originate and manage commercial mortgage investments on properties that range from stabilized to requiring hands-on value creation. In addition to managing private debt funds, the Real Estate Group makes debt investments through a publicly traded commercial mortgage REIT, ACRE.

The Company has an OMG that consists of shared resource groups to support the Company’s operating segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, strategy and relationship management, legal, compliance and human resources. Additionally, the OMG provides services to certain of the Company’s investment companies and partnerships, which reimburse the OMG for expenses equal to the costs of services provided. The OMG’s expenses are not allocated to the Company’s three reportable segments but the Company does consider the cost structure of the OMG when evaluating its financial performance.

Non-GAAP Measures: These measures supplement and should be considered in addition to, and not in lieu of, the Consolidated Statements of Operations prepared in accordance with GAAP.

Fee related earnings (“FRE”), a non-GAAP measure, is used to assess core operating performance by determining whether recurring revenue, primarily consisting of management fees, is sufficient to cover operating expenses and to generate profits. FRE differs from income before taxes computed in accordance with GAAP as it excludes performance income, performance related compensation, investment income from the Consolidated Funds and non-consolidated funds and certain other items that the Company believes are not indicative of its core operating performance.

Realized income (“RI”), a non-GAAP measure, is an operating metric used by management to evaluate performance of the business based on operating performance and the contribution of each of the business segments to that performance, while removing the fluctuations of unrealized income and expenses, which may or may not be eventually realized at the levels presented and whose realizations depend more on future outcomes than current business operations. RI differs from net income by excluding (a) income tax expense, (b) operating results of our Consolidated Funds, (c) depreciation and amortization expense, (d) the effects of changes arising from corporate actions, (e) unrealized gains and losses related to performance income and investment performance and (f) certain other items that we believe are not indicative of our operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers, acquisitions and capital transactions, underwriting costs and expenses incurred in connection with corporate reorganization. Beginning in 2018, placement fees are no longer excluded from RI but are amortized to match the period over which management fees are recognized. Prior to the introduction of RI, management used distributable earnings for this evaluation. Management believes RI is a more appropriate metric to evaluate the Company's current business operations.

Management makes operating decisions and assesses the performance of each of the Company’s business segments based on financial and operating metrics and other data that is presented before giving effect to the consolidation of any of the Consolidated Funds. Consequently, all segment data excludes the assets, liabilities and operating results related to the Consolidated Funds and non‑consolidated funds.

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the year ended December 31, 2018:



	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $128,805)	$	564,899		$	198,182		$	73,663		$	836,744		$	—		$	836,744
Other fees	23,247			1,008			33			24,288			—			24,288
Compensation and benefits	(216,843		)	(74,672		)	(38,623		)	(330,138		)	(126,117		)	(456,255		)
General, administrative and other expenses	(43,934		)	(18,482		)	(11,123		)	(73,539		)	(75,926		)	(149,465		)
Fee related earnings	327,369			106,036			23,950			457,355			(202,043		)	255,312
Performance income—realized	121,270			139,820			96,117			357,207			—			357,207
Performance related compensation—realized	(75,541		)	(111,764		)	(64,292		)	(251,597		)	—			(251,597		)
Realized net performance income	45,729			28,056			31,825			105,610			—			105,610
Investment income—realized	2,492			17,816			11,409			31,717			4,790			36,507
Interest and other investment income—realized	10,350			4,624			2,257			17,231			2,184			19,415
Interest expense	(11,386		)	(6,000		)	(1,836		)	(19,222		)	(2,226		)	(21,448		)
Realized net investment income	1,456			16,440			11,830			29,726			4,748			34,474
Realized income	$	374,554		$	150,532		$	67,605		$	592,691		$	(197,295	)	$	395,396
Total assets	$	729,930		$	942,928		$	469,595		$	2,142,453		$	65,961		$	2,208,414

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the year ended December 31, 2017:



	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $105,467)	$	481,466		$	198,498		$	64,861		$	744,825		$	—		$	744,825
Other fees	20,830			1,495			106			22,431			—			22,431
Compensation and benefits	(193,347		)	(68,569		)	(39,586		)	(301,502		)	(112,233		)	(413,735		)
General, administrative and other expenses	(33,626		)	(17,561		)	(10,519		)	(61,706		)	(74,825		)	(136,531		)
Fee related earnings	275,323			113,863			14,862			404,048			(187,058		)	216,990
Performance income—realized	21,087			287,092			9,608			317,787			—			317,787
Performance related compensation—realized	(9,218		)	(228,774		)	(4,338		)	(242,330		)	—			(242,330		)
Realized net performance income	11,869			58,318			5,270			75,457			—			75,457
Investment income—realized	7,102			22,625			5,534			35,261			3,880			39,141
Interest and other investment income—realized	10,192			3,226			511			13,929			1,142			15,071
Interest expense	(12,405		)	(5,218		)	(1,650		)	(19,273		)	(1,946		)	(21,219		)
Realized net investment income	4,889			20,633			4,395			29,917			3,076			32,993
Realized income	$	292,081		$	192,814		$	24,527		$	509,422		$	(183,982	)	$	325,440
Total assets	$	837,562		$	1,255,454		$	306,463		$	2,399,479		$	119,702		$	2,519,181

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the year ended December 31, 2016:



	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $121,181)	$	444,664		$	147,790		$	66,997		$	659,451		$	—		$	659,451
Other fees	9,953			1,544			854			12,351			—			12,351
Compensation and benefits	(184,571		)	(61,276		)	(41,091		)	(286,938		)	(97,777		)	(384,715		)
General, administrative and other expenses	(29,136		)	(14,679		)	(10,603		)	(54,418		)	(60,319		)	(114,737		)
Fee related earnings	240,910			73,379			16,157			330,446			(158,096		)	172,350
Performance income—realized	51,435			230,162			11,401			292,998			—			292,998
Performance related compensation—realized	(11,772		)	(184,072		)	(2,420		)	(198,264		)	—			(198,264		)
Realized net performance income	39,663			46,090			8,981			94,734			—			94,734
Investment income (loss)—realized	4,928			18,773			931			24,632			(14,606		)	10,026
Interest and other investment income—realized	22,547			16,891			1,598			41,036			163			41,199
Interest expense	(8,609		)	(5,589		)	(1,056		)	(15,254		)	(2,727		)	(17,981		)
Realized net investment income (loss)	18,866			30,075			1,473			50,414			(17,170		)	33,244
Realized income	$	299,439		$	149,544		$	26,611		$	475,594		$	(175,266	)	$	300,328
Total assets	$	650,435		$	1,218,412		$	232,862		$	2,101,709		$	74,383		$	2,176,092

The following table presents the components of the Company’s operating segments’ revenue, expenses and realized net investment income:



	For the Year Ended December 31,
	2018			2017			2016
Segment Revenues
Management fees (includes ARCC Part I Fees of $128,805, $105,467 and $121,181 for the years ended December 31, 2018, 2017 and 2016, respectively)	$	836,744		$	744,825		$	659,451
Other fees	24,288			22,431			12,351
Performance income—realized	357,207			317,787			292,998
Total segment revenues	$	1,218,239		$	1,085,043		$	964,800
Segment Expenses
Compensation and benefits	$	330,138		$	301,502		$	286,938
General, administrative and other expenses	73,539			61,706			54,418
Performance related compensation—realized	251,597			242,330			198,264
Total segment expenses	$	655,274		$	605,538		$	539,620
Segment Realized Net Investment Income
Investment income—realized	$	31,717		$	35,261		$	24,632
Interest and other investment income—realized	17,231			13,929			41,036
Interest expense	(19,222		)	(19,273		)	(15,254		)
Total segment realized net investment income	$	29,726		$	29,917		$	50,414

The following table reconciles the Company's consolidated revenues to segment revenue:



	For the Year Ended December 31,
	2018			2017			2016
Total consolidated revenue	$	958,461		$	1,479,943		$	1,254,373
Performance income—unrealized	247,212			(325,915		)	(228,472		)
Management fees of Consolidated Funds eliminated in consolidation	34,242			22,406			17,383
Carried interest allocation of Consolidated Funds eliminated in consolidation	—			1,017			(2,926		)
Incentive fees of Consolidated Funds eliminated in consolidation	4,000			4,075			4,065
Principal investment income of Consolidated Funds eliminated in consolidation	2,502			24,587			(4,760		)
Administrative fees(1)	(27,380		)	(34,049		)	(26,934		)
Performance income reclass(2)	205			1,936			2,479
Principal investment income	(1,047		)	(89,031		)	(50,408		)
Revenue of non-controlling interests in consolidated subsidiaries(3)	44			74			—
Total consolidation adjustments and reconciling items	259,778			(394,900		)	(289,573		)
Total segment revenue	$	1,218,239		$	1,085,043		$	964,800


(1)	Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.


(2)	Related to performance income for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within net realized and unrealized gain (loss) on investments in the Company’s Consolidated Statements of Operations.


(3)	Adjustments for administrative fees reimbursed attributable to certain of our joint venture partners.

The following table reconciles the Company's consolidated expenses to segment expenses:



	For the Year Ended December 31,
	2018			2017			2016
Total consolidated expenses	$	870,362		$	1,504,758		$	1,016,420
Performance related compensation—unrealized	221,343			(237,392		)	(189,582		)
Expenses of Consolidated Funds added in consolidation	(92,006		)	(65,501		)	(42,520		)
Expenses of Consolidated Funds eliminated in consolidation	38,242			26,481			21,447
Administrative fees(1)	(27,380		)	(34,049		)	(26,934		)
OMG expenses	(202,043		)	(187,058		)	(158,096		)
Acquisition and merger-related expenses	(2,936		)	(280,055		)	(773		)
Equity compensation expense	(89,724		)	(69,711		)	(39,065		)
Placement fees and underwriting costs	(20,343		)	(19,765		)	(6,424		)
Amortization of intangibles	(9,032		)	(17,850		)	(26,638		)
Depreciation expense	(16,055		)	(12,631		)	(8,215		)
Other expenses(2)	(11,836		)	—			—
Expenses of non-controlling interests in consolidated subsidiaries(3)	(3,318		)	(1,689		)	—
Total consolidation adjustments and reconciling items	(215,088		)	(899,220		)	(476,800		)
Total segment expenses	$	655,274		$	605,538		$	539,620


(1)	Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.


(2)	Year ended December 31, 2018 includes an $11.8 million payment made to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018.


(3)	Costs being borne by certain of our joint venture partners.

The following table reconciles the Company's consolidated other income to segment realized net investment income:



	For the Year Ended December 31,
	2018			2017			2016
Total consolidated other income	$	96,242		$	174,674		$	59,967
Investment (income) loss—unrealized	49,241			(46,860		)	(16,653		)
Interest and other investment (income) loss—unrealized	233			1,868			(3,323		)
Other income from Consolidated Funds added in consolidation, net	(114,286		)	(154,869		)	(37,388		)
Other (income) expense from Consolidated Funds eliminated in consolidation, net	(865		)	1,059			(96		)
OMG other expense	(3,315		)	(11,828		)	19,381
Performance income reclass(1)	(205		)	(1,936		)	(2,479		)
Principal investment income	1,047			89,031			50,408
Change in value of contingent consideration	—			(20,156		)	(17,675		)
Other (income) expense	1,653			(1,042		)	(1,728		)
Other income of non-controlling interests in consolidated subsidiaries(2)	(19		)	(24		)	—
Total consolidation adjustments and reconciling items	(66,516		)	(144,757		)	(9,553		)
Total segment realized net investment income	$	29,726		$	29,917		$	50,414


(1)	Related to performance income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within net realized and unrealized gain (loss) on investments in the Company’s Consolidated Statements of Operations.


(2)	Costs being borne by certain of our joint venture partners.

The following table presents the reconciliation of income before taxes as reported in the Consolidated Statements of Operations to segment results of RI and FRE:



	For the Year Ended December 31,
	2018			2017			2016
Income before taxes	$	184,341		$	149,859		$	297,920
Adjustments:
Amortization of intangibles	9,032			17,850			26,638
Depreciation expense	16,055			12,631			8,215
Equity compensation expenses	89,724			69,711			39,065
Acquisition and merger-related expenses	2,936			259,899			(16,902		)
Placement fees and underwriting costs	20,343			19,765			6,424
OMG expenses, net	198,728			175,230			177,477
Other (income) expense(1)	13,489			(1,042		)	(1,728		)
Expense of non-controlling interests in consolidated subsidiaries(2)	3,343			1,739			—
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(20,643		)	(62,705		)	(2,649		)
Total performance (income) loss - unrealized	247,212			(325,915		)	(228,472		)
Total performance related compensation - unrealized	(221,343		)	237,392			189,582
Total net investment (income) loss - unrealized	49,474			(44,992		)	(19,976		)
Realized income	592,691			509,422			475,594
Total performance income - realized	(357,207		)	(317,787		)	(292,998		)
Total performance related compensation - realized	251,597			242,330			198,264
Total net investment income - realized	(29,726		)	(29,917		)	(50,414		)
Fee related earnings	$	457,355		$	404,048		$	330,446


(1)	Year ended December 31, 2018 expenses include an $11.8 million payment made to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018.


(2)	Adjustments for administrative fees reimbursed and other revenue items attributable to certain of our joint venture partners.

The reconciliation of total assets reported in the Consolidated Statements of Financial Condition to total segment assets consists of the following:



	For the Year Ended December 31,
	2018			2017			2016
Total consolidated assets	$	10,154,692		$	8,563,522		$	5,829,712
Total assets from Consolidated Funds added in consolidation	(8,141,280		)	(6,231,245		)	(3,822,010		)
Total assets from the Company eliminated in consolidation	195,002			186,904			168,390
OMG assets	(65,961		)	(119,702		)	(74,383		)
Total consolidation adjustments and reconciling items	(8,012,239		)	(6,164,043		)	(3,728,003		)
Total segment assets	$	2,142,453		$	2,399,479		$	2,101,709

CONSOLIDATION

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Disclosure [Abstract]

CONSOLIDATION

Deconsolidated Funds

Certain funds that have historically been consolidated in the financial statements that are no longer consolidated because, as of the reporting period: (a) the Company deconsolidated such funds as a result of being liquidated or dissolved; or (b) the Company is no longer deemed to be the primary beneficiary of the VIEs as it no longer has a significant economic interest. During the years ended December 31, 2018 and 2017, one fund was liquidated or dissolved in each year. There were no funds deconsolidated for the year ended December 31, 2016. For deconsolidated funds, the Company will continue to serve as the general partner and/or investment manager until such funds are fully liquidated.

Investments in Consolidated Variable Interest Entities

The Company consolidates entities in which the Company has a variable interest and as the general partner or investment manager, has both the power to direct the most significant activities and a potentially significant economic interest. Investments in the consolidated VIEs are reported at fair value and represents the Company’s maximum exposure to loss.

Investments in Non-Consolidated Variable Interest Entities

The Company holds interests in certain VIEs that are not consolidated as the Company is not the primary beneficiary. The Company's interest in such entities generally is in the form of direct equity interests, fixed fee arrangements or both. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. Investments in the non-consolidated VIEs are carried at fair value.

The Company's interests in consolidated and non-consolidated VIEs, as presented in the Consolidated Statements of Financial Condition, and its respective maximum exposure to loss relating to non-consolidated VIEs are as follows:



	As of December 31,
	2018		2017
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs	$	222,477	$	251,376
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs	$	186,455	$	175,620
Assets of consolidated VIEs	$	8,141,280	$	6,231,245
Liabilities of consolidated VIEs	$	7,479,383	$	5,538,054



	For the Years Ended December 31,
	2018		2017		2016
Net income attributable to non-controlling interests related to consolidated VIEs	$	20,512	$	60,818	$	3,386

CONSOLIDATING SCHEDULES

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company's financial condition as of December 31, 2018 and 2017 and results from operations for the years ended December 31, 2018, 2017 and 2016.



	As of December 31, 2018
	Consolidated Company Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	110,247		$	—	$	—		$	110,247
Investments ($841,079 of accrued carried interest)	1,512,592			—		(186,455		)	1,326,137
Due from affiliates	207,924			—		(8,547		)	199,377
Intangible assets, net	31,578			—		—			31,578
Goodwill	143,786			—		—			143,786
Deferred tax asset, net	42,137			—		—			42,137
Other assets	160,150			—		—			160,150
Assets of Consolidated Funds
Cash and cash equivalents	—			384,644		—			384,644
Investments, at fair value	—			7,673,165		—			7,673,165
Due from affiliates	—			17,609		—			17,609
Dividends and interest receivable	—			19,330		—			19,330
Receivable for securities sold	—			42,076		—			42,076
Other assets	—			4,456		—			4,456
Total assets	$	2,208,414		$	8,141,280	$	(195,002	)	$	10,154,692
Liabilities
Accounts payable, accrued expenses and other liabilities	$	83,221		$	—	$	—		$	83,221
Accrued compensation	29,389			—		—			29,389
Due to affiliates	82,411			—		—			82,411
Performance related compensation payable	641,737			—		—			641,737
Debt obligations	480,952			—		—			480,952
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			83,876		—			83,876
Due to affiliates	—			8,547		(8,547		)	—
Payable for securities purchased	—			471,390		—			471,390
CLO loan obligations	—			6,706,286		(28,195		)	6,678,091
Fund borrowings	—			209,284		—			209,284
Total liabilities	1,317,710			7,479,383		(36,742		)	8,760,351
Commitments and contingencies
Non-controlling interest in Consolidated Funds	—			661,897		(158,260		)	503,637
Non-controlling interest in Ares Operating Group entities	302,780			—		—			302,780
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 units issued and outstanding at December 31, 2018)	298,761			—		—			298,761
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (101,594,095 shares issued and outstanding at December 31, 2018)	1,016			—		—			1,016
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding at December 31, 2018)	—			—		—			—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (1 shares issued and outstanding at December 31, 2018)	—			—		—			—
Additional paid-in-capital	326,007			—		—			326,007
Retained earnings	(29,336		)						(29,336		)
Accumulated other comprehensive loss, net of taxes	(8,524		)	—		—			(8,524		)
Total stockholders' equity	587,924			—		—			587,924
Total equity	890,704			661,897		(158,260		)	1,394,341
Total liabilities, non-controlling interests and equity	$	2,208,414		$	8,141,280	$	(195,002	)	$	10,154,692



	As of December 31, 2017
	As adjusted
	Consolidated Company Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	118,929		$	—	$	—		$	118,929
Investments ($1,077,236 of accrued carried interest)	1,900,191			—		(175,620		)	1,724,571
Due from affiliates	171,701			—		(5,951		)	165,750
Intangible assets, net	40,465			—		—			40,465
Goodwill	143,895			—		—			143,895
Deferred tax asset, net	8,326			—		—			8,326
Other assets	135,674			—		(5,333		)	130,341
Assets of Consolidated Funds
Cash and cash equivalents	—			556,500		—			556,500
Investments, at fair value	—			5,582,842		—			5,582,842
Due from affiliates	—			15,884		—			15,884
Dividends and interest receivable	—			12,568		—			12,568
Receivable for securities sold	—			61,462		—			61,462
Other assets	—			1,989		—			1,989
Total assets	$	2,519,181		$	6,231,245	$	(186,904	)	$	8,563,522
Liabilities
Accounts payable and accrued expenses	$	81,955		$	—	$	—		$	81,955
Accrued compensation	27,978			—		—			27,978
Due to affiliates	39,184			—		—			39,184
Performance related compensation payable	822,084			—		—			822,084
Debt obligations	616,176			—		—			616,176
Deferred tax liability, net	—			—		—			—
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			64,316		—			64,316
Due to affiliates	—			11,285		(11,285		)	—
Payable for securities purchased	—			350,145		—			350,145
CLO loan obligations	—			4,974,110		(10,916		)	4,963,194
Fund borrowings	—			138,198		—			138,198
Total liabilities	1,587,377			5,538,054		(22,201		)	7,103,230
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding)	298,761			—		—			298,761
Non-controlling interest in Consolidated Funds	—			693,191		(164,703		)	528,488
Non-controlling interest in Ares Operating Group entities	358,186			—		—			358,186
Controlling interest in Ares Management, L.P.:
Partners' Capital (82,280,033 shares issued and outstanding)	279,065			—		—			279,065
Accumulated other comprehensive loss, net of tax benefit	(4,208		)	—		—			(4,208		)
Total controlling interest in Ares Management, L.P.	274,857			—		—			274,857
Total equity	931,804			693,191		(164,703		)	1,460,292
Total liabilities, non-controlling interests and equity	$	2,519,181		$	6,231,245	$	(186,904	)	$	8,563,522



	For the Year Ended December 31, 2018
	Consolidated Company Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $128,805)	$	836,744		$	—		$	(34,242	)	$	802,502
Carried interest allocation	42,410			—			—			42,410
Incentive fees	67,380			—			(4,000		)	63,380
Principal investment income	1,047			—			(2,502		)	(1,455		)
Administrative, transaction and other fees	51,624			—			—			51,624
Total revenues	999,205			—			(40,744		)	958,461
Expenses
Compensation and benefits	570,380			—			—			570,380
Performance related compensation	30,254			—			—			30,254
General, administrative and other expense	215,964			—			—			215,964
Expenses of Consolidated Funds	—			92,006			(38,242		)	53,764
Total expenses	816,598			92,006			(38,242		)	870,362
Other income (expense)
Net realized and unrealized loss on investments	(2,867		)	—			983			(1,884		)
Interest and dividend income	7,121			—			(93		)	7,028
Interest expense	(21,448		)	—			—			(21,448		)
Other income (expense), net	(1,715		)	—			864			(851		)
Net realized and unrealized gain (loss) on investments of Consolidated Funds	—			664			(2,247		)	(1,583		)
Interest and other income of Consolidated Funds	—			337,875			—			337,875
Interest expense of Consolidated Funds	—			(224,253		)	1,358			(222,895		)
Total other income (loss)	(18,909		)	114,286			865			96,242
Income before taxes	163,698			22,280			(1,637		)	184,341
Income tax expense	32,071			131			—			32,202
Net income	131,627			22,149			(1,637		)	152,139
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			22,149			(1,637		)	20,512
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	74,607			—			—			74,607
Net income attributable to Ares Management Corporation	57,020			—			—			57,020
Less: Series A Preferred Stock dividends paid	21,700			—			—			21,700
Net income attributable to Ares Management Corporation Class A common stock	$	35,320		$	—		$	—		$	35,320



	For the Year Ended December 31, 2017
	As adjusted
	Consolidated Company Entities				Consolidated Funds				Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $105,467)	$	744,825			$	—			$	(22,406	)	$	722,419
Carried interest allocation	621,471				—				(1,017		)	620,454
Incentive fees	20,295				—				(4,075		)	16,220
Principal investment income	89,031				—				(24,587		)	64,444
Administrative, transaction and other fees	56,406				—				—			56,406
Total revenues	1,532,028				—				(52,085		)	1,479,943
Expenses
Compensation and benefits	514,109				—				—			514,109
Performance related compensation	479,722				—				—			479,722
General, administrative and other expense	196,730				—				—			196,730
Transaction support expense	275,177				—				—			275,177
Expenses of Consolidated Funds	—				65,501				(26,481		)	39,020
Total expenses	1,465,738				65,501				(26,481		)	1,504,758
Other income (expense)
Net realized and unrealized gain on investments	13,565				—				(5,303		)	8,262
Interest and dividend income	9,048				—				(2,005		)	7,043
Interest expense	(21,219		)		—				—			(21,219		)
Other income, net	19,470				—				—			19,470
Net realized and unrealized gain on investments of Consolidated Funds	—				126,836				(26,712		)	100,124
Interest and other income of Consolidated Funds	—				187,721				—			187,721
Interest expense of Consolidated Funds	—				(159,688		)		32,961			(126,727		)
Total other income	20,864				154,869				(1,059		)	174,674
Income before taxes	87,154				89,368				(26,663		)	149,859
Income tax expense (benefit)	(24,939		)		1,887				—			(23,052		)
Net income	112,093				87,481				(26,663		)	172,911
Less: Net income attributable to non-controlling interests in Consolidated Funds	—				87,481				(26,663		)	60,818
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	35,915				—				—			35,915
Net income attributable to Ares Management, L.P.	76,178				—				—			76,178
Less: Preferred equity dividends paid	21,700			—	—			—	—			21,700
Net income attributable to Ares Management, L.P. common shareholders	$	54,478			$	—			$	—		$	54,478



	For the Year Ended December 31, 2016
	As adjusted
	Consolidated Company Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $121,181)	$	659,451		$	—		$	(17,383	)	$	642,068
Carried interest allocation	491,654			—			2,926			494,580
Incentive fees	27,337			—			(4,065		)	23,272
Principal investment income	50,408			—			4,760			55,168
Administrative, transaction and other fees	39,285			—			—			39,285
Total revenues	1,268,135			—			(13,762		)	1,254,373
Expenses
Compensation and benefits	447,725			—			—			447,725
Performance related compensation	387,846			—			—			387,846
General, administrative and other expense	159,776			—			—			159,776
Expenses of Consolidated Funds	—			42,520			(21,447		)	21,073
Total expenses	995,347			42,520			(21,447		)	1,016,420
Other income (expense)
Net realized and unrealized loss on investments	(3,220		)	—			(4,409		)	(7,629		)
Interest and dividend income	8,034			—			(3,541		)	4,493
Interest expense	(17,981		)	—			—			(17,981		)
Other income, net	35,650			—			—			35,650
Net realized and unrealized loss on investments of Consolidated Funds	—			(2,999		)	942			(2,057		)
Interest and other income of Consolidated Funds	—			138,943			—			138,943
Interest expense of Consolidated Funds	—			(98,556		)	7,104			(91,452		)
Total other income	22,483			37,388			96			59,967
Income (loss) before taxes	295,271			(5,132		)	7,781			297,920
Income tax expense (benefit)	11,756			(737		)	—			11,019
Net income (loss)	283,515			(4,395		)	7,781			286,901
Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds	—			(4,395		)	7,781			3,386
Less: Net income attributable to redeemable interests in Ares Operating Group entities	456			—			—			456
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	171,251			—			—			171,251
Net income attributable to Ares Management, L.P.	111,808			—			—			111,808
Less: Preferred equity dividends paid	12,176			—			—			12,176
Net income attributable to Ares Management, L.P. common shareholders	$	99,632		$	—		$	—		$	99,632

SUBSEQUENT EVENTS	12 Months Ended
SUBSEQUENT EVENTS	Dec. 31, 2018
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTS The Company evaluated all events or transactions that occurred after December 31, 2018 through the date the consolidated financial statements were issued. During this period the Company had the following material subsequent events that require disclosure: In February 2019, the Company's board of directors declared a quarterly dividend of $0.32 per share of Class A common stock to common stockholders of record at the close of business on March 15, 2019, with a payment date of March 29, 2019. In February 2019, the Company's board of directors declared a quarterly dividend of $0.4375 per share of Series A Preferred Stock to preferred stockholders of record at the close of business on March 15, 2019, with a payment date of March 31, 2019. In February 2019, the Company's board of directors authorized the repurchase of up to $150 million of shares of Class A common stock. Under this stock repurchase program, shares may be repurchased from time to time in open market purchases, privately negotiated transactions or otherwise, including in reliance on Rule 10b5-1 of the Securities Act. The program is scheduled to expire in February 2020. Repurchases under the program, if any, will depend on the prevailing market conditions and other factors. There is no assurance that any shares will be repurchased under the program.

QUARTERLY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Data [Abstract]

QUARTERLY FINANCIAL DATA (UNAUDITED)

Unaudited quarterly information for each of the three months in the years ended December 31, 2018 and 2017 are presented below.



	For the Three Months Ended
	March 31, 2018		June 30, 2018			September 30, 2018		December 31, 2018
Revenues	$	266,089	$	204,163		$	240,777	$	247,432
Expenses	206,283		221,017			227,188		215,874
Other income	2,240		67,926			38,754		(12,678		)
Income before provision for income taxes	62,046		51,072			52,343		18,880
Net income	74,421		14,169			47,212		16,337
Net income (loss) attributable to Ares Management Corporation(1)	40,948		(11,775		)	15,910		11,937
Series A Preferred Stock dividends paid	5,425		5,425			5,425		5,425
Net income (loss) attributable to Ares Management Corporation Class A common stockholders(1)	35,523		(17,200		)	10,485		6,512
Net income (loss) attributable to Ares Management Corporation per share of Class A common stock(1):
Basic	$	0.39	$	(0.20	)	$	0.09	$	0.05
Diluted	$	0.28	$	(0.20	)	$	0.09	$	0.05
Dividends declared per share of Class A common stock(1)	$	0.24	$	0.28		$	0.28	$	0.28



	For the Three Months Ended
	March 31, 2017			June 30, 2017			September 30, 2017		December 31, 2017
	As adjusted
Revenues	$	244,244		$	572,197		$	288,402	$	375,100
Expenses	491,467			448,197			254,127		310,967
Other income (loss)	56,635			(8,920		)	54,149		72,810
Income (loss) before provision for income taxes	(190,588		)	115,080			88,424		136,943
Net income (loss)	(156,324		)	113,827			83,872		131,536
Net income (loss) attributable to Ares Management, L.P.	(41,134		)	49,878			27,838		39,596
Preferred equity dividends paid	5,425			5,425			5,425		5,425
Net income (loss) attributable to Ares Management, L.P. common shareholders	(46,559		)	44,453			22,413		34,171
Net income (loss) attributable to Ares Management L.P. per common share:
Basic	$	(0.58	)	$	0.54		$	0.26	$	0.40
Diluted	$	(0.58	)	$	0.53		$	0.26	$	0.39
Dividends declared per common share(2)	$	0.13		$	0.31		$	0.41	$	0.25


(1)	Periods prior to the Conversion on November 26, 2018 were attributable to Ares Management L.P. common shareholders


(2)	Dividends declared are reflected to match the period the income is earned.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Basis of Accounting

The accompanying consolidated financial statements are prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”). The Company’s Consolidated Funds are investment companies under GAAP based on the following characteristics: the Consolidated Funds obtain funds from one or more investors and provide investment management services and the Consolidated Funds’ business purpose and substantive activities are investing funds for returns from capital appreciation and/or investment income. Therefore, investments of Consolidated Funds are recorded at fair value and the unrealized appreciation (depreciation) in an investment’s fair value is recognized on a current basis in the Consolidated Statements of Operations. Additionally, the Consolidated Funds do not consolidate their majority-owned and controlled investments in portfolio companies. In the preparation of these consolidated financial statements, the Company has retained the investment company accounting for the Consolidated Funds under GAAP.

All of the investments held and CLO loan obligations issued by the Consolidated Funds are presented at their estimated fair values in the Company’s Consolidated Statements of Financial Condition. Net income attributable to holders of subordinated notes of the CLOs is included in net income (loss) attributable to non-controlling interests in Consolidated Funds in the Consolidated Statements of Operations.

Reclassifications

The Company has reclassified certain prior period amounts to conform to the current year presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses and other income (expense) during the reporting periods. Assumptions and estimates regarding the valuation of investments involve a high degree of judgment and complexity and may have a significant impact on net income. Actual results could differ from these estimates and such differences could be material to the consolidated financial statements.

Principles of Consolidation

The Company consolidates those entities in which it has a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. As such, the Company consolidates (a) entities in which it holds a majority voting interest or has majority ownership and control over the operational, financial and investing decisions of that entity, including Ares affiliates and affiliated funds and co-investment entities and (b) entities that the Company concludes are variable interest entities (“VIEs”), including limited partnerships and CLOs, in which the Company has more than insignificant economic interest and power to direct the activities that most significantly impact the entities, and for which the Company is deemed to be the primary beneficiary.

The Company determines whether an entity should be consolidated by first evaluating whether it holds a variable interest in the entity. Fees that are customary and commensurate with the level of services provided by the Company, and where the Company does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, would not be considered a variable interest. The Company factors in all economic interests, including proportionate interests through related parties, to determine if fees are considered a variable interest. As the Company’s interests in funds are primarily management fees, performance income, and/or insignificant direct or indirect equity interests through related parties, the Company is not considered to have a variable interest in many of these entities. Entities that are not VIEs are further evaluated for consolidation under the voting interest model (“VOE”).

Variable Interest Model

An entity is considered to be a variable interest entity (“VIE”) if any of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) the holders of equity investment at risk, as a group, lack either the direct or indirect ability through voting rights or similar rights to make decisions that have a significant effect on the success of the entity or the obligation to absorb the expected losses or right to receive the expected residual returns, or (c) the voting rights of some equity investors are disproportionate to their obligation to absorb losses of the entity, their rights to receive returns from an entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor with disproportionately few voting rights.

The Company consolidates all VIEs for which it is the primary beneficiary. An entity is determined to be the primary beneficiary if it holds a controlling financial interest, which is defined as having (a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE.

The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and continuously reconsiders the conclusion. In evaluating whether the Company is the primary beneficiary, the Company evaluates its direct and indirect economic interests in the entity. The consolidation analysis is generally performed qualitatively, however, if the primary beneficiary is not readily determinable, a quantitative analysis may also be performed. This analysis requires judgment. These judgments include: (1) determining whether the equity investment at risk is sufficient to permit the entity to finance its activities without additional subordinated financial support, (2) evaluating whether the equity holders, as a group, can make decisions that have a significant effect on the success of the entity, (3) determining whether two or more parties' equity interests should be aggregated, (4) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive returns from an entity and (5) evaluating the nature of relationships and activities of the parties involved in determining which party within a related-party group is most closely associated with a VIE and hence would be deemed the primary beneficiary.

Voting Interest Model

The Company consolidated entities, including limited partnerships and similar entities, in which it held a majority voting interest and those entities in which it had majority ownership and control over the operational, financial and investing decisions, including Ares affiliates and affiliated funds and co-investment entities.

The Company’s total exposure to consolidated VOEs represents the value of its economic ownership interest in these entities. Valuation changes associated with investments held at fair value by these consolidated VOEs are reflected in non-operating income (expense) and partially offset in net income (loss) attributable to non-controlling interests for the portion not attributable to the Company.

Equity Appropriated for Consolidated Funds

Consolidated CLOs

As of December 31, 2018 and 2017, the Company consolidated thirteen and ten CLOs, respectively.

Beginning January 1, 2016, the Company has determined that the fair value of the financial assets of the consolidated CLOs, which are mostly Level II assets within the GAAP fair value hierarchy, are more observable than the fair value of the financial liabilities of its consolidated CLOs, which are mostly Level III liabilities within the GAAP fair value hierarchy. As a result, the financial assets of consolidated CLOs are measured at fair value and the financial liabilities of the consolidated CLOs are measured in consolidation as: (1) the sum of the fair value of the financial assets, and the carrying value of any nonfinancial assets held temporarily, less (2) the sum of the fair value of any beneficial interests retained by the Company (other than those that represent compensation for services), and the Company’s carrying value of any beneficial interests that represent compensation for services. The resulting amount is allocated to the individual financial liabilities (other than the beneficial interests retained by the Company).

The loan obligations issued by the CLOs are collateralized by diversified asset portfolios and by structured debt or equity. In exchange for managing the collateral for the CLOs, the Company typically earns a variety of management fees, including senior and subordinated management fees, and in some cases, contingent incentive fee income. In cases where the Company earns fees from a CLO that it consolidates, those fees have been eliminated as intercompany transactions. The Company's holdings in these CLOs are generally subordinated to other interests in the entities and entitle the Company to receive a pro rata portion of the residual cash flows, if any, from the entities. Additionally, the Company may invest in other senior secured notes, which are repaid based on available cash flows subject to priority of payments under each consolidated CLO's governing documents. Investors in the CLOs generally have no recourse against the Company for any losses sustained in the capital structure of each CLO.

Fair Value Measurements

GAAP establishes a hierarchal disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market observability. Market price observability is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:


•	Level I—Quoted prices in active markets for identical instruments.

•

Level II—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in inactive markets; and model‑derived valuations with directly or indirectly observable significant inputs. Level II inputs include prices in markets with few transactions, non-current prices, prices for which little public information exists or prices that vary substantially over time or among brokered market makers. Other inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates.


•	Level III—Valuations that rely on one or more significant unobservable inputs. These inputs reflect the Company’s assessment of the assumptions that market participants would use to value the instrument based on the best information available.

In some instances, an instrument may fall into more than one level of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the fair value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. The Company accounts for the transfer of assets into or out of each fair value hierarchy level as of the beginning of the reporting period. (See Note 5 for further detail).

Cash and Cash Equivalents

Cash and cash equivalents for the Company includes investments with maturities at purchase of less than three months, money market funds and demand deposits. Cash and cash equivalents held at Consolidated Funds represents cash that, although not legally restricted, is not available to support the general liquidity needs of the Company, as the use of such amounts is generally limited to the activities of the Consolidated Funds.

As the servicer to certain real estate investments, certain subsidiaries of the Company collect escrow deposits from borrowers to ensure the borrowers’ obligations are met. These escrow deposits are represented as cash and cash equivalents for the Company and escrow liability is reported within accounts payable, accrued expenses and other liabilities in the Consolidated Statements of Financial Condition.

At December 31, 2018 and 2017, the Company had cash balances with financial institutions in excess of Federal Deposit Insurance Corporation insured limits. The Company monitors the credit standing of these financial institutions.

Investments

The Company has retained the specialized investment company accounting guidance under GAAP with respect to its Consolidated Funds, which hold substantially all of its investments. Thus, the consolidated investments are reflected in the Consolidated Statements of Financial Condition at fair value, with unrealized appreciation (depreciation) resulting from changes in fair value reflected as a component of net realized and unrealized gain (loss) on investments in the Consolidated Statements of Operations. Fair value is the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., the exit price).

Equity-Method Investments

Equity Method Investments

The Company accounts for its investments in which it has or is otherwise presumed to have significant influence, including investments in unconsolidated funds, strategic investments and carried interest, using the equity method of accounting. The carrying amounts of equity method investments are reflected in investments in the Consolidated Statements of Financial Condition. As the underlying investments of the Company's equity method investments are reported at fair value, the carrying value of the equity method investments approximates fair value. The carrying value of investments accounted for using equity method accounting is determined based on amounts invested by the Company, adjusted for the equity in earnings or losses of the investee allocated based on the respective partnership agreements, less distributions received. The Company evaluates the equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. Except for carried interest, the Company’s share of the investee’s income and expenses for the Company’s equity method investments is included within principal investment income (loss) and net realized and unrealized gain (loss) on investments within the Consolidated Statements of Operations. Carried interest allocation is presented separately as a revenue line item within the Consolidated Statements of Operations, and the accrued but unpaid carried interest as of the reporting date is reported in within investments in the Consolidated Statements of Financial Condition.

Derivative Instruments

The Company recognizes all derivatives as either assets or liabilities in the Consolidated Statements of Financial Condition within other assets or accounts payable, accrued expenses and other liabilities, respectively, and reports them at fair value.

In the normal course of business, the Company and the Consolidated Funds are exposed to certain risks relating to their ongoing operations and use various types of derivative instruments primarily to mitigate against credit and foreign exchange risk. The derivative instruments used by the Company and Consolidated Funds include warrants, currency options, interest rate swaps, credit default swaps and forward contracts. The derivative instruments are not designated as hedging instruments under the accounting standards for derivatives and hedging. The Company recognizes all of its derivative instruments at fair value as either assets or liabilities in the Consolidated Statements of Financial Condition within other assets or accounts payable, accrued expenses and other liabilities, respectively.

By using derivatives, the Company and the Consolidated Funds are exposed to counterparty credit risk if counterparties to the derivative contracts do not perform as expected. If a counterparty fails to perform, the Company's counterparty credit risk is equal to the amount reported as a derivative asset in the Consolidated Statements of Financial Condition. The Company minimizes counterparty credit risk through credit approvals, limits, monitoring procedures, executing master netting arrangements and obtaining collateral, where appropriate.

To the extent the master netting arrangements and other criteria meet the applicable requirements, which includes determining the legal enforceability of the arrangements, the Company may choose to offset the derivative assets and liabilities in the same currency by specific derivative type, or in the event of default by the counterparty, offset derivative assets and liabilities with the same counterparty. The Company generally presents derivative and other financial instruments on a gross basis within the Consolidated Statements of Financial Condition, with certain instruments subject to enforceable master netting arrangements that could allow for the derivative and other financial instruments to be offset. The Consolidated Funds present derivative and other financial instruments on a net basis. This election is determined at management's discretion on a fund by fund basis. The Company has retained each Consolidated Fund's presentation upon consolidation.

Qualitative Disclosures of Derivative Financial Instruments

Derivative instruments are marked-to-market daily based upon quotations from pricing services or by the Company and the change in value, if any, is recorded as an unrealized gain (loss) within net realized and unrealized gain (loss) on investments in the Consolidated Statements of Operations. Upon settlement of the instrument, the Company records the realized gain (loss) within net realized and unrealized gain (loss) on investments in the Consolidated Statements of Operations.

Significant derivative instruments utilized by the Company and the Consolidated Funds during the reporting periods presented include the following:

Forward Foreign Currency Contracts: The Company and the Consolidated Funds enter into foreign currency forward exchange contracts to hedge against foreign currency exchange rate risk on certain non-U.S. dollar denominated cash flows. When entering into a forward currency contract, the Company and the Consolidated Funds agree to receive and/or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed-upon future date. Forward foreign currency contracts involve elements of market risk in excess of the amounts reflected in the Consolidated Statements of Financial Condition. The Company and the Consolidated Funds bear the risk of an unfavorable change in the foreign exchange rate underlying the forward foreign currency contract. In addition, the potential inability of the counterparties to meet the terms of their contracts poses a risk to the Company and the Consolidated Funds.

Interest Rate Swaps: The Company and the Consolidated Funds enter into interest rate swap contracts to mitigate their interest rate risk exposure to higher floating interest rates. Interest rate swaps represent an agreement between two counterparties to exchange cash flows based on the difference in two interest rates, applied to the notional principal amount for a specified period. The payment flows are generally netted, with the difference being paid by one party to the other. The interest rate swap contracts effectively mitigate the Company and the Consolidated Funds’ exposure to interest rate risk by converting a portion of the Company and the Consolidated Funds’ floating rate debt to a fixed rate basis.

Asset Swap: The Consolidated Funds enter into asset swap contracts to hedge against foreign currency exchange rate risk on certain non-Euro denominated loans. Assets swap contracts provide the Consolidated Funds with the opportunity to purchase or sell an underlying asset that are not denominated in Euros and a pre-agreed exchange rate and receive Euro interest payments from the swap counter party in exchange for non-Euro interest payments pegged to the currency of the underlying loan and applicable interest rates. The swap contracts can be optionally cancelled at any time, normally due the disposal or redemption of the underlying asset, however in the absence of sale or redemption the swap contracts maturity matches that of the underlying asset. By entering into asset swap contracts to exchange interest payments and principal on equally valued loans denominated in a different currency than that of the underlying assets the Consolidated Funds can mitigate the risk of exposure to foreign currency fluctuations. Generally, the fair value of asset swap contracts are calculated using a model that utilizes the spread between the fair value of the underlying asset and the exercise value of the contract, as well as any other relevant inputs. Broker quotes may also be used to calculate the fair value of asset swaps, if available.

Goodwill and Intangible Assets

The Company's finite-lived intangible assets consist of contractual rights to earn future management fees from the acquired management contracts. Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from approximately 3.5 to 13.5 years. The purchase price of the acquired management contract is treated as an intangible asset and is amortized over the life of the contract. Amortization is included as part of general, administrative and other expenses in the Consolidated Statements of Operations.

The Company tests finite‑lived intangible assets for impairment if certain events occur or circumstances change indicating that the carrying amount of the intangible asset may not be recoverable. The Company evaluates impairment by comparing the estimated fair value attributable to the intangible asset being evaluated with its carrying amount. If an impairment is determined to exist by management, the Company accelerates amortization expense so that the carrying amount represents fair value. The Company estimates fair value using undiscounted future cash flow.

Goodwill represents the excess cost over identifiable net assets of an acquired business. The Company tests goodwill annually for impairment. If, after assessing qualitative factors, the Company believes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company will evaluate impairment quantitatively to determine and record the amount of goodwill impairment as the excess of the carrying amount of the reporting unit over its fair value.

The Company also tests goodwill for impairment in other periods if an event occurs or circumstances change such that is more likely than not to reduce the fair value of the reporting unit below its carrying amount. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including the Company’s interpretation of current economic indicators and market valuations, and assumptions about the Company’s strategic plans with regard to its operations. Due to the uncertainties associated with such estimates, actual results could differ from such estimates.

Fixed Assets

Fixed assets, consisting of furniture, fixtures and equipment, leasehold improvements, computer hardware and internal-use software, are recorded at cost, less accumulated depreciation and amortization. Fixed assets are included within other assets on the Company’s Consolidated Statements of Financial Condition.

Direct costs associated with developing, purchasing or otherwise acquiring software for internal use (“Internal-Use Software”) are capitalized and amortized on a straight-line basis over the expected useful life of the software, beginning when the software is ready for its intended purpose. Costs incurred for upgrades and enhancements that will not result in additional functionality are expensed as incurred.

Fixed assets are depreciated or amortized on a straight-line basis over an asset's estimated useful life, with the corresponding depreciation and amortization expense included within general, administrative and other expenses on the Company’s Consolidated Statements of Operations. The estimated useful life for leasehold improvements is the lesser of the lease term or the life of the asset while other fixed assets and internal-use software are generally depreciated between three and seven years. Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Revenue Recognition

Revenues primarily consist of management fees, carried interest allocation, incentive fees, principal investment income and administrative, transaction and other fees.

Management Fees

Management fees are generally based on a defined percentage of fair value of assets, total commitments, invested capital, net asset value ("NAV"), net investment income, total assets or par value of the investment portfolios managed by the Company. Principally all management fees are earned from affiliated funds of the Company. The contractual terms of management fees vary by fund structure and investment strategy. Management fees are recognized as revenue in the period advisory services are rendered, subject to the Company’s assessment of collectability.

Management fees also include a quarterly incentive fee based on the investment income ("ARCC Part I Fees") from Ares Capital Corporation (NASDAQ: ARCC) ("ARCC"), a publicly traded business development company registered under the Investment Company Act and managed by a subsidiary of the Company.

ARCC Part I Fees are equal to 20.0% of its net investment income (before ARCC Part I Fees and incentive fees payable based on capital gains), subject to a fixed "hurdle rate" of 1.75% per quarter, or 7.0% per annum. No fee is recognized until ARCC's net investment income exceeds a 1.75% hurdle rate, with a "catch-up" provision such that the Company receives 20% of ARCC's net investment income from the first dollar earned. Such fees from ARCC are classified as management fees as they are paid quarterly, predictable and recurring in nature, not subject to contingent repayment and are typically cash settled each quarter.

Performance Income

Performance income revenues consist of carried interest allocation and incentive fees. Performance income is based on certain specific hurdle rates as defined in the applicable investment management agreements or governing documents. Substantially all performance income is earned from affiliated funds of the Company.

Carried Interest Allocation

In certain fund structures, typically in private equity and real estate equity funds, carried interest is allocated to the Company based on cumulative fund performance to date, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. At the end of each reporting period, a fund will allocate carried interest applicable to the Company based upon an assumed liquidation of that fund's net assets on the reporting date, irrespective of whether such amounts have been realized. Carried interest is recorded to the extent such amounts have been allocated, and may be subject to reversal to the extent that the amount allocated exceeds the amount due to the general partner or investment manager based on a fund’s cumulative investment returns.

As the fair value of underlying assets varies between reporting periods, it is necessary to make adjustments to amounts recorded as carried interest to reflect either (i) positive performance resulting in an increase in the carried interest allocated to the Company or (ii) negative performance that would cause the amount due to the Company to be less than the amount previously recognized as revenue, resulting in a reversal of previously recognized carried interest allocated to the Company. Accrued but unpaid carried interest as of the reporting date is recorded within investments in the Consolidated Statements of Financial Condition.

Carried interest is realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the specific hurdle rates as defined in the applicable investment management agreements or governing documents. Since carried interest is subject to reversal, the Company may need to accrue for potential repayment of previously received carried interest. This accrual represents all amounts previously distributed to the Company that would need to be repaid to the funds if the funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual repayment obligations, however, generally does not become realized until the end of a fund’s life. As of December 31, 2018, if the funds were liquidated at their fair values, there would be a $0.4 million repayment obligation, and accordingly, the Company recorded a contingent repayment liability as of December 31, 2018. As of December 31, 2017, if the funds were liquidated at their fair values, there would be no repayment obligation, and accordingly, the Company did not record a contingent repayment liability as of December 31, 2017.

Prior to January 1, 2018, the Company accounted for carried interest under Method 2 described in ASC 605-20-S99-1, which provided guidance on accounting for incentive-based performance income, including carried interest. The Company has reassessed its accounting policy for carried interest, and has determined that carried interest is addressed within scope of ASC 323, Investments-Equity Method and Joint Ventures, and out of scope under the scoping provision of ASC 606. Therefore, following the application of ASC 323, the Company accounted for carried interest, which represents a performance-based capital allocation from an investment fund to the Company, as earnings from financial assets within the scope of ASC 323. Accordingly, the Company recognizes carried interest allocation as a separate revenue line item in the Consolidated Statements of Operations with uncollected carried interest as of the reporting date reported within investments in the Consolidated Statements of Financial Condition.

The Company has applied the change in accounting principle on a full retrospective basis, and prior periods presented herein have been recast to conform with the current period's presentation. The change in accounting principle did not change the timing or the amount of carried interest recognized. Instead, the change in accounting principle resulted in reclassification from performance income to carried interest allocation, and therefore did not have any impact on net income. See the tables below for the impact of the change in accounting principle of carried interest.

Incentive Fees

Incentive fees earned on the performance of certain fund structures, typically in credit funds, are recognized based on the fund’s performance during the period, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. Incentive fees are realized at the end of a measurement period, typically annually. Once realized, such fees are no longer subject to reversal.

Prior to January 1, 2018, the Company accounted for incentive fees under Method 2 as described above. However, the accounting for incentive fees is separate and distinct from the accounting for carried interest because the incentive fees are contractual fee arrangements and do not represent allocations of returns from partners' capital accounts. The Company now accounts for incentive fees in accordance with ASC 606. Accordingly, the Company recognizes incentive fee revenue only when the amount is realized and no longer subject to reversal. Therefore, the Company no longer recognizes unrealized incentive fees in revenues in the consolidated financial statements. The adoption of ASC 606 results in the delayed recognition of unrealized incentive fees in the consolidated financial statements until they become realized at the end of the measurement period, which is typically annually.

The Company adopted ASC 606 for incentive fees using the modified retrospective approach with an effective date of January 1, 2018. The cumulative effect of the adoption resulted in the reversal of $22.6 million of unrealized incentive fees and is presented as a reduction to the opening balances of components of equity as of January 1, 2018.

Principal Investment Income

Principal investment income consists of interest and dividend income and net realized and unrealized gain (loss) from the equity method investments that the Company manages.

Administrative, Transaction and Other Fees

The Company provides administrative services to certain of its affiliated funds that are reported within administrative and other fees. The administrative fees generally represent expense reimbursements for a portion of overhead and other expenses incurred by certain Operations Management Group professionals directly attributable to performing services for a fund but may also be based on a fund’s NAV for certain funds domiciled outside the U.S. The Company also receives transaction fees from certain affiliated funds for activities related to fund transactions, such as loan originations. These fees are recognized as other revenue in the period in which the administrative services and the transaction related services are rendered.

Adoption of ASC 606 and Recent Accounting Pronouncements

Recent Accounting Pronouncements

The Company considers the applicability and impact of all ASUs issued. ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The objective of the guidance in ASU 2016-02 is to increase transparency and comparability among organizations by recognizing lease assets and liabilities in the balance sheet and disclosing key information. ASU 2016-02 amends previous lease guidance, which required a lessee to categorize and account for leases as either operating leases or capital leases, and instead requires a lessee to recognize a lease liability and a right-of-use asset on the entity’s balance sheet for all leases with terms that exceed one year. The lease liability and right-of-use asset are to be carried at the present value of remaining expected future lease payments. The guidance should be applied using a modified retrospective approach. ASU 2016-02 is effective for public entities for annual reporting periods beginning after December 15, 2018 and interim periods within those reporting periods, with early adoption permitted. The Company has completed its compilation of all leases and right–of–use terms, and has preliminary concluded that the impact of the adoption of ASU 2016-02 is expected to be a recognition of right-of-use assets and lease liabilities of approximately between $135.0 million and $150.0 million on its Consolidated Statements of Financial Condition. The adoption is not expected to have a material impact on its Consolidated Statements of Operations or on other consolidated financial statements. The Company used the practical expedients provided in the guidance for its adoption of ASU 2016-02. The Company plans on using its Credit Facility rate as its incremental borrowing rate based on information available at the time of implementation of ASU 2016-02 as the Company leases do not provide an implicit rate.

In May 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The objective of the guidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs. ASU 2016-13 requires an entity to present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses. Available for sale and held to maturity debt securities are also required to be held net of an allowance for credit losses. The guidance should be applied using a modified retrospective approach. ASU 2016-13 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods. Early adoption is permitted for annual and quarterly reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Public Law No. 115-97 (the “Tax Cuts and Jobs Act”). Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. This ASU also requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The guidance should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company adopted ASU 2018-02 in the three months ended March 31, 2018. As a result of the adoption of ASU 2018-02, $1.2 million of stranded tax effects resulting from the Tax Cuts and Jobs Act were reclassified from accumulated other comprehensive income to shareholders' equity during the three months ended March 31, 2018.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). ASU 2018-15, amends ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This ASU aligns the accounting for costs incurred to implement a cloud computing arrangement that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, ASU 2018-15 amends ASC 350 to include in its scope implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a cloud computing arrangement that is considered a service contract. The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. In addition, this ASU states that a cloud computing arrangement that is a service contract does not give rise to a recognizable intangible asset because it is an executory service contract. Consequently, any costs incurred to implement a cloud computing arrangement that is a service contract would not be capitalized as an intangible asset since they do not form part of an intangible asset but instead would be characterized in the financial statements in the same manner as other service costs and assets related to service contracts such as prepaid expense. That is, these costs would be capitalized as part of the service contract and the related amortization would be consistent with the ongoing periodic costs of the underlying cloud computing arrangement. ASU 2018-15 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods, with early adoption permitted. The guidance may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. ASU 2018-17, amends ASC 810 to address whether indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. This is consistent with how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE. For example, if a decision maker or service provider owns a 20 percent interest in a related party and that related party owns a 40 percent interest in the legal entity being evaluated, the decision maker’s or service provider’s indirect interest in the VIE held through the related party under common control should be considered the equivalent of an eight percent direct interest for determining whether its fees are variable interests. ASU 2018-17 is effective for public entities for annual reporting periods beginning after December 15, 2019 and interim periods within those reporting periods, with early adoption permitted. The guidance should be applied retrospectively. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

Adoption of ASC 606

Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) Topic 606 (“ASC 606”), Revenue from Contracts with Customers. The Company adopted ASC 606 to all applicable contracts under the modified retrospective approach using the practical expedient provided for within paragraph 606-10-65-1(f)(3); therefore, the presentation of prior year periods has not been adjusted. The Company recognized the cumulative effect of initially adopting ASC 606 as an adjustment to the opening balance of components of equity as of January 1, 2018.

Pursuant to ASC 606, the Company recognizes revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Under this standard, revenue is based on a contract with a determinable transaction price and distinct performance obligations with probable collectability. Revenues cannot be recognized until the performance obligation(s) are satisfied and control is transferred to the customer. The Company's adoption of ASC 606 impacted the timing and recognition of incentive fees in the Company’s consolidated statements of operations. The adoption of ASC 606 did not have an impact on the Company’s management fees, administrative fees, transaction fees or other fees. The details of the significant changes and quantitative impact of the adoption of ASC 606 are further discussed below.

Equity-Based Compensation

The Company recognizes expense related to equity-based compensation in which it receives employee services in exchange for (a) equity instruments of the Company, (b) derivatives based on the Company’s Class A common stock or (c) liabilities that are based on the fair value of the Company’s equity instruments. Equity-based compensation expense represents expenses associated with restricted units, options and phantom shares granted under the Second Amended and Restated Ares Management Corporation 2014 Equity Incentive Plan (“the 2014 Equity Incentive Plan”).

Equity-based compensation expense for restricted units and options is determined based on the fair value of the respective equity award on the grant date and is recognized on a straight-line basis over the requisite service period, with a corresponding increase in additional paid-in-capital. Grant date fair value of the restricted units was determined to be the most recent closing price of shares of the Company's Class A common stock. Certain restricted units are subject to a lock-up provision that expires on the fifth anniversary of the IPO. The Company used Finnerty’s average strike-price put option model to estimate the discount associated with this lack of marketability. The Company estimated the grant date fair value of the options as of the grant date using Black-Scholes option pricing model. The phantom shares will be settled in cash and therefore represent a liability that is required to be remeasured at each reporting period. Fair value of phantom shares was determined to be the most recent closing price each reporting period.

The Company recognizes share-based award forfeitures in the period they occur as a reversal of previously recognized compensation expense. The reduction in compensation expense is determined based on the specific awards forfeited during that period.

The Company records deferred tax assets or liabilities for equity compensation plan awards based on deductions for income tax purposes of equity-based compensation recognized at the statutory tax rate in the jurisdiction in which the Company is expected to receive a tax deduction. In addition, differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the Company’s income tax returns are recorded as adjustments to additional paid-in-capital. If the tax deduction is less than the deferred tax asset, the calculated shortfall reduces the pool of excess tax benefits. If the pool of excess tax benefits is reduced to zero, then subsequent shortfalls would increase the income tax expense.

Equity-based compensation expense is presented within compensation and benefits in the Consolidated Statements of Operations.

Performance Fee Compensation

Performance Related Compensation

The Company has agreed to pay a portion of the performance income earned from certain funds, including income from Consolidated Funds that is eliminated in consolidation, to investment and non-investment professionals. Depending on the nature of each fund, the performance income allocation may be structured as a fixed percentage subject to vesting based on continued employment or service (generally over a period of five years) or as an annual award that is fully vested for the particular year. Other limitations may apply to performance income allocation as set forth in the applicable governing documents of the fund or award documentation. Performance related compensation is recognized in the same period that the related performance income is recognized. Performance related compensation can be reversed during periods when there is a reversal of performance income that was previously recognized.

Performance related compensation payable represents the amounts payable to professionals who are entitled to a proportionate share of performance income in one or more funds. The liability is calculated based upon the changes to realized and unrealized performance income but not payable until the performance income itself is realized.

Net Realized and Unrealized Gain (Loss) on Investments

Realized gain (loss) occurs when the Company redeems all or a portion of its investment or when the Company receives cash income, such as dividends or distributions. Unrealized appreciation (depreciation) results from changes in the fair value of the underlying investment as well as from the reversal of previously recognized unrealized appreciation (depreciation) at the time an investment is realized. Realized and unrealized gains (losses) are presented together as net realized and unrealized gain (loss) on investments in the Consolidated Statements of Operations. Also, the Company’s share of the investee’s income and expenses for the Company’s equity method investments is included within net realized and unrealized gain (loss) on investments.

Interest and Dividend Income

Interest, dividends and other investment income are included in interest and dividend income. Interest income is recognized on an accrual basis to the extent that such amounts are expected to be collected using the effective interest method. Dividends and other investment income are recorded when the right to receive payment is established.

Foreign Currency

The U.S. dollar is the Company's functional currency; however, certain transactions of the Company may not be denominated in U.S. dollars. Foreign exchange revaluation arising from these transactions is recognized within other income (expense) in the Consolidated Statements of Operations. For the years ended December 31, 2018 and 2017, the Company recognized $0.1 million and $1.7 million, respectively, in transaction losses related to foreign currencies revaluation. For the year ended December 31, 2016, the Company recognized $16.2 million in transaction gain related to foreign currencies revaluation.

In addition, the combined and consolidated results include certain foreign subsidiaries and Consolidated Funds that use functional currencies other than the U.S. dollar. Assets and liabilities of these foreign subsidiaries are translated to U.S. dollars at the prevailing exchange rates as of the reporting date. Income and expense and gain and loss transactions denominated in foreign currencies are generally translated into U.S. dollars monthly using the average exchange rates during the respective transaction period. Translation adjustments resulting from this process are recorded to currency translation adjustment in accumulated other comprehensive income.

Income Taxes

The Company elected to be taxed as a corporation effective March 1, 2018 (the “Tax Election”). Prior to the Tax Election, the Company's share of carried interest and investment income generally were not subject to U.S. corporate income taxes. Upon the effectiveness of the Tax Election, all earnings allocated to the Company is subject to U.S. corporate income taxes. Prior to March 1, 2018, a significant portion of Company's share of carried interest and investment income flowed through to investors without being subject to entity level income taxes. Consequently, we did not reflect a provision for income taxes on such income except those for foreign, state, and local income taxes at the entity level. Beginning March 1, 2018, the Company's share of unrealized gains and income items became subject to U.S. corporate tax. A provision for corporate level income taxes imposed on these previously unrealized gains and income items as well as taxes imposed on certain subsidiaries’ earnings is included in the consolidated tax provision. Also included in the consolidated tax provision are entity level income taxes incurred by certain affiliated funds and co‑investment entities that are consolidated in these financial statements. The portion of consolidated earnings not allocated to the Company continues to flow through to owners of the Ares Operating Group entities without being taxed at the corporate level.

Income taxes are accounted for using the liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis, using tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred assets and liabilities of a change in tax rates is recognized as income, in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current and deferred tax liabilities are reported on a net basis in the Consolidated Statements of Financial Condition.

The Company analyzes its tax filing positions in all U.S. federal, state, local and foreign tax jurisdictions where it is required to file income tax returns for all open tax years in these jurisdictions. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized. The amount of unrecognized tax benefits (“UTBs”) is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax law, new regulations or interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination. Both accrued interest and penalties, where appropriate, related to UTBs are shown in general, administrative and other expenses in the Consolidated Statements of Operations.

Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties under GAAP. The Company reviews its tax positions quarterly and adjusts its tax balances as new legislation is passed or new information becomes available.

Income Allocation

Income (loss) before taxes is allocated based on each partner’s average daily ownership of the Ares Operating Group entities for each year presented.

Fair Value

Financial Instrument Valuations

The valuation techniques used by the Company to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The valuation techniques applied to investments held by the Company and by the Consolidated Funds vary depending on the nature of the investment.

CLOs and CLO loan obligations: The fair value of CLOs held by the Company are estimated based on various third-party pricing services or broker quotes and are classified as Level III. The Company measures its CLO loan obligations of the Consolidated Funds by first determining whether the fair values of the financial assets or financial liabilities of its consolidated CLOs are more observable. The Company has determined that the fair value of the financial assets of the consolidated CLOs, which are mostly Level II assets, are more observable than the fair value of the financial liabilities of its consolidated CLOs, which are mostly Level III liabilities. As a result, the financial assets of consolidated CLOs are measured at fair value and the financial liabilities of the consolidated CLOs are measured in consolidation as: (1) the sum of the fair value of the financial assets, and the carrying value of any nonfinancial assets held temporarily, less (2) the sum of the fair value of any beneficial interests retained by the Company (other than those that represent compensation for services), and the Company’s carrying value of any beneficial interests that represent compensation for services. The resulting amount is allocated to the individual financial liabilities (other than the beneficial interests retained by the Company).

Corporate debt, bonds, bank loans and derivative instruments: The fair value of corporate debt, bonds, bank loans and derivative instruments is estimated based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs. These investments are generally classified as Level II. The Company obtains prices from independent pricing services that generally utilize broker quotes and may use various other pricing techniques, which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data. If management is only able to obtain a single broker quote, or utilizes a pricing model, such securities will generally be classified as Level III.

Equity and equity-related securities: Securities traded on a national securities exchange are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified as Level I. Securities that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs obtained by the Company from independent pricing services are classified as Level II.

Partnership interests: The Company generally values its investments using the NAV per share equivalent calculated by the investment manager as a practical expedient to determining an independent fair value or estimates based on various valuation models of third-party pricing services, as well as internal models. The Company does not categorize within the fair value hierarchy investments where fair value is measured using the net asset value per share practical expedient.

Certain investments of the Company are valued at NAV per share of the fund. In limited circumstances, the Company may determine, based on its own due diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, the Company will estimate the fair value in good faith and in a manner that it reasonably chooses, in accordance with the requirements of GAAP. As of December 31, 2018 and 2017, NAV per share represents the fair value of the investments for the Company and discounted cash flow analysis is used to determine the fair value for an investment held by the Consolidated Funds.

The substantial majority of the Company's private commingled funds are closed-ended, and accordingly, do not permit investors to redeem their interests other than in limited circumstances that are beyond the control of the Company, such as instances in which retaining the interest could cause the investor to violate a law, regulation or rule. Investors in open-ended and evergreen funds have the right to withdraw their capital, subject to the terms of the respective constituent documents, over periods ranging from one month to three years. In addition, separately managed investment vehicles for a single fund investor may allow such investors to terminate the fund at the discretion of the investor pursuant to the terms of the applicable constituent documents of such vehicle.

Earnings Per Share

Basic earnings per share of Class A common stock is computed by dividing income available to Class A common stockholders by the weighted-average number shares of Class A common stock outstanding during the period. Income available to Class A common stockholders represents net income attributable to Ares Management Corporation after giving effect to the Series A Preferred stock dividends paid.

Diluted earnings per share of Class A common stock is computed by dividing income available to Class A common stockholders by the weighted-average number of shares of Class A common stock outstanding during the period, increased to include the number of additional shares of Class A common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding options to acquire shares of Class A common stock, unvested restricted units and AOG Units exchangeable for shares of Class A common stock. The effect of potentially dilutive securities is reflected in diluted earnings per share of Class A common stock using the more dilutive result of the treasury stock method or the two-class method.

Unvested share-based payment awards that contain non-forfeitable rights to dividend or dividend equivalents (whether paid or unpaid) are participating securities and are considered in the computation of earnings per share of Class A common stock pursuant to the two-class method. Unvested restricted units that pay dividend equivalents are deemed participating securities and are included in basic and diluted earnings per share of Class A common stock calculation under the two-class method.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other appreciation (depreciation) affecting stockholders' equity that, under GAAP, are excluded from net income (loss). The Company's other comprehensive income (loss) includes foreign currency translation adjustments.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Schedule of Adoption of ASU 2016-09

The following tables present the adjustments made in connection with the Company's change in accounting principle related to carried interest under ASC 323, Investments-Equity Method and Joint Ventures on the financial statement line items for the periods presented in the consolidated financial statements:



Consolidated Statement of Financial Condition

	As of December 31, 2017
	As Previously Reported		Adjustments				As Adjusted
	(audited)
Assets
Investments ($1,077,236 of accrued carried interest)	$	647,335	$	1,077,236			$	1,724,571
Performance income receivable	1,099,847		(1,099,847		)		—
Other assets	107,730		22,611			(1)	130,341


(1)	Unrealized incentive fees receivable balance as of December 31, 2017 that was reversed in connection with the adoption of ASC 606.



Consolidated Statement of Operations

	For the Year Ended December 31, 2017
	As Previously Reported		Adjustments			As Adjusted

Revenues
Performance income	$	636,674	$	(636,674	)	$	—
Carried interest allocation	—		620,454			620,454
Incentive fees	—		16,220			16,220
Principal investment income	—		64,444			64,444
Total revenues	1,415,499		64,444			1,479,943
Other income (expense)
Net realized and unrealized gain on investments	67,034		(58,772		)	8,262
Interest and dividend income	12,715		(5,672		)	7,043



Consolidated Statement of Operations

	For the Year Ended December 31, 2016
	As Previously Reported		Adjustments			As Adjusted

Revenues
Performance income	$	517,852	$	(517,852	)	$	—
Carried interest allocation	—		494,580			494,580
Incentive fees	—		23,272			23,272
Principal investment income	—		55,168			55,168
Total revenues	1,199,205		55,168			1,254,373
Other income (expense)
Net realized and unrealized gain on investments	28,251		(35,880		)	(7,629		)
Interest and dividend income	23,781		(19,288		)	4,493

The Company's change in accounting policy related to carried interest did not impact the Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Equity or Consolidated Statements of Cash Flows for the years ended December 31, 2017 and 2016.

The following tables present the impact of incentive fees on the condensed consolidated financial statements upon the adoption of ASC 606 effective January 1, 2018:

Consolidated Statement of Financial Condition



	As of January 1, 2018
	As adjusted December 31, 2017		Adjustments				As Adjusted for ASC 606 adoption
Investments	$	1,724,571	$	—			$	1,724,571
Other assets	130,341		(22,611		)	(1)	107,730
Total assets	8,563,522		(22,611		)		8,540,911
Total liabilities	7,103,230		—				7,103,230
Cumulative effect adjustment to equity(2)	—		(22,611		)		(22,611		)
Total equity	1,460,292		(22,611		)		1,437,681
Total liabilities, non-controlling interests and equity	8,563,522		(22,611		)		8,540,911


(1)	Unrealized incentive fees receivable balance as of December 31, 2017.


(2)	See detail below.

Consolidated Statement of Changes in Equity



	Preferred Equity		Shareholders' Capital			Accumulated Other Comprehensive Loss			Non-controlling interest in Ares Operating Group Entities			Non-Controlling Interest in Consolidated Funds		Total Equity
Balance at December 31, 2017	$	298,761	$	279,065		$	(4,208	)	$	358,186		$	528,488	$	1,460,292
Cumulative effect of the adoption of ASC 606	—		(10,827		)	—			(17,117		)	5,333		(22,611		)
As adjusted balance at January 1, 2018	$	298,761	$	268,238		$	(4,208	)	$	341,069		$	533,821	$	1,437,681

In accordance with the ASC 606 disclosure requirements, the following tables present the adjustments made by the Company to remove the effects of adopting ASC 606 on the consolidated financial statements as of and for the year ended December 31, 2018:



Consolidated Statement of Financial Condition

	As of December 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Assets
Cash and cash equivalents	$	110,247		$	—		$	110,247
Investments ($841,079 of accrued carried interest)	1,326,137			—			1,326,137
Due from affiliates	199,377						199,377
Deferred tax asset, net	42,137			(2,474		)	39,663
Other assets	160,150			42,848			202,998
Total assets	10,154,692			40,373			10,195,065
Commitments and contingencies
Non-controlling interest in Consolidated Funds	503,637			(7,574		)	496,063
Non-controlling interest in Ares Operating Group entities	302,780			29,663			332,443
Stockholders' Equity
Additional paid-in-capital	326,007			23,587			349,594
Retained earnings	(29,336		)	(5,095		)	(34,431		)
Accumulated other comprehensive loss, net of tax	(8,524		)	(208		)	(8,732		)
Total stockholders' equity	587,924			18,284			606,208
Total equity	1,394,341			40,373			1,434,714
Total liabilities and equity	10,154,692			40,373			10,195,065



Consolidated Statement of Operations

	For the Year Ended December 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Revenues
Incentive fees	$	63,380		$	20,997		$	84,377
Total revenues	958,461			20,997			979,458
Expenses
Expenses of Consolidated Funds	53,764			—			53,764
Total expenses	870,362			—			870,362
Other income (expense)
Other income, net	(851		)	30			(821		)
Total other income	96,242			30			96,272
Income before taxes	184,341			21,027			205,368
Income tax expense	32,202			2,475			34,677
Net income	152,139			18,552			170,691
Less: Net income attributable to non-controlling interests in Consolidated Funds	20,512			(1,921		)	18,591
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	74,607			12,808			87,415
Net income attributable to Ares Management Corporation	57,020			7,665			64,685
Less: Series A Preferred Stock dividends paid	21,700			—			21,700
Net income attributable to Ares Management Corporation Class A common stockholders	35,320			7,665			42,985

Consolidated Statement of Comprehensive Income



	For the Year Ended December 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606

Net income	$	152,139		$	18,552		$	170,691
Other comprehensive income:
Foreign currency translation adjustments	(13,190		)	(470		)	(13,660		)
Total comprehensive income	138,949			18,082			157,031
Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds	15,575			(1,921		)	13,654
Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities	70,670			12,546			83,216
Comprehensive income attributable to Ares Management Corporation	$	52,704		$	7,457		$	60,161

Condensed Consolidated Statement of Cash Flows



	For the Year Ended December 31, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606

Cash flows from operating activities:
Net income	$	152,139		$	18,552		$	170,691
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Other assets	(49,789		)	(22,948		)	(72,737		)
Deferred taxes	(17,006		)	2,475			(14,531		)
Change in other liabilities and payables held at Consolidated Funds	137,545			1,921			139,466
Net cash used in operating activities	$	(1,417,102	)	$	—		(1,417,102		)

GOODWILL AND INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of carrying value for the Company's intangible assets

The following table summarizes the carrying value for the Company's intangible assets:



	Weighted Average Amortization Period as of	As of December 31,
	December 31, 2018	2018			2017
Management contracts	2.8 years	$	42,335		$	67,306
Client relationships	9.5 years	38,600			38,600
Trade name	3.5 years	3,200			3,200
Other	Less than 1 year	342			—
Intangible assets, gross		84,477			109,106
Less: accumulated amortization		(52,899		)	(68,641		)
Intangible assets, net		$	31,578		$	40,465

Schedule of estimated future annual amortization of finite-lived intangible assets

At December 31, 2018, future annual amortization of finite-lived intangible assets for the years 2019 through 2023 and thereafter is estimated to be:



Year	Amortization
2019	$	4,602
2020	4,071
2021	3,987
2022	3,192
2023	2,859
Thereafter	12,867
Total	$	31,578

Schedule of goodwill rollforward

The following table summarizes the carrying value of the Company's goodwill assets:



	Credit		Private Equity		Real Estate			Total
Balance as of December 31, 2016	$	32,196	$	58,600	$	52,928		$	143,724
Foreign currency translation	—		—		171			171
Balance as of December 31, 2017	32,196		58,600		53,099			143,895
Foreign currency translation	—		—		(109		)	(109		)
Balance as of December 31, 2018	$	32,196	$	58,600	$	52,990		$	143,786

INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2018

Investments in and Advances to Affiliates, Schedule of Investments [Abstract]

Summary of investments held

Investments held in the Consolidated Funds are summarized below:



	Fair value at				Fair value as a percentage of total investments at
	December 31,		December 31,		December 31,		December 31,
	2018		2017		2018		2017
United States:
Fixed income securities:
Consumer discretionary	$	1,675,863	$	1,295,732	22.0	%	23.2	%
Consumer staples	58,602		55,073		0.8	%	1.0	%
Energy	198,631		176,836		2.6	%	3.2	%
Financials	476,542		270,520		6.2	%	4.8	%
Healthcare, education and childcare	707,881		449,888		9.2	%	8.1	%
Industrials	396,767		370,926		5.2	%	6.6	%
Information technology	196,586		167,089		2.6	%	3.0	%
Materials	193,378		185,170		2.5	%	3.3	%
Telecommunication services	665,576		399,617		8.7	%	7.2	%
Utilities	80,233		77,102		1.0	%	1.4	%
Total fixed income securities (cost: $4,876,915 and $3,459,318 at December 31, 2018 and December 31, 2017, respectively)	4,650,059		3,447,953		60.8	%	61.8	%
Equity securities:
Equity securities	335		126		0.0	%	0.0	%
Total equity securities (cost: $354 and $2 at December 31, 2018 and December 31, 2017, respectively)	335		126		0.0	%	0.0	%
Partnership interests:
Partnership interests	271,447		232,332		3.5	%	4.2	%
Total partnership interests (cost: $210,000 and $190,000 at December 31, 2018 and December 31, 2017, respectively)	271,447		232,332		3.5	%	4.2	%



	Fair value at				Fair value as a percentage of total investments at
	December 31,		December 31,		December 31,		December 31,
	2018		2017		2018		2017
Europe:
Fixed income securities:
Consumer discretionary	$	946,434	$	604,608	12.3	%	10.8	%
Energy	16,840		2,413		0.2	%	0.0	%
Consumer staples	105,464		76,361		1.4	%	1.4	%
Financials	273,492		81,987		3.6	%	1.5	%
Healthcare, education and childcare	384,350		209,569		5.0	%	3.8	%
Industrials	124,469		145,706		1.6	%	2.6	%
Information technology	32,632		21,307		0.4	%	0.4	%
Materials	222,237		213,395		2.9	%	3.8	%
Telecommunication services	297,101		182,543		3.9	%	3.3	%
Utilities	14,453		—		0.2	%	—	%
Total fixed income securities (cost: $2,478,349 and $1,545,297 at December 31, 2018 and December 31, 2017, respectively)	2,417,472		1,537,889		31.5	%	27.6	%
Equity securities:
Healthcare, education and childcare	23,536		63,155		0.3	%	1.1	%
Total equity securities (cost: $56,154 and $67,198 at December 31, 2018 and December 31, 2017, respectively)	23,536		63,155		0.3	%	1.1	%
Asia and other:
Fixed income securities:
Consumer discretionary	1,686		2,008		0.0	%	0.0	%
Financials	5,878		12,453		0.1	%	0.2	%
Telecommunication services	19,753		21,848		0.3	%	0.4	%
Total fixed income securities (cost: $28,974 and $36,180 at December 31, 2018 and December 31, 2017, respectively)	27,317		36,309		0.4	%	0.6	%
Equity securities:
Consumer discretionary	41,820		59,630		0.5	%	1.1	%
Consumer staples	41,979		45,098		0.5	%	0.8	%
Healthcare, education and childcare	41,562		44,637		0.5	%	0.8	%
Industrials	47,238		16,578		0.6	%	0.3	%
Total equity securities (cost: $122,418 and $122,418 at December 31, 2018 and December 31, 2017, respectively)	172,599		165,943		2.1	%	3.0	%



	Fair value at				Fair value as a percentage of total investments at
	December 31,		December 31,		December 31,		December 31,
	2018		2017		2018		2017
Canada:
Fixed income securities:
Consumer discretionary	$	8,625	$	6,757	0.1	%	0.1	%
Consumer staples	33,722		15,351		0.4	%	0.3	%
Energy	503		33,715		0.0	%	0.6	%
Industrials	46,307		18,785		0.6	%	0.3	%
Telecommunication services	13,835		6,189		0.2	%	0.1	%
Total fixed income securities (cost: $109,084 and $80,201 at December 31, 2018 and December 31, 2017, respectively)	102,992		80,797		1.3	%	1.4	%
Equity securities:
Consumer discretionary	—		5,912		—	%	0.1	%
Total equity securities (cost: $0 and $17,202 at December 31, 2018 and December 31, 2017, respectively)	—		5,912		—	%	0.1	%
Australia:
Fixed income securities:
Consumer discretionary	5,973		10,863		0.1	%	0.2	%
Energy	1,435		1,563		0.0	%	0.0	%
Total fixed income securities (cost: $8,249 and $12,714 at December 31, 2018 and December 31, 2017, respectively)	7,408		12,426		0.1	%	0.2	%
Total fixed income securities	7,205,248		5,115,374		94.1	%	91.6	%
Total equity securities	196,470		235,136		2.4	%	4.2	%
Total partnership interests	271,447		232,332		3.5	%	4.2	%
Total investments, at fair value	$	7,673,165	$	5,582,842



					Percentage of total investments
	December 31,				December 31,
	2018		2017		2018		2017
Private Investment Partnership Interests and Other:
Equity method private investment partnership interests - principal (1)	$	357,655	$	340,354	27.0	%	19.7	%
Equity method - carried interest (1)	841,079		1,077,236		63.4	%	62.5	%
Equity method private investment partnership interests and other (held at fair value)	46,449		80,767		3.5	%	4.7	%
Equity method private investment partnership interests and other	18,846		29,420		1.4	%	1.7	%
Total private investment partnership interests and other	1,264,029		1,527,777		95.3	%	88.6	%
Collateralized loan obligations	20,824		195,158		1.6	%	11.3	%
Other fixed income	40,000		—		3.0	%	—	%
Collateralized loan obligations and other fixed income, at fair value	60,824		195,158		4.6	%	11.3	%
Common stock, at fair value	1,284		1,636		0.1	%	0.1	%
Total investments	$	1,326,137	$	1,724,571


(1)	Investment or portion of the investment is denominated in foreign currency and is translated into U.S. dollars at each reporting date.

Schedule of equity method investments

The following tables present summarized financial information for the Company's equity method investments, which are primarily funds managed by the Company, for the years ended December 31, 2018, 2017 and 2016.



	As of December 31, 2018 and the Year then Ended
	Credit			Private Equity			Real Estate			Total
Statement of Financial Condition
Investments	$	8,210,094		$	9,574,998		$	3,337,076		$	21,122,168
Total assets	8,799,290			9,785,312			3,763,907			22,348,509
Total liabilities	1,542,058			423,687			813,269			2,779,014
Total equity	7,257,232			9,361,625			2,950,638			19,569,495

Statement of Operations
Revenues	$	766,009		$	264,376		$	144,706		$	1,175,091
Expenses	(189,432		)	(85,801		)	(96,353		)	(371,586		)
Net realized and unrealized gain from investments	(67,477		)	(892,800		)	417,974			(542,303		)
Income tax expense	(2,526		)	(20,554		)	(4,075		)	(27,155		)
Net income	$	506,574		$	(734,779	)	$	462,252		$	234,047



	As of December 31, 2017 and the Year then Ended
	Credit			Private Equity			Real Estate			Total
Statement of Financial Condition
Investments	$	5,903,009		$	9,849,829		$	2,997,789		$	18,750,627
Total assets	6,435,364			10,033,790			3,174,149			19,643,303
Total liabilities	665,680			519,349			202,174			1,387,203
Total equity	5,769,684			9,514,441			2,971,975			18,256,100

Statement of Operations
Revenues	$	603,682		$	144,829		$	154,967		903,478
Expenses	(169,086		)	(91,803		)	(67,396		)	(328,285		)
Net realized and unrealized gain from investments	41,185			2,335,027			365,091			2,741,303
Income tax expense	(2,700		)	(31,359		)	(13,092		)	(47,151		)
Net income	$	473,081		$	2,356,694		$	439,570		$	3,269,345



	For the Year Ended December 31, 2016
	Credit			Private Equity			Real Estate			Total
Statement of Operations
Revenues	$	416,228		$	839,723		$	114,937		$	1,370,888
Expenses	(107,465		)	(134,573		)	(77,021		)	(319,059		)
Net realized and unrealized gain from investments	36,316			1,489,624			171,467			1,697,407
Income tax expense	(345		)	(27,587		)	(5,380		)	(33,312		)
Net income	$	344,734		$	2,167,187		$	204,003		$	2,715,924

FAIR VALUE (Tables)

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Summary of valuation of investments and other financial instruments by fair value hierarchy levels

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of December 31, 2018:



Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Collateralized loan obligations and other fixed income	$	—	$	—		$	60,824	$	—	$	60,824
Common stock and other equity securities	280		1,004			10,397		—		11,681
Partnership interests	—		—			35,192		861		36,053
Total investments, at fair value	280		1,004			106,413		861		108,558
Derivatives-foreign exchange contracts	—		1,066			—		—		1,066
Total assets, at fair value	$	280	$	2,070		$	106,413	$	861	$	109,624
Liabilities, at fair value
Derivatives-foreign exchange contracts			$	(869	)	$	—	$	—	$	(869	)
Total liabilities, at fair value	$	—	$	(869	)	$	—	$	—	$	(869	)



Financial Instruments of Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	316,850		$	1,649		$	318,499
Loans	—		6,340,440			546,309			6,886,749
Total fixed income investments	—		6,657,290			547,958			7,205,248
Equity securities	45,718		—			150,752			196,470
Partnership interests	—		—			271,447			271,447
Total investments, at fair value	45,718		6,657,290			970,157			7,673,165
Derivatives:
Foreign exchange contracts	—		1,881			—			1,881
Asset swaps - other	—		—			1,328			1,328
Total derivative assets, at fair value	—		1,881			1,328			3,209
Total assets, at fair value	$	45,718	$	6,659,171		$	971,485		$	7,676,374
Liabilities, at fair value
Foreign exchange contracts	$	—	$	(1,864	)	$	—		$	(1,864	)
Asset swaps - other	—		—			(648		)	(648		)
Loan obligations of CLOs	—		(6,678,091		)	—			(6,678,091		)
Total liabilities, at fair value	$	—	$	(6,679,955	)	$	(648	)	$	(6,680,603	)

The tables below summarize the financial assets and financial liabilities measured at fair value for the Company and Consolidated Funds as of December 31, 2017:



Financial Instruments of the Company	Level I		Level II			Level III		Investments Measured at NAV(1)		Total
Assets, at fair value
Investments:
Fixed income - collateralized loan obligations	$	—	$	—		$	195,158	$	—	$	195,158
Equity securities - common stock	520		1,116			—		—		1,636
Partnership interests	—		—			44,769		35,998		80,767
Total investments, at fair value	520		1,116			239,927		35,998		277,561
Derivatives-foreign exchange contracts	—		498			—		—		498
Total assets, at fair value	$	520	$	1,614		$	239,927	$	35,998	$	278,059
Liabilities, at fair value
Derivatives-foreign exchange contracts	$	—	$	(2,639	)	$	—	$	—	$	(2,639	)
Total liabilities, at fair value	$	—	$	(2,639	)	$	—	$	—	$	(2,639	)



Financial Instruments of Consolidated Funds	Level I		Level II			Level III			Total
Assets, at fair value
Investments:
Fixed income investments:
Bonds	$	—	$	82,151		$	7,041		$	89,192
Loans	—		4,755,335			260,848			5,016,183
Collateralized loan obligations	—		10,000			—			10,000
Total fixed income investments	—		4,847,486			267,889			5,115,375
Equity securities	72,558		—			162,577			235,135
Partnership interests	—		—			232,332			232,332
Total investments, at fair value	72,558		4,847,486			662,798			5,582,842
Derivatives:
Asset swaps - other	—		—			1,366			1,366
Total derivative assets, at fair value	—		—			1,366			1,366
Total assets, at fair value	$	72,558	$	4,847,486		$	664,164		$	5,584,208
Liabilities, at fair value
Asset swaps - other	$	—	$	—		$	(462	)	$	(462	)
Loan obligations of CLOs	—		(4,963,194		)	—			(4,963,194		)
Total liabilities, at fair value	$	—	$	(4,963,194	)	$	(462	)	$	(4,963,656	)

Summary of changes in the fair value of the Level III investments

The following tables set forth a summary of changes in the fair value of the Level III measurements for the year ended December 31, 2017:



	Level III Assets								Level III Liabilities
Level III Assets and Liabilities of the Company	Fixed Income			Partnership Interests		Total			Contingent Considerations
Balance, beginning of period	$	89,111		$	33,410	$	122,521		$	22,156
Purchases(1)	143,579			169		143,748			—
Sales/settlements(2)	(39,047		)	—		(39,047		)	(1,000		)
Expired contingent considerations	—			—		—			(1,000		)
Realized and unrealized appreciation (depreciation), net	1,515			11,190		12,705			(20,156		)
Balance, end of period	$	195,158		$	44,769	$	239,927		$	—
Increase in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	2,752		$	11,359	$	14,111		$	—



Level III Assets of Consolidated Funds	Equity Securities			Fixed Income			Partnership Interests			Derivatives, Net			Total
Balance, beginning of period	$	130,690		$	242,253		$	171,696		$	(2,708	)	$	541,931
Transfer in	—			45,526			—			—			45,526
Transfer out	(6,581		)	(100,643		)	—			—			(107,224		)
Purchases(1)	6,691			240,723			88,000			—			335,414
Sales/settlements(2)	(3,701		)	(180,248		)	(45,000		)	(2,192		)	(231,141		)
Additions(3)				14,479						1,393			15,872
Amortized discounts/premiums	—			247			—			244			491
Realized and unrealized appreciation (depreciation), net	35,478			5,552			17,636			4,167			62,833
Balance, end of period	$	162,577		$	267,889		$	232,332		$	904		$	663,702
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	33,990		$	31		$	17,636		$	(705	)	$	50,952



Level III Assets of Consolidated Funds	Equity Securities			Fixed Income			Partnership Interests			Derivatives, Net			Total
Balance, beginning of period	$	130,690		$	242,253		$	171,696		$	(2,708	)	$	541,931
Transfer in	—			45,526			—			—			45,526
Transfer out	(6,581		)	(100,643		)	—			—			(107,224		)
Purchases(1)	6,691			240,723			88,000			—			335,414
Sales/settlements(2)	(3,701		)	(180,248		)	(45,000		)	(2,192		)	(231,141		)
Additions(3)				14,479						1,393			15,872
Amortized discounts/premiums	—			247			—			244			491
Realized and unrealized appreciation (depreciation), net	35,478			5,552			17,636			4,167			62,833
Balance, end of period	$	162,577		$	267,889		$	232,332		$	904		$	663,702
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	33,990		$	31		$	17,636		$	(705	)	$	50,952


(1)	Purchases include paid‑in‑kind interest and securities received in connection with restructurings.


(2)	Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.


(3)	Additions relates to a CLO that was refinanced and restructured that is now consolidated.



Level III Assets of Consolidated Funds	Equity Securities			Fixed Income			Partnership Interests			Derivatives, Net			Total
Balance, beginning of period	$	162,577		$	267,889		$	232,332		$	904		$	663,702
Additions(3)	506			46,829			—			—			47,335
Transfer in	—			86,995			—			—			86,995
Transfer out	—			(45,647		)	—			—			(45,647		)
Purchases(1)	203			492,142			25,000			—			517,345
Sales/settlements(2)	(21,141		)	(283,620		)	(5,000		)	(186		)	(309,947		)
Amortized discounts/premiums	—			380			—			(140		)	240
Realized and unrealized appreciation (depreciation), net	8,607			(17,010		)	19,115			102			10,814
Balance, end of period	$	150,752		$	547,958		$	271,447		$	680		$	970,837
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	8,686		$	(13,157	)	$	19,115		$	(57	)	$	14,587


(1)	Purchases include paid‑in‑kind interest and securities received in connection with restructurings.


(2)	Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.


(3)	Additions relate to

The following tables set forth a summary of changes in the fair value of the Level III measurements for the year ended December 31, 2018:



	Level III Assets
Level III Assets and Liabilities of the Company	Equity Securities		Fixed Income			Partnership Interests			Total
Balance, beginning of period	$	—	$	195,158		$	44,769		$	239,927
Transfer in	250		—						250
Purchases(1)	1,000		92,797			—			93,797
Sales/settlements(2)	—		(222,934		)	—			(222,934		)
Deconsolidation of fund	—		78			—			78
Realized and unrealized appreciation (depreciation), net	9,147		$	(4,275	)	(9,577		)	(4,705		)
Balance, end of period	$	10,397	$	60,824		$	35,192		$	106,413
Increase (decrease) in unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	9,147	$	(3,923	)	$	(9,577	)	$	(4,353	)

Summary of quantitative inputs and assumptions used for Level III inputs

The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of December 31, 2018:



	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	23,871		Enterprise value market multiple analysis	EBITDA multiple(1)	7.2x - 22.9x	7.7x
	41,562			Other	Net income multiple	38.8x	38.8x
					Illiquidity discount	25%	25%
	271,447			Discounted cash flow	Discount rate	20.8%	20.8%
	85,319			Transaction price(2)	N/A	N/A	N/A
Fixed income securities
	441,368			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	106,590			Income approach	Yield	1.0% - 14.8%	9.6%
Derivative instruments	1,328			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	971,485
Liabilities
Derivatives instruments	$	(648	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(648	)


(1)	“EBITDA” in the table above is a Non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.


(2)	Transaction price consists of securities recently purchased or restructured. The Company determined that there was no change to the valuation based on the underlying assumptions used at the closing of such transactions.

The following table summarizes the quantitative inputs and assumptions used for the Consolidated Funds’ Level III measurements as of December 31, 2017:



	Fair Value			Valuation Technique(s)	Significant Unobservable Input(s)	Range	Weighted Average
Assets
Equity securities
	$	63,155		Enterprise value market multiple analysis	EBITDA multiple(1)	2.7x	2.7x
	61,215			Other	Net income multiple Illiquidity discount	27.0x - 36.2x 25.0%	33.7x 25.0%
	126			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	38,081			Transaction price(2)	N/A	N/A	N/A
Partnership interests	232,332			Discounted cash flow	Discount rate	19.0%	19.0%
Fixed income securities
	222,413			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
	45,243			Income approach	Yield	10.8% - 22.5%	12.1%
	233			Market approach (comparable companies)	EBITDA multiple(1)	6.5x	6.5x
Derivative instruments	1,366			Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total assets	$	664,164
Liabilities
Derivatives instruments	$	(462	)	Broker quotes and/or 3rd party pricing services	N/A	N/A	N/A
Total liabilities	$	(462	)


(1)	“EBITDA” in the table above is a Non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2018:



	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Equity securities	$	10,397	Transaction price(1)	N/A	N/A
Partnership interests	35,192		Discounted cash flow	Discount rate	8.0%
Collateralized loan obligations	20,824		Broker quotes and/or 3rd party pricing services	N/A	N/A
Other fixed income	40,000		Other	N/A	N/A
Total	$	106,413


(1)	Transaction price consists of securities recently purchased or restructured. The Company determined that there was no change to the valuation based on the underlying assumptions used at the closing of such transactions.

The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2017:



	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range
Assets
Partnership interests	$	44,769	Other	N/A	N/A
Collateralized loan obligations	195,158		Broker quotes and/or 3rd party pricing services	N/A	N/A
Total	$	239,927

Summary of fair value by segment along with the remaining unfunded commitment and any redemption restriction of investments valued using NAV per share



	As of December 31, 2018				As of December 31, 2017
	Fair Value		Unfunded Commitments		Fair Value		Unfunded Commitments
Non Ares managed fund investments(1)	$	861	$	—	$	35,998	$	16,492
Totals	$	861	$	—	$	35,998	$	16,492

(1) As of December 31, 2018 amount represents a private fund focused on insurance type investments. As of December 31, 2017 amount represents private funds focused on energy related investments that were sold during 2018.

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of fair value and notional amounts of derivative contracts by major product type on a gross basis

These amounts may be offset (to the extent that there is a legal right to offset) and presented on a net basis within other assets or accounts payable, accrued expenses and other liabilities in the Consolidated Statements of Financial Condition:



	As of December 31, 2018								As of December 31, 2017
	Assets				Liabilities				Assets				Liabilities
The Company	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign exchange contracts	$	33,026	$	1,066	$	27,140	$	869	$	13,724	$	498	$	51,026	$	2,639
Total derivatives, at fair value	$	33,026	$	1,066	$	27,140	$	869	$	13,724	$	498	$	51,026	$	2,639



	As of December 31, 2018								As of December 31, 2017
	Assets				Liabilities				Assets				Liabilities
Consolidated Funds	Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value		Notional(1)		Fair Value
Foreign exchange contracts	$	1,881	$	1,881	$	1,881	$	1,864	$	—	$	—	$	—	$	—
Asset swap - other	5,226		1,328		2,605		648		5,363		1,366		1,840		462
Total derivatives, at fair value	7,107		3,209		4,486		2,512		5,363		1,366		1,840		462


(1)	Represents the total contractual amount of derivative assets and liabilities outstanding.

Summary of net realized and unrealized appreciation (depreciation) on derivative instruments

The following tables present a summary of net realized gains (losses) and unrealized appreciation (depreciation) on the Company's derivative instruments, which are included within net realized and unrealized gain (loss) on investments in the Consolidated Statements of Operations, for the years ended December 31, 2018, 2017 and 2016:



	For the Year Ended December 31,
The Company	2018			2017			2016
Net realized gain (loss) on derivatives
Interest rate contracts—Swaps	$	—		$	—		$	(337	)
Foreign currency forward contracts	(1,197		)	(1,830		)	1,783
Net realized gain (loss) on derivatives	$	(1,197	)	$	(1,830	)	$	1,446
Net change in unrealized appreciation (depreciation) on derivatives
Interest rate contracts—Swaps	$	—		$	—		$	214
Foreign currency forward contracts	2,338			(5,299		)	2,008
Net change in unrealized appreciation (depreciation) on derivatives	$	2,338		$	(5,299	)	$	2,222



	For the Year Ended December 31,
Consolidated Funds	2018			2017			2016
Net realized gain (loss) on derivatives of Consolidated Funds
Foreign currency forward contracts	$	96		$	(181	)	$	(1,008	)
Asset swap - other	(795		)	903			(1,322		)
Net realized gain (loss) on derivatives of Consolidated Funds	$	(699	)	$	722		$	(2,330	)
Net change in unrealized appreciation (depreciation) on derivatives of Consolidated Funds
Equity contracts: Warrants(1)	$	—		$	—		$	26
Foreign currency forward contracts	15			(529		)	900
Asset swap - other	(183		)	2,338			7,685
Net change in unrealized appreciation (depreciation) on derivatives of Consolidated Funds	$	(168	)	$	1,809		$	8,611


(1)	Realized and unrealized gains (losses) on warrants are also reflected within investments of Consolidated Funds.

Schedule of setoff and related arrangements associated with the derivative and other financial instruments

The table below sets forth the rights of offset and related arrangements associated with the Company's derivative and other financial instruments as of December 31, 2018 and 2017. The column titled "Gross Amounts Not Offset in the Statement of Financial Position" in the table below relates to derivative instruments that are eligible to be offset in accordance with applicable accounting guidance but for which management has elected not to offset in the Consolidated Statements of Financial Condition.



									Gross Amount Not Offset in the Statement of Financial Position
The Company as of December 31, 2018	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in Assets (Liabilities)		Net Amounts of Assets (Liabilities) Presented			Financial Instruments			Net Amount
Assets:
Derivatives	$	1,066		$	—	$	1,066		$	(869	)	$	197
Liabilities:
Derivatives	(869		)	—		(869		)	869			—
Net derivative assets	$	197		$	—	$	197		$	—		$	197



									Gross Amount Not Offset in the Statement of Financial Position
The Company as of December 31, 2017	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in Assets (Liabilities)		Net Amounts of Assets (Liabilities) Presented			Financial Instruments			Net Amount
Assets:
Derivatives	$	498		$	—	$	498		$	(498	)	$	—
Liabilities:
Derivatives	(2,639		)	—		(2,639		)	498			(2,141		)
Net derivative liabilities	$	(2,141	)	$	—	$	(2,141	)	$	—		$	(2,141	)

The table below sets forth the rights of offset and related arrangements associated with the Consolidated Funds' derivative and other financial instruments as of December 31, 2018 and 2017. The column titled "Gross Amounts Not Offset in the Statement of Financial Position" in the table below relates to derivative instruments that are eligible to be offset in accordance with applicable accounting guidance but for which management has elected not to offset in the Consolidated Statements of Financial Condition.



										Gross Amounts Not Offset in the Statement of Financial Position
Consolidated Funds as of December 31, 2018	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in Assets (Liabilities)			Net Amounts of Assets (Liabilities) Presented			Financial Instruments		Net Amount
Assets:
Derivatives	$	8,942		$	(5,733	)	$	3,209		$	—	$	3,209
Liabilities:
Derivatives	(8,245		)	5,733			(2,512		)	—		(2,512		)
Net derivatives assets	$	697		$	—		$	697		$	—	$	697



										Gross Amounts Not Offset in the Statement of Financial Position
Consolidated Funds as of December 31, 2017	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in Assets (Liabilities)			Net Amounts of Assets (Liabilities) Presented			Financial Instruments		Net Amount
Assets:
Derivatives	$	1,750		$	(384	)	$	1,366		$	—	$	1,366
Liabilities:
Derivatives	(846		)	384			(462		)	—		(462		)
Net derivatives liabilities	$	904		$	—		$	904		$	—	$	904

Schedule of borrowings outstanding

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

+ References

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+ Details

DEBT (Tables)

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

The following table summarizes the Company’s and its subsidiaries’ debt obligations:



					As of December 31, 2018				As of December 31, 2017
	Debt Origination Date	Maturity	Original Borrowing Amount		Carrying Value		Interest Rate		Carrying Value		Interest Rate
Credit Facility(1)	Revolver	2/24/2022	N/A		$	235,000	4.00	%	$	210,000	3.09%
Senior Notes(2)	10/8/2014	10/8/2024	$	250,000	245,952		4.21	%	245,308		4.21%
2015 Term Loan(3)	9/2/2015	7/29/2026	$	—	—		N/A		35,037		2.86%
2016 Term Loan(4)	12/21/2016	1/15/2029	$	—	—		N/A		25,948		3.08%
2017 Term Loan A(4)	3/22/2017	1/22/2028	$	—	—		N/A		17,407		2.90%
2017 Term Loan B(4)	5/10/2017	10/15/2029	$	—	—		N/A		35,062		2.90%
2017 Term Loan C(4)	6/22/2017	7/30/2029	$	—	—		N/A		17,078		2.88%
2017 Term Loan D(4)	11/16/2017	10/15/2030	$	—	—		N/A		30,336		2.77%
Total debt obligations					$	480,952			$	616,176

(1)

The AOG entities are borrowers under the Credit Facility, which provides a $1.065 billion revolving line of credit. It has a variable interest rate based on LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change with the Company’s underlying credit agency rating. As of December 31, 2018, base rate loans bear interest calculated based on the base rate plus 0.50% and the LIBOR rate loans bear interest calculated based on LIBOR plus 1.50%. The unused commitment fee is 0.20% per annum. There is a base rate and LIBOR floor of zero.


(2)	The Senior Notes were issued in October 2014 by Ares Finance Co. LLC, a subsidiary of the Company, at 98.268% of the face amount with interest paid semi-annually. The Company may redeem the Senior Notes prior to maturity, subject to the terms of the indenture.

(3)

The 2015 Term Loan was entered into in August 2015 by a subsidiary of the Company that acted as a manager to a CLO. The 2015 Term Loan was secured by collateral in the form of CLO senior tranches owned by the Company. To the extent the assets were not sufficient to cover the Term Loan, there was no further recourse to the Company to fund or repay the remaining balance. Interest was paid quarterly, and the Company also paid a fee of 0.025% of a maximum investment amount.

(4)

The 2016 and 2017 Term Loans (the “Term Loans”) were entered into by a subsidiary of the Company that acted as a manager to CLOs. The Term Loans were secured by collateral in the form of CLO senior tranches and subordinated notes owned by the Company. Collateral associated with one of the Term Loans could have been used to satisfy outstanding liabilities of another Term Loan should the collateral fall short. To the extent the assets associated with these Term Loans were not sufficient to cover the Term Loans, there was no further recourse to the Company to fund or repay the remaining balance. Interest was paid quarterly, and the Company also paid a fee of 0.03% of a maximum investment amount.

The Consolidated Funds had the following revolving bank credit facilities and term loans outstanding as of December 31, 2018 and 2017:



				As of December 31, 2018				As of December 31, 2017
Type of Facility	Maturity Date	Total Capacity		Carrying Value(1)		Effective Rate		Carrying Value(1)		Effective Rate
Credit Facilities:
	1/1/2023	$	18,000	$	14,953	3.98%		$	12,942	2.88%
	6/29/2019	45,800		43,624		1.55%	(2)	48,042		1.55%	(2)
	3/7/2019	71,500		71,500		3.47%		71,500		2.89%
	6/30/2021	200,375		38,844		1.00%	(2)	—		—%
	7/15/2028	75,000		39,000		4.75%		—		—%
Revolving Term Loan	8/19/2019	11,429		—		—%		5,714		5.86%
	1/31/2022	1,900		1,363		8.07%		—		—%
Total borrowings of Consolidated Funds				$	209,284			$	138,198


(1)	The fair values of the borrowings approximate the carrying value as the interest rate on the borrowings is a floating rate.


(2)	The effective rate is based on the three month EURIBOR or zero, whichever is higher, plus an applicable margin.

As of December 31, 2018 and 2017, the following loan obligations were outstanding and classified as liabilities of the Consolidated CLOs:



	As of December 31, 2018					As of December 31, 2017
	Loan Obligations		Fair Value of Loan Obligations		Weighted Average Remaining Maturity In Years	Loan Obligations		Fair Value of Loan Obligations		Weighted Average Remaining Maturity In Years
Senior secured notes(1)	$	6,642,616	$	6,391,643	10.94	$	4,801,582	$	4,776,883	10.57
Subordinated notes(2)	455,333		286,448		11.21	276,169		186,311		11.25
Total loan obligations of Consolidated CLOs	$	7,097,949	$	6,678,091		$	5,077,751	$	4,963,194


(1)	Original borrowings under the senior secured notes totaled $6.6 billion, with various maturity dates ranging from December 2025 to October 2031. The weighted average interest rate as of December 31, 2018 was 4.93%.


(2)	Original borrowings under the subordinated notes totaled $455.3 million, with various maturity dates ranging from December 2025 to October 2031. They do not have contractual interest rates, but instead receive distributions from the excess cash flows generated by each Consolidated CLO.

The following table shows the activity of the Company's debt issuance costs:



	Credit Facility			Senior Notes			Term Loans			Repurchase Agreement Loan
Unamortized debt issuance costs as of December 31, 2016	$	4,800		$	1,803		$	526		$	—
Debt issuance costs incurred	3,394			—			733			—
Amortization of debt issuance costs	(1,651		)	(232		)	(88		)	—
Unamortized debt issuance costs as of December 31, 2017	6,543			1,571			1,171			—
Debt issuance costs incurred	—			—			98			259
Amortization of debt issuance costs	(1,571		)	(237		)	(56		)	(7		)
Debt extinguishment expense	—			—			(1,213		)	(252		)
Unamortized debt issuance costs as of December 31, 2018	$	4,972		$	1,334		$	—		$	—

OTHER ASSETS (Tables)

12 Months Ended

Dec. 31, 2018

Other Assets [Abstract]

Schedule of other assets

The components of other assets as of December 31, 2018 and 2017 were as follows:



	As of December 31,
	2018		2017
Other assets of the Company:
Accounts and interest receivable	$	11,624	$	3,025
Fixed assets, net	65,069		61,151
Incentive fees receivable	49,697		22,611
Other assets	33,760		43,554
Total other assets of the Company	$	160,150	$	130,341
Other assets of Consolidated Funds:
Income tax and other receivables	4,456		1,989
Total other assets of Consolidated Funds	$	4,456	$	1,989

Schedule of major classes of depreciable assets

Fixed assets included the following as of December 31, 2018 and 2017:



	Year Ended December 31,
	2018			2017
Furniture	$	9,536		$	9,303
Office and computer equipment	21,671			19,164
Internal-use software	29,005			19,055
Leasehold improvements	53,494			52,021
Fixed assets, at cost	113,706			99,543
Less: accumulated depreciation	(48,637		)	(38,392		)
Fixed assets, net	$	65,069		$	61,151

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule of future minimum commitments for operating leases

The future minimum commitments for the Company's operating leases are as follows:



2019	$	32,039
2020	26,799
2021	20,765
2022	22,502
2023	20,290
Thereafter	45,141
Total	$	167,536

RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of amounts due from and to affiliates

The Company considers its professionals and non-consolidated funds to be affiliates. Amounts due from and to affiliates were composed of the following:



	As of December 31,
	2018		2017
Due from affiliates:
Management fees receivable from non-consolidated funds	$	151,455	$	126,506
Payments made on behalf of and amounts due from non-consolidated funds and employees	47,922		39,244
Due from affiliates—Company	$	199,377	$	165,750
Amounts due from portfolio companies and non-consolidated funds	$	17,609	$	15,884
Due from affiliates—Consolidated Funds	$	17,609	$	15,884
Due to affiliates:
Management fee rebate payable to non-consolidated funds	$	2,105	$	5,213
Management fees received in advance	5,491		1,729
Tax receivable agreement liability	24,927		3,503
Undistributed carried interest and incentive fees(1)	31,162		24,542
Payments made by non-consolidated funds on behalf of and amounts due from the Company	18,726		4,197
Due to affiliates—Company	$	82,411	$	39,184

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Schedule of provision for income taxes

The provision for income taxes attributable to the Company and the Consolidated Funds, consisted of the following for the years ended December 31, 2018, 2017 and 2016. Supplemental information on an unaudited pro forma basis assumes that the Company's election to be taxed as a corporation for U.S. federal income tax purposes was effective for the years ended December 31, 2017 and 2016.



	Year Ended December 31,
Provision for Income Taxes	2018			2017			2016			Unaudited 2017 Pro Forma			Unaudited 2016 Pro Forma
The Company
Current:
U.S. federal income tax expense (benefit)	$	16,859		$	(21,559	)	$	19,419		$	2,634		$	36,326
State and local income tax expense	4,306			454			3,706			2,963			5,583
Foreign income tax expense	6,607			3,741			8,458			3,741			8,458
	27,772			(17,364		)	31,583			9,338			50,367
Deferred:
U.S. federal income tax expense (benefit)	10,572			(3,466		)	(14,247		)	18,297			(4,306		)
State and local income tax benefit	(4,789		)	(2,414		)	(1,400		)	(721		)	(487		)
Foreign income tax benefit	(1,484		)	(1,695		)	(4,180		)	(1,695		)	(4,180		)
	4,299			(7,575		)	(19,827		)	15,881			(8,973		)
Total:
U.S. federal income tax expense (benefit)	27,431			(25,025		)	5,172			20,931			32,020
State and local income tax expense (benefit)	(483		)	(1,960		)	2,306			2,242			5,096
Foreign income tax expense	5,123			2,046			4,278			2,046			4,278
Income tax expense (benefit)	32,071			(24,939		)	11,756			25,219			41,394

Consolidated Funds
Current:
Foreign income tax expense (benefit)	131			1,887			(737		)	1,887			(737		)
Income tax expense (benefit)	131			1,887			(737		)	1,887			(737		)

Total Provision for Income Taxes
Total current income tax expense (benefit)	27,903			(15,477		)	30,846			11,225			49,630
Total deferred income tax expense (benefit)	4,299			(7,575		)	(19,827		)	15,881			(8,973		)
Total income tax expense (benefit)	$	32,202		$	(23,052	)	$	11,019		$	27,106		$	40,657

Schedule of reasons for which effective income tax rate differed from the federal statutory rate

The effective income tax rate differed from the federal statutory rate for the following reasons for the years ended December 31, 2018, 2017 and 2016. Supplemental information on an unaudited pro forma basis assumes that the Company's election to be taxed as a corporation for U.S. federal income tax purposes was effective for the years ended December 31, 2017 and 2016.



	Year Ended December 31,
	2018		2017		2016		Unaudited 2017 Pro Forma		Unaudited 2016 Pro Forma
Income tax expense at federal statutory rate	21.0	%	35.0	%	35.0	%	35.0	%	35.0	%
Income passed through to non-controlling interests	(9.9	)	(51.1	)	(27.6	)	(23.2	)	(18.3	)
State and local taxes, net of federal benefit	2.1		(1.4	)	0.9		0.4		1.5
Foreign taxes	0.3		0.3		(0.9	)	0.3		(0.9	)
Permanent items	(0.8	)	0.3		(2.2	)	0.3		(2.2	)
Tax Cuts and Jobs Act	(0.4	)	(0.4	)	—		3.3		—
Corporate conversion expense	5.4		—		—		—		—
Other, net	(0.3	)	0.4		(1.7	)	0.4		(1.7	)
Valuation allowance	0.1		1.3		0.2		1.3		0.2
Total effective rate	17.5	%	(15.6	)%	3.7	%	17.8	%	13.6	%

Schedule of income tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities



	As of December 31,
Deferred Tax Assets and Liabilities of the Consolidated Funds	2018			2017			Unaudited 2017 Pro Forma
Deferred tax assets
Net operating loss	$	5,525		$	4,703		$	4,703
Other, net	2,173			2,173			2,173
Total gross deferred tax assets	7,698			6,876			6,876
Valuation allowance	(7,698		)	(6,876		)	(6,876		)
Total deferred tax assets, net	$	—		$	—		$	—

The income tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities were as follows as of December 31, 2018 and 2017. Supplemental information on an unaudited pro forma basis assumes that the Company's election to be taxed as a corporation for U.S. federal income tax purposes was effective for the years ended December 31, 2017 and 2016.



	As of December 31,
Deferred Tax Assets and Liabilities of the Company	2018			2017			Unaudited 2017 Pro Forma
Deferred tax assets
Net operating losses	$	865		$	2,827		$	2,827
Investment in partnerships	11,527			—			(10,552		)
Amortizable tax basis for AOG unit exchanges	25,928			1,775			1,775
Other, net	5,416			4,767			4,767
Total gross deferred tax assets	43,736			9,369			(1,183		)
Valuation allowance	(22		)	(15		)	(15		)
Total deferred tax assets, net	43,714			9,354			(1,198		)
Deferred tax liabilities
Investment in partnerships	(1,577		)	(1,028		)	(1,028		)
Total deferred tax liabilities	(1,577		)	(1,028		)	(1,028		)
Net deferred tax assets	$	42,137		$	8,326		$	(2,226	)

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Schedule of Antidilutive Securities Excluded from Earnings Per Common share

The computation of diluted earnings per share of Class A common stock for the years ended December 31, 2018, 2017 and 2016 excludes the following options, restricted units and AOG Units, as their effect would have been anti-dilutive:



	For the Year Ended December 31,
	2018	2017	2016
Options	19,194,615	21,001,916	22,781,597
Restricted units	15,970,004	14,105,481	47,182
AOG Units	121,296,583	130,244,013	131,499,652

Schedule of the computation of basic and diluted earnings per common share

The following table presents the computation of basic and diluted earnings per common share:



	For the Year Ended December 31,
	2018			2017			2016
Net income attributable to Ares Management Corporation Class A common stockholders	$	35,320		$	54,478		$	99,632
Distributions on unvested restricted units	(6,948		)	(3,588		)	(1,257		)
Preferred stock dividends(1)	—			—			(8		)
Net income available to Class A common stockholders	$	28,372		$	50,890		$	98,367
Basic weighted-average shares of Class A common stock	96,023,147			81,838,007			80,749,671
Basic earnings per share of Class A common stock	$	0.30		$	0.62		$	1.22
Net income (loss) attributable to Ares Management Corporation Class A common stockholders	$	35,320		$	54,478		$	99,632
Distributions on unvested restricted units	(6,948		)	(3,588		)	—
Preferred stock dividends(1)	—			—			(8		)
Net income available to Class A common stockholders	$	28,372		$	50,890		$	99,624
Effect of dilutive shares:
Restricted units	—			—			2,187,359
Diluted weighted-average shares of Class A common stock	96,023,147			81,838,007			82,937,030
Diluted earnings per share of Class A common stock	$	0.30		$	0.62		$	1.20

Dividend declared and paid per Class A common stock	$	1.33		$	1.13		$	0.83


(1)	Dividends relate to the preferred shares that were issued by Ares Real Estate Holdings LLC and were redeemed on July 1, 2016.

EQUITY COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of equity-based compensation expense, net of assumed forfeitures

Equity-based compensation expense, net of forfeitures is included in the following table:



	For the Year Ended December 31,
	2018		2017		2016
Restricted units	$	74,441	$	54,339	$	21,894
Restricted units with a market condition	1,524		—		—
Options	12,449		13,848		15,450
Phantom shares	1,310		1,524		1,721
Equity-based compensation expense	$	89,724	$	69,711	$	39,065

Summary of unvested restricted units' activity

The following table presents the unvested market condition awards' activity during the year ended December 31, 2018:



	Market Condition Award Units	Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2018	—	$	—
Granted	1,333,334	9.30
Vested	—	—
Forfeited	—	—
Balance - December 31, 2018	1,333,334	$	9.30

The following table presents unvested restricted unit activity during the year ended December 31, 2018:



	Restricted Units		Weighted Average Grant Date Fair Value Per Unit
Balance - January 1, 2018	13,751,888		$	17.58
Granted	4,957,869		22.86
Vested	(2,035,909	)	17.12
Forfeited	(418,373	)	19.15
Balance - December 31, 2018	16,255,475		$	19.21

Schedule of weighted average assumptions used for fair value

Below is a summary of the significant assumptions used to estimate the grant date fair value of the market condition awards:



Closing price of the Company's common shares as of valuation date	$	20.95
Risk-free interest rate	2.95		%
Volatility	30.0		%
Dividend yield	5.0		%
Cost of equity	10.0		%

Summary of unvested options activity

A summary of unvested options activity during the year ended December 31, 2018 is presented below:



	Options		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)	Aggregate Intrinsic Value
Balance - January 1, 2018	20,495,025		$	18.99	6.09	$	20,611
Granted	—		—		—	—
Expired	(907,046	)	19.00		—	—
Exercised	(50,000	)	19.00		—	90
Forfeited	(796,475	)	19.00		—	—
Balance - December 31, 2018	18,741,504		$	18.99	4.88	$	—
Exercisable at December 31, 2018	13,032,852		$	19.00	4.66	$	—

Summary of unvested Phantom units activity

A summary of unvested phantom shares’ activity during the year ended December 31, 2018 is presented below:




	Phantom Shares		Weighted Average Grant Date Fair Value Per Share
Balance - January 1, 2018	156,153		$	19.00
Vested	(70,352	)	19.00
Forfeited	(19,514	)	19.00
December 31, 2018	66,287		$	19.00

EQUITY (Tables)

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Schedule of Stock by Class

The following table presents the changes in each class of common stock for the year ended December 31, 2018:



	Class A Common Stock	Class B Common Stock	Class C Common Stock	Total

Balance - January 1, 2018	—	—	—	—
Conversion of partnership units to outstanding shares of common stock	101,530,174	1,000	1	101,531,175
AOG units conversions	28,120	—	—	28,120
Vesting of restricted stock awards	35,801	—	—	35,801
Balance outstanding - December 31, 2018	101,594,095	1,000	1	101,595,096

Schedule of Ownership Interests

The following table presents each partner's AOG Units and corresponding ownership interest in each of the Ares Operating Group entities as of December 31, 2018 and 2017, as well as its daily average ownership of AOG Units in each of the Ares Operating Group entities for the years ended December 31, 2018, 2017 and 2016.



	As of December 31,						Daily Average Ownership
	2018			2017			For the Year Ended December 31,
	AOG Units	Direct Ownership Interest		AOG Units	Direct Ownership Interest		2018		2017		2016
Ares Management Corporation	101,594,095	46.47	%	82,280,033	38.75	%	44.19	%	38.59	%	38.04	%
Ares Owners Holding L.P.	117,019,274	53.53	%	117,576,663	55.36	%	53.99	%	55.52	%	56.07	%
Affiliate of Alleghany Corporation	—	—	%	12,500,000	5.89	%	1.82	%	5.89	%	5.89	%
Total	218,613,369	100.00	%	212,356,696	100.00	%

Schedule of financial results for Company's operating segments, as well as the OMG

Tabular disclosure of an entity's stock, including par or stated value per share, number and dollar amount of share subscriptions, shares authorized, shares issued, shares outstanding, number and dollar amount of shares held in an employee trust, dividend per share, total dividends, share conversion features, par value plus additional paid in capital, the value of treasury stock and other information necessary to a fair presentation, and EPS information. Stock by class includes common, convertible, and preferred stocks which are not redeemable or redeemable solely at the option of the issuer. Includes preferred stock with redemption features that are solely within the control of the issuer and mandatorily redeemable stock if redemption is required to occur only upon liquidation or termination of the reporting entity. If more than one issue is outstanding, state the title of each issue and the corresponding dollar amount; dollar amount of any shares subscribed but unissued and the deduction of subscriptions receivable there from; number of shares authorized, issued, and outstanding.

+ References

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+ Details

SEGMENT REPORTING (Tables)

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the year ended December 31, 2018:



	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $128,805)	$	564,899		$	198,182		$	73,663		$	836,744		$	—		$	836,744
Other fees	23,247			1,008			33			24,288			—			24,288
Compensation and benefits	(216,843		)	(74,672		)	(38,623		)	(330,138		)	(126,117		)	(456,255		)
General, administrative and other expenses	(43,934		)	(18,482		)	(11,123		)	(73,539		)	(75,926		)	(149,465		)
Fee related earnings	327,369			106,036			23,950			457,355			(202,043		)	255,312
Performance income—realized	121,270			139,820			96,117			357,207			—			357,207
Performance related compensation—realized	(75,541		)	(111,764		)	(64,292		)	(251,597		)	—			(251,597		)
Realized net performance income	45,729			28,056			31,825			105,610			—			105,610
Investment income—realized	2,492			17,816			11,409			31,717			4,790			36,507
Interest and other investment income—realized	10,350			4,624			2,257			17,231			2,184			19,415
Interest expense	(11,386		)	(6,000		)	(1,836		)	(19,222		)	(2,226		)	(21,448		)
Realized net investment income	1,456			16,440			11,830			29,726			4,748			34,474
Realized income	$	374,554		$	150,532		$	67,605		$	592,691		$	(197,295	)	$	395,396
Total assets	$	729,930		$	942,928		$	469,595		$	2,142,453		$	65,961		$	2,208,414

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the year ended December 31, 2017:



	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $105,467)	$	481,466		$	198,498		$	64,861		$	744,825		$	—		$	744,825
Other fees	20,830			1,495			106			22,431			—			22,431
Compensation and benefits	(193,347		)	(68,569		)	(39,586		)	(301,502		)	(112,233		)	(413,735		)
General, administrative and other expenses	(33,626		)	(17,561		)	(10,519		)	(61,706		)	(74,825		)	(136,531		)
Fee related earnings	275,323			113,863			14,862			404,048			(187,058		)	216,990
Performance income—realized	21,087			287,092			9,608			317,787			—			317,787
Performance related compensation—realized	(9,218		)	(228,774		)	(4,338		)	(242,330		)	—			(242,330		)
Realized net performance income	11,869			58,318			5,270			75,457			—			75,457
Investment income—realized	7,102			22,625			5,534			35,261			3,880			39,141
Interest and other investment income—realized	10,192			3,226			511			13,929			1,142			15,071
Interest expense	(12,405		)	(5,218		)	(1,650		)	(19,273		)	(1,946		)	(21,219		)
Realized net investment income	4,889			20,633			4,395			29,917			3,076			32,993
Realized income	$	292,081		$	192,814		$	24,527		$	509,422		$	(183,982	)	$	325,440
Total assets	$	837,562		$	1,255,454		$	306,463		$	2,399,479		$	119,702		$	2,519,181

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the year ended December 31, 2016:



	Credit Group			Private Equity Group			Real Estate Group			Total Segments			OMG			Total
Management fees (Credit Group includes ARCC Part I Fees of $121,181)	$	444,664		$	147,790		$	66,997		$	659,451		$	—		$	659,451
Other fees	9,953			1,544			854			12,351			—			12,351
Compensation and benefits	(184,571		)	(61,276		)	(41,091		)	(286,938		)	(97,777		)	(384,715		)
General, administrative and other expenses	(29,136		)	(14,679		)	(10,603		)	(54,418		)	(60,319		)	(114,737		)
Fee related earnings	240,910			73,379			16,157			330,446			(158,096		)	172,350
Performance income—realized	51,435			230,162			11,401			292,998			—			292,998
Performance related compensation—realized	(11,772		)	(184,072		)	(2,420		)	(198,264		)	—			(198,264		)
Realized net performance income	39,663			46,090			8,981			94,734			—			94,734
Investment income (loss)—realized	4,928			18,773			931			24,632			(14,606		)	10,026
Interest and other investment income—realized	22,547			16,891			1,598			41,036			163			41,199
Interest expense	(8,609		)	(5,589		)	(1,056		)	(15,254		)	(2,727		)	(17,981		)
Realized net investment income (loss)	18,866			30,075			1,473			50,414			(17,170		)	33,244
Realized income	$	299,439		$	149,544		$	26,611		$	475,594		$	(175,266	)	$	300,328
Total assets	$	650,435		$	1,218,412		$	232,862		$	2,101,709		$	74,383		$	2,176,092

Schedule of segment’ revenue, expenses and other income (expense)

The following table presents the components of the Company’s operating segments’ revenue, expenses and realized net investment income:



	For the Year Ended December 31,
	2018			2017			2016
Segment Revenues
Management fees (includes ARCC Part I Fees of $128,805, $105,467 and $121,181 for the years ended December 31, 2018, 2017 and 2016, respectively)	$	836,744		$	744,825		$	659,451
Other fees	24,288			22,431			12,351
Performance income—realized	357,207			317,787			292,998
Total segment revenues	$	1,218,239		$	1,085,043		$	964,800
Segment Expenses
Compensation and benefits	$	330,138		$	301,502		$	286,938
General, administrative and other expenses	73,539			61,706			54,418
Performance related compensation—realized	251,597			242,330			198,264
Total segment expenses	$	655,274		$	605,538		$	539,620
Segment Realized Net Investment Income
Investment income—realized	$	31,717		$	35,261		$	24,632
Interest and other investment income—realized	17,231			13,929			41,036
Interest expense	(19,222		)	(19,273		)	(15,254		)
Total segment realized net investment income	$	29,726		$	29,917		$	50,414

Schedule of segment revenues components

The following table reconciles the Company's consolidated revenues to segment revenue:



	For the Year Ended December 31,
	2018			2017			2016
Total consolidated revenue	$	958,461		$	1,479,943		$	1,254,373
Performance income—unrealized	247,212			(325,915		)	(228,472		)
Management fees of Consolidated Funds eliminated in consolidation	34,242			22,406			17,383
Carried interest allocation of Consolidated Funds eliminated in consolidation	—			1,017			(2,926		)
Incentive fees of Consolidated Funds eliminated in consolidation	4,000			4,075			4,065
Principal investment income of Consolidated Funds eliminated in consolidation	2,502			24,587			(4,760		)
Administrative fees(1)	(27,380		)	(34,049		)	(26,934		)
Performance income reclass(2)	205			1,936			2,479
Principal investment income	(1,047		)	(89,031		)	(50,408		)
Revenue of non-controlling interests in consolidated subsidiaries(3)	44			74			—
Total consolidation adjustments and reconciling items	259,778			(394,900		)	(289,573		)
Total segment revenue	$	1,218,239		$	1,085,043		$	964,800


(1)	Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.


(2)	Related to performance income for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within net realized and unrealized gain (loss) on investments in the Company’s Consolidated Statements of Operations.


(3)	Adjustments for administrative fees reimbursed attributable to certain of our joint venture partners.

Schedule of segment expenses components

The following table reconciles the Company's consolidated expenses to segment expenses:



	For the Year Ended December 31,
	2018			2017			2016
Total consolidated expenses	$	870,362		$	1,504,758		$	1,016,420
Performance related compensation—unrealized	221,343			(237,392		)	(189,582		)
Expenses of Consolidated Funds added in consolidation	(92,006		)	(65,501		)	(42,520		)
Expenses of Consolidated Funds eliminated in consolidation	38,242			26,481			21,447
Administrative fees(1)	(27,380		)	(34,049		)	(26,934		)
OMG expenses	(202,043		)	(187,058		)	(158,096		)
Acquisition and merger-related expenses	(2,936		)	(280,055		)	(773		)
Equity compensation expense	(89,724		)	(69,711		)	(39,065		)
Placement fees and underwriting costs	(20,343		)	(19,765		)	(6,424		)
Amortization of intangibles	(9,032		)	(17,850		)	(26,638		)
Depreciation expense	(16,055		)	(12,631		)	(8,215		)
Other expenses(2)	(11,836		)	—			—
Expenses of non-controlling interests in consolidated subsidiaries(3)	(3,318		)	(1,689		)	—
Total consolidation adjustments and reconciling items	(215,088		)	(899,220		)	(476,800		)
Total segment expenses	$	655,274		$	605,538		$	539,620


(1)	Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.


(2)	Year ended December 31, 2018 includes an $11.8 million payment made to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018.


(3)	Costs being borne by certain of our joint venture partners.

Schedule of segment other income (expense) components

The following table reconciles the Company's consolidated other income to segment realized net investment income:



	For the Year Ended December 31,
	2018			2017			2016
Total consolidated other income	$	96,242		$	174,674		$	59,967
Investment (income) loss—unrealized	49,241			(46,860		)	(16,653		)
Interest and other investment (income) loss—unrealized	233			1,868			(3,323		)
Other income from Consolidated Funds added in consolidation, net	(114,286		)	(154,869		)	(37,388		)
Other (income) expense from Consolidated Funds eliminated in consolidation, net	(865		)	1,059			(96		)
OMG other expense	(3,315		)	(11,828		)	19,381
Performance income reclass(1)	(205		)	(1,936		)	(2,479		)
Principal investment income	1,047			89,031			50,408
Change in value of contingent consideration	—			(20,156		)	(17,675		)
Other (income) expense	1,653			(1,042		)	(1,728		)
Other income of non-controlling interests in consolidated subsidiaries(2)	(19		)	(24		)	—
Total consolidation adjustments and reconciling items	(66,516		)	(144,757		)	(9,553		)
Total segment realized net investment income	$	29,726		$	29,917		$	50,414


(1)	Related to performance income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within net realized and unrealized gain (loss) on investments in the Company’s Consolidated Statements of Operations.


(2)	Costs being borne by certain of our joint venture partners.

Reconciliation of segment results to the Company's income before taxes and total assets

The following table presents the reconciliation of income before taxes as reported in the Consolidated Statements of Operations to segment results of RI and FRE:



	For the Year Ended December 31,
	2018			2017			2016
Income before taxes	$	184,341		$	149,859		$	297,920
Adjustments:
Amortization of intangibles	9,032			17,850			26,638
Depreciation expense	16,055			12,631			8,215
Equity compensation expenses	89,724			69,711			39,065
Acquisition and merger-related expenses	2,936			259,899			(16,902		)
Placement fees and underwriting costs	20,343			19,765			6,424
OMG expenses, net	198,728			175,230			177,477
Other (income) expense(1)	13,489			(1,042		)	(1,728		)
Expense of non-controlling interests in consolidated subsidiaries(2)	3,343			1,739			—
Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(20,643		)	(62,705		)	(2,649		)
Total performance (income) loss - unrealized	247,212			(325,915		)	(228,472		)
Total performance related compensation - unrealized	(221,343		)	237,392			189,582
Total net investment (income) loss - unrealized	49,474			(44,992		)	(19,976		)
Realized income	592,691			509,422			475,594
Total performance income - realized	(357,207		)	(317,787		)	(292,998		)
Total performance related compensation - realized	251,597			242,330			198,264
Total net investment income - realized	(29,726		)	(29,917		)	(50,414		)
Fee related earnings	$	457,355		$	404,048		$	330,446


(1)	Year ended December 31, 2018 expenses include an $11.8 million payment made to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018.


(2)	Adjustments for administrative fees reimbursed and other revenue items attributable to certain of our joint venture partners.

Schedule of reconciliation of total segment assets to total assets reported in the Consolidated Statements of Financial Condition

The reconciliation of total assets reported in the Consolidated Statements of Financial Condition to total segment assets consists of the following:



	For the Year Ended December 31,
	2018			2017			2016
Total consolidated assets	$	10,154,692		$	8,563,522		$	5,829,712
Total assets from Consolidated Funds added in consolidation	(8,141,280		)	(6,231,245		)	(3,822,010		)
Total assets from the Company eliminated in consolidation	195,002			186,904			168,390
OMG assets	(65,961		)	(119,702		)	(74,383		)
Total consolidation adjustments and reconciling items	(8,012,239		)	(6,164,043		)	(3,728,003		)
Total segment assets	$	2,142,453		$	2,399,479		$	2,101,709

CONSOLIDATION (Tables)

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Disclosure [Abstract]

Schedule of interest in VIEs

The Company's interests in consolidated and non-consolidated VIEs, as presented in the Consolidated Statements of Financial Condition, and its respective maximum exposure to loss relating to non-consolidated VIEs are as follows:



	As of December 31,
	2018		2017
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs	$	222,477	$	251,376
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs	$	186,455	$	175,620
Assets of consolidated VIEs	$	8,141,280	$	6,231,245
Liabilities of consolidated VIEs	$	7,479,383	$	5,538,054



	For the Years Ended December 31,
	2018		2017		2016
Net income attributable to non-controlling interests related to consolidated VIEs	$	20,512	$	60,818	$	3,386

Schedule of consolidating effects of the Consolidated Funds on the Company's financial condition

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company's financial condition as of December 31, 2018 and 2017 and results from operations for the years ended December 31, 2018, 2017 and 2016.



	As of December 31, 2018
	Consolidated Company Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	110,247		$	—	$	—		$	110,247
Investments ($841,079 of accrued carried interest)	1,512,592			—		(186,455		)	1,326,137
Due from affiliates	207,924			—		(8,547		)	199,377
Intangible assets, net	31,578			—		—			31,578
Goodwill	143,786			—		—			143,786
Deferred tax asset, net	42,137			—		—			42,137
Other assets	160,150			—		—			160,150
Assets of Consolidated Funds
Cash and cash equivalents	—			384,644		—			384,644
Investments, at fair value	—			7,673,165		—			7,673,165
Due from affiliates	—			17,609		—			17,609
Dividends and interest receivable	—			19,330		—			19,330
Receivable for securities sold	—			42,076		—			42,076
Other assets	—			4,456		—			4,456
Total assets	$	2,208,414		$	8,141,280	$	(195,002	)	$	10,154,692
Liabilities
Accounts payable, accrued expenses and other liabilities	$	83,221		$	—	$	—		$	83,221
Accrued compensation	29,389			—		—			29,389
Due to affiliates	82,411			—		—			82,411
Performance related compensation payable	641,737			—		—			641,737
Debt obligations	480,952			—		—			480,952
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			83,876		—			83,876
Due to affiliates	—			8,547		(8,547		)	—
Payable for securities purchased	—			471,390		—			471,390
CLO loan obligations	—			6,706,286		(28,195		)	6,678,091
Fund borrowings	—			209,284		—			209,284
Total liabilities	1,317,710			7,479,383		(36,742		)	8,760,351
Commitments and contingencies
Non-controlling interest in Consolidated Funds	—			661,897		(158,260		)	503,637
Non-controlling interest in Ares Operating Group entities	302,780			—		—			302,780
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 units issued and outstanding at December 31, 2018)	298,761			—		—			298,761
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (101,594,095 shares issued and outstanding at December 31, 2018)	1,016			—		—			1,016
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding at December 31, 2018)	—			—		—			—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (1 shares issued and outstanding at December 31, 2018)	—			—		—			—
Additional paid-in-capital	326,007			—		—			326,007
Retained earnings	(29,336		)						(29,336		)
Accumulated other comprehensive loss, net of taxes	(8,524		)	—		—			(8,524		)
Total stockholders' equity	587,924			—		—			587,924
Total equity	890,704			661,897		(158,260		)	1,394,341
Total liabilities, non-controlling interests and equity	$	2,208,414		$	8,141,280	$	(195,002	)	$	10,154,692



	As of December 31, 2017
	As adjusted
	Consolidated Company Entities			Consolidated Funds		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	118,929		$	—	$	—		$	118,929
Investments ($1,077,236 of accrued carried interest)	1,900,191			—		(175,620		)	1,724,571
Due from affiliates	171,701			—		(5,951		)	165,750
Intangible assets, net	40,465			—		—			40,465
Goodwill	143,895			—		—			143,895
Deferred tax asset, net	8,326			—		—			8,326
Other assets	135,674			—		(5,333		)	130,341
Assets of Consolidated Funds
Cash and cash equivalents	—			556,500		—			556,500
Investments, at fair value	—			5,582,842		—			5,582,842
Due from affiliates	—			15,884		—			15,884
Dividends and interest receivable	—			12,568		—			12,568
Receivable for securities sold	—			61,462		—			61,462
Other assets	—			1,989		—			1,989
Total assets	$	2,519,181		$	6,231,245	$	(186,904	)	$	8,563,522
Liabilities
Accounts payable and accrued expenses	$	81,955		$	—	$	—		$	81,955
Accrued compensation	27,978			—		—			27,978
Due to affiliates	39,184			—		—			39,184
Performance related compensation payable	822,084			—		—			822,084
Debt obligations	616,176			—		—			616,176
Deferred tax liability, net	—			—		—			—
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—			64,316		—			64,316
Due to affiliates	—			11,285		(11,285		)	—
Payable for securities purchased	—			350,145		—			350,145
CLO loan obligations	—			4,974,110		(10,916		)	4,963,194
Fund borrowings	—			138,198		—			138,198
Total liabilities	1,587,377			5,538,054		(22,201		)	7,103,230
Commitments and contingencies
Preferred equity (12,400,000 shares issued and outstanding)	298,761			—		—			298,761
Non-controlling interest in Consolidated Funds	—			693,191		(164,703		)	528,488
Non-controlling interest in Ares Operating Group entities	358,186			—		—			358,186
Controlling interest in Ares Management, L.P.:
Partners' Capital (82,280,033 shares issued and outstanding)	279,065			—		—			279,065
Accumulated other comprehensive loss, net of tax benefit	(4,208		)	—		—			(4,208		)
Total controlling interest in Ares Management, L.P.	274,857			—		—			274,857
Total equity	931,804			693,191		(164,703		)	1,460,292
Total liabilities, non-controlling interests and equity	$	2,519,181		$	6,231,245	$	(186,904	)	$	8,563,522

Schedule of results from operations



	For the Year Ended December 31, 2018
	Consolidated Company Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $128,805)	$	836,744		$	—		$	(34,242	)	$	802,502
Carried interest allocation	42,410			—			—			42,410
Incentive fees	67,380			—			(4,000		)	63,380
Principal investment income	1,047			—			(2,502		)	(1,455		)
Administrative, transaction and other fees	51,624			—			—			51,624
Total revenues	999,205			—			(40,744		)	958,461
Expenses
Compensation and benefits	570,380			—			—			570,380
Performance related compensation	30,254			—			—			30,254
General, administrative and other expense	215,964			—			—			215,964
Expenses of Consolidated Funds	—			92,006			(38,242		)	53,764
Total expenses	816,598			92,006			(38,242		)	870,362
Other income (expense)
Net realized and unrealized loss on investments	(2,867		)	—			983			(1,884		)
Interest and dividend income	7,121			—			(93		)	7,028
Interest expense	(21,448		)	—			—			(21,448		)
Other income (expense), net	(1,715		)	—			864			(851		)
Net realized and unrealized gain (loss) on investments of Consolidated Funds	—			664			(2,247		)	(1,583		)
Interest and other income of Consolidated Funds	—			337,875			—			337,875
Interest expense of Consolidated Funds	—			(224,253		)	1,358			(222,895		)
Total other income (loss)	(18,909		)	114,286			865			96,242
Income before taxes	163,698			22,280			(1,637		)	184,341
Income tax expense	32,071			131			—			32,202
Net income	131,627			22,149			(1,637		)	152,139
Less: Net income attributable to non-controlling interests in Consolidated Funds	—			22,149			(1,637		)	20,512
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	74,607			—			—			74,607
Net income attributable to Ares Management Corporation	57,020			—			—			57,020
Less: Series A Preferred Stock dividends paid	21,700			—			—			21,700
Net income attributable to Ares Management Corporation Class A common stock	$	35,320		$	—		$	—		$	35,320



	For the Year Ended December 31, 2017
	As adjusted
	Consolidated Company Entities				Consolidated Funds				Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $105,467)	$	744,825			$	—			$	(22,406	)	$	722,419
Carried interest allocation	621,471				—				(1,017		)	620,454
Incentive fees	20,295				—				(4,075		)	16,220
Principal investment income	89,031				—				(24,587		)	64,444
Administrative, transaction and other fees	56,406				—				—			56,406
Total revenues	1,532,028				—				(52,085		)	1,479,943
Expenses
Compensation and benefits	514,109				—				—			514,109
Performance related compensation	479,722				—				—			479,722
General, administrative and other expense	196,730				—				—			196,730
Transaction support expense	275,177				—				—			275,177
Expenses of Consolidated Funds	—				65,501				(26,481		)	39,020
Total expenses	1,465,738				65,501				(26,481		)	1,504,758
Other income (expense)
Net realized and unrealized gain on investments	13,565				—				(5,303		)	8,262
Interest and dividend income	9,048				—				(2,005		)	7,043
Interest expense	(21,219		)		—				—			(21,219		)
Other income, net	19,470				—				—			19,470
Net realized and unrealized gain on investments of Consolidated Funds	—				126,836				(26,712		)	100,124
Interest and other income of Consolidated Funds	—				187,721				—			187,721
Interest expense of Consolidated Funds	—				(159,688		)		32,961			(126,727		)
Total other income	20,864				154,869				(1,059		)	174,674
Income before taxes	87,154				89,368				(26,663		)	149,859
Income tax expense (benefit)	(24,939		)		1,887				—			(23,052		)
Net income	112,093				87,481				(26,663		)	172,911
Less: Net income attributable to non-controlling interests in Consolidated Funds	—				87,481				(26,663		)	60,818
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	35,915				—				—			35,915
Net income attributable to Ares Management, L.P.	76,178				—				—			76,178
Less: Preferred equity dividends paid	21,700			—	—			—	—			21,700
Net income attributable to Ares Management, L.P. common shareholders	$	54,478			$	—			$	—		$	54,478



	For the Year Ended December 31, 2016
	As adjusted
	Consolidated Company Entities			Consolidated Funds			Eliminations			Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $121,181)	$	659,451		$	—		$	(17,383	)	$	642,068
Carried interest allocation	491,654			—			2,926			494,580
Incentive fees	27,337			—			(4,065		)	23,272
Principal investment income	50,408			—			4,760			55,168
Administrative, transaction and other fees	39,285			—			—			39,285
Total revenues	1,268,135			—			(13,762		)	1,254,373
Expenses
Compensation and benefits	447,725			—			—			447,725
Performance related compensation	387,846			—			—			387,846
General, administrative and other expense	159,776			—			—			159,776
Expenses of Consolidated Funds	—			42,520			(21,447		)	21,073
Total expenses	995,347			42,520			(21,447		)	1,016,420
Other income (expense)
Net realized and unrealized loss on investments	(3,220		)	—			(4,409		)	(7,629		)
Interest and dividend income	8,034			—			(3,541		)	4,493
Interest expense	(17,981		)	—			—			(17,981		)
Other income, net	35,650			—			—			35,650
Net realized and unrealized loss on investments of Consolidated Funds	—			(2,999		)	942			(2,057		)
Interest and other income of Consolidated Funds	—			138,943			—			138,943
Interest expense of Consolidated Funds	—			(98,556		)	7,104			(91,452		)
Total other income	22,483			37,388			96			59,967
Income (loss) before taxes	295,271			(5,132		)	7,781			297,920
Income tax expense (benefit)	11,756			(737		)	—			11,019
Net income (loss)	283,515			(4,395		)	7,781			286,901
Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds	—			(4,395		)	7,781			3,386
Less: Net income attributable to redeemable interests in Ares Operating Group entities	456			—			—			456
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	171,251			—			—			171,251
Net income attributable to Ares Management, L.P.	111,808			—			—			111,808
Less: Preferred equity dividends paid	12,176			—			—			12,176
Net income attributable to Ares Management, L.P. common shareholders	$	99,632		$	—		$	—		$	99,632