Ares Management Corporation (ARES) Earnings Call Transcript & Summary

Before we get started, for important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to Morgan Stanley sales representative. All right. With that out of the way, good afternoon, everyone. I'm Mike Cyprys, Equity Analyst covering brokers, asset managers and exchanges for Morgan Stanley Research. It's my pleasure to welcome Jarrod Phillips, Chief Financial Officer at Ares Management. . As many of you know, Ares is a leading global alternative investment firm with $325 billion of client assets under management invested across credit, private equity and real assets. Jarrod, thanks for joining us.

Thanks for having me, Mike. It's great to be here. .

Great. So why don't we start off with kind of the macro backdrop, very topical, a challenging start to the year, higher inflation, rising rates, volatility, so forth and so on, recession concerns, geopolitical tensions, all while still trying to navigate a global pandemic. So have you had enough of yet? All right. So how is Ares adapt it, just given all of those challenges? And what are your top priorities as you are managing the business through this?

Sure. And I think it starts from us being a credit firm first and really being in the top of the capital structure, senior secured lending with floating rate assets. Having that in long-term, long-dated funds enables us to be extremely patient. So we aren't in a situation where we're forced sellers. We are more in the situation of how do we work with the sponsors if there appears to be trouble or if there is trouble? How do we take our time with our portfolio and use our dry powder widely? So as a percentage of our AUM, we have the largest percentage of dry powder right now. So this is really a time as things are more uncertain and a little more volatile where we can look to be on the offenses as opposed to on the defenses. So we can look at where there might be opportunities in our portfolio where there might be chances to assist sponsors and other transactions, where there might be different areas to deploy capital that may be in a better market, we weren't deploying capital. A great example of that is taking a look at some of the larger loans that might have gone into the syndication market, but haven't had that access recently. The ability to take down these $1 billion-plus transactions in our direct lending platform works to our advantage. So that's an area where we can step in, and we can be a provider to those borrowers.

And maybe against that backdrop, what's the pace of deal activity and capital deployment? How is that trending? And how would you characterize the environment for putting capital to work these days?

Sure. I'd say that it has slowed down a little bit in the second quarter. The first quarter, I think, had a hangover from Q4 and was really for the first 5 or 6 weeks was near a peak of activity than the war in Ukraine occurred and things began to slow down a little bit. But given all that, when you look at Q1 of this year versus Q1 of last year for us, we were still up in terms of deployment year-over-year. Going into the second quarter here, things have slowed a little bit. And I think with the lack of M&A activity, which we still think will likely happen, the pipeline still seems like there's deals to be had and there's deals to be done and there is some smaller amounts of deals we do see things like that, that syndication and opportunity that I talked about where larger deals are moving into the private space that traditionally would have accessed more in the public space. So then you can end up with a chunkier deal that may be made up for a lack of multiple smaller activity.

Great. And when you think about putting capital to work, what are some of the more interesting themes and sectors that you find most compelling here? And any sort of things that you're avoiding.

Sure. I'd say that we always try to avoid the cyclical environments. We're looking for top-tier companies that are generating cash flow. So that's something that we've always focused on. We've -- if you look at ARCC's portfolio as a nice proxy of where our direct lending portfolio is, we stay out of things like casinos and utilities and media areas that are considered more risky and volatile in this time and that's really at all times that we've stayed out of there. I'd say that our focus now will continue to be kind of where it's been and being available for our sponsors being their lender of choice and looking to continue to build on that portfolio same time as we look across the portfolio, similarly in private equity, we've traditionally stayed out of the cyclical environment with a real focus on services and health care. I don't see there'd be any reason to pivot in this type of environment from those. And in real estate, we're really focused on multifamily and industrial. Two areas that we think continue to benefit in this environment and industrial being a bit of an inflation hedge and still seeing a lot of demand for that type of real estate and multi-housing, certainly, there is a lack of supply and housing that is beneficial to that. But I do think there might be some opportunities you see in real estate in the office space and hospitality space that really going into COVID, we weren't significantly in either area, but now the chance to return to office or return to work and retrofit and rebuild some of these offices. And when you look at where your opportunities might be, they could be fairly interesting. And as people have returned to travel, I mean I'm here from Los Angeles with you, we're seeing a lot more people on a lot more hotels. So how does the hospitality space look.

Great. Maybe just coming back to your point around a little bit of a slowdown in the second quarter that you're seeing relative to the first quarter. I guess, what parts of the business are you seeing that split out more emblematic and what areas are maybe holding up a little bit better.

Sure. I think private equity is an easy one to call out. There's just a little bit of a mismatch between I think sellers expecting to get the 12/31 valuations and buyers being a little bit more patient and one in a little bit more price discovery. I'd say in the -- that then translates obviously into your direct lending space as you're going to have less churn in your portfolio, you're going to end up with a smaller gross number. However, because of what I talked about, you still end up with a roughly equivalent net number as you have your natural maturities, your natural extensions of a loan and things of that nature. So your net number might be relatively similar, but it will be made up differently than it has been in prior periods. And I'd say in real estate, we're still seeing a lot of attractiveness in industrial and multifamily. So that hasn't maybe slowed quite as much as some other areas.

And in private equity and the direct lending side, I guess, what does it take to kind of see a reacceleration of deal activity in volumes? You referenced M&A broadly, does that need to pick up for the overall marketplace for that to support the private credit growth? .

I think as people have more clarity on interest rates, and that buy-sell gap kind of comes together a little bit more so that people can agree on valuations. That takes time. I think, Mike, a couple of weeks ago had mentioned that he thought it was maybe a 3- to 6-month time frame where that might happen now. We're certainly in the middle of that right now because I think that, that really started beginning with the war in Ukraine and how the market was going to pause and assess. I think obviously, the last few days haven't helped that case very much. So I'm hopeful that you'll see that start to come soon and transactions will resume. I mean when you look at other periods historically of increasing rates, you haven't seen that much of a falloff in transaction volume in terms of direct lending, all other things being equal. So it's not really as rate driven as much of that price discovery and the price discovery might be rate driven.

And how is the portfolio holding up through all of this? I mean first quarter marks were fairly resilient compared to what we saw in the public markets. But maybe you could talk about how the portfolio investments are navigating through this environment?

I think when you look at the private markets, they're always less volatile than the public markets. And they're always on a little bit more of a lag. So it's really important to look at the fundamentals of how the portfolio is performing. And when we look at the fundamentals of our portfolio right now, we're very pleased with how everything is performing. And when we entered the year in terms of ARCC's portfolio with excellent EBITDA to interest coverage with really low LTVs throughout the portfolio, really where you want to be in a rising rate environment. So we haven't seen fundamental falloff in any of the businesses that are underlying our portfolio. We've been very pleased with that. And I think that, that, to some degree, is driving less volatility in the marks. I think, along with -- you take a look at where we're at with real estate, with -- interest rates will certainly put pressure on your cap rates, but we have historical low vacancies and we have the ability to flex and reset our lease rates. So that, combined with a market demand for industrial multifamily space allows that valuation to hold up more in the face of rising cap rate.

Now given the growth that we've seen in private markets over the past 1 decade or 2, for that matter, the question often comes up around risk -- excess risk in the system, excess risk in private markets, some point to private credit, others point to BC, if anything there. I guess what are you watching closely? What are your thoughts on that?

Sure. I think when you step back and think about why you might hear that, when we went through the global financial crisis and when we've had issues in the past, a lot of times it was how are these assets being financed? And what do you have on the liability side? If you look at where BDCs were prior to the GFC, you had a lot of financing that was more short term in nature.And it was not matched to the duration of the assets. So I think as we've looked at what's in the portfolio, and we've looked kind of across the industry as well. You're seeing a much better liability and asset match which prevents you from having to be a forced seller into a distressed market. So I think a lot of times when we hear that question, it's private credit and area of risk. We're senior in the capital structure. It's been one of the most durable and best-performing asset classes throughout the last 20 years. And you have that added benefit of it, it is better matched with its liabilities. So we feel really strong obviously about private credit. I'd say as we think about where the risks might be, I mean, the unwinding of the fed balance sheet will probably create some headwinds over the next several years. They certainly won't be for sellers either, but that is going to provide some headwinds.

Why don't we shift and talk about real estate? That's become a bigger business for you guys at Ares. You did the Black Creek acquisition. It's been almost a year since closing there. So as we enter a period of what could be slowing economic activity, how do you think about how the real estate platform is positioned? And what are some of the risks and opportunities that you see there?

Sure. And I highlighted a little bit of this. The Black Creek acquisition really did 2 things for us. It added a new distribution channel in terms of the retail channel, and it added the core and core plus strategies. So we added that to our value and opportunistic strategies within the real estate platform, which was an area we had a real high conviction around. So we were very happy to add that industrial segment to it, and we've also worked with AREIT, which we brought on to really repurpose it and add kind of the Ares platform to that in an investing strategy. . What we've seen there, we continue to have extremely high conviction on industrial. The demand for industrial space continues to be high for e-commerce and other businesses. We also are seeing a benefit because we take it from the dirt all the way through to the final build in leasing. Those steps and stages in an inflationary environment have become more expensive. Hiring the construction to build it has become more expensive, meaning that as people want to come into the market, it's easier for them to sometimes buy than it is to build. So you see gains from doing that from going through your zoning process, going through your planning process and your approvals, you see gains at all the various levels. So we continue to be very happy with the industrial space and believe that there's still room to grow there. Multifamily, again, is another story of supply and the ability to have flexibility on rents and those rents can flex up and provide a bit of inflation protection. And like I mentioned with some of the other areas that I think that we focus on are value-add and opportunistic real estate strategies in both the U.S. and Europe. That allows us to be extremely flexible. And those have in the past gone in and out of hospitality, gone in and out of office space, but they've done industrial. They've done multifamily as well. They're going to be able to be flexible going into this environment, and we're on the successive fundraises of several of those funds. So we have dry capital there that we're able to deploy. And I think that there's going to be a number of different opportunities. And we're seeing opportunity in Europe, too, and we're mainly focused on Western Europe. So the war in Ukraine hasn't had any real impact on that real estate environment. And then I'd add that real estate debt continues to be an attractive place for us -- We have who's presenting here earlier as well as our open-ended U.S. funds. We've recently added open-ended European real estate debt fund. So I think that there's a good opportunity for growth in building there.

So a number of different areas that you mentioned that you are deploying capital into that you're excited about. But we're also hearing similar sort of themes from others in the marketplace and others also moving into this part of the marketplace. So at what point does it become too crowded? At what point do valuations become too elevated? At what point does it become less compelling of an opportunity to deploy capital into?

I think there's always been a tremendous number of competitors in the real estate environment. In fact, it's probably the most fragmented of all the manager environment. And I think that you're seeing whether it's what we've done in acquisitions and the size firms that we've acquired over the last several years that it really is advantageous to be part of a larger platform. You have the ability to have scale and real estate is a -- it's a people-intensive business and it's a structure intensive business. So the ability to deliver scale is going to assist with your returns and your creativity. Having the ability to vertically integrate, which we also received from Black Creek, is something that we put -- it's a lot of value in. So we can be the ones that develop it all the way through and then we can actually be the property management of these spaces. So bringing things into 1 singular place, I think that scale is what provides the opportunity. I think that there will be winners and losers ultimately, but I think that the winners will gain that from having scale and being major players in the spaces that they operate.

And when you're deploying capital today and some of these real estate themes and sectors, I guess, what level of rent growth and cap rates are you sort of building into your models? And what sort of impact is there from higher financing costs?

Sure. I'd say that the -- like the vacancy is at an all-time low. So you are seeing more rent than maybe you typically would because of vacancy. The types of leases you have is very important. The ability to have refreshes on those leases with any kind of regularity, I think, is very important. As you get into the longer-term extended leases, that's going to behave more like a bond and you have more opportunity we put into a negative financial position as a result. So having that flexibility in leasing, I think, is really, really important as you are able to model out. And then that allows you to increase leases as time passes, if that is warranted based on inflation and supply demand. In terms of cap rates, I do think touch on that just a little bit in terms of our view there that there are a lot of factors that work in line with cap rates to maybe offset or mute some of the impact of those cap rates. But I think logically, with interest rates increasing, we do see cap rates increasing, which does have that offsetting impact to valuation, which isn't wholly different than what you would receive in private equity either as interest rates increase.

Great. Why don't we shift to the other end of real assets and talk about infrastructure and the other acquisition that you had done, which is the AMP. So maybe you could talk a little bit about that platform that you acquired. What's unique there? How does that sort of accelerate your journey that you have envision on the infrastructure side?

I think it's important to note that we obviously had the infrastructure equity business that we had acquired back in 2015, and we did a lot of infrastructure lending in the senior position. And IDF is really the market leader, the world leader maybe in the mezzanine space. They're through 4 co-mingled funds, and they're on to their fifth fund now. Their fourth fund was about $4 billion. So really, it just blended so well with what we are already doing and really the senior team and the equity team being cross-platform with that mezz team I think allows us to provide sponsors another source of borrowing. It allows LPs to have another investing opportunity, and it's had a track record of great returns and it fit really seamlessly. Patrick and his team have integrated throughout our investment teams and really just become a whole part of it, they've moved into our New York space, and we're thrilled to have them. And it's something that we're really excited about. We think that with our debt platform and using our playbook, we'll really be able to grow that platform even more than it already has.

Maybe you could just flesh out with the AMP debt platform just around the size, people, assets that are coming over. And I think you mentioned more senior in the cap structure, is that right?

It's mezzanine. It's more mezz and the -- like the fourth fund that they had -- they're in the market now with their fifth fund. The fourth fund was $4 billion with the success of funds being a little smaller. I think all in right now, we're around $8 billion or $9 billion of AUM on IDF. It was a smaller team in the probably 20-front office, maybe 10 back office, and they're located throughout the globe. So they have some AUM that's in the Australia area. They have mainly global AUM beyond that with the primary locations being here in New York and London.

Great. Maybe just more broadly on infrastructure, how do you see that asset class positioned here in the current economic cycle?

I think infrastructure acts somewhat countercyclical. So it's something that we're obviously, very excited about and I think we'll be an important component in terms of deployment and returns over the next couple of years. And I think it's something that our LPs and investors were looking for. And I think it's great to have them.

Great. Well, maybe moving on to secondaries, another product area that you guys have bolted on to your platform through the testing there? And what are some of the steps you're taking to accelerate growth?

I've been very happy with our integration playbook. It's funny. I sit here listening in, what about this acquisition? What about that acquisition, and it's been great. We've had 4 acquisitions in the last 2 years, and we have really a playbook that we put in place to work with the teams to bring them into Ares, feel like they're part of our culture. When we're doing the due diligence, one of the most important things for us is that culture and how are they going to fit? I think all 4 have been -- they've been -- people that we've worked with in the past, whether it's along with our deals or we've encountered in the marketplace that we knew were going to be an excellent cultural fit and that we're excited to have come over. One of the things that we try to do in our investment committees is they obviously at landmark had their own investment committees and adding people from the Ares platform to that investment committee at the same time adding people from that investment committee over into other Ares platform investment committees really assists with the integration and the work there. We've brought in some new partners into Landmark, and we've brought over some partners that are -- we're currently at Ares to work with the landmark folks to focus on that integration. I think really if you want to kind of what we think is really positive, we bought Black Creek. We bought Landmark. We closed them within a month of each other. And earlier this quarter, on April 1, we launched our private markets fund, which is a secondary fund for the retail channel using the Black Creek broker dealer. So you've seen that we've brought together these 2 different acquisitions and really been able to see synergies there that both things didn't exist prior to May of last year. So we've been really excited about the opportunities that are there. and what lies ahead, but we've already started to see benefits of that integration.

And maybe that's a good segue to talk about retail. Maybe you could just update us on that product that you guys have launched kind of just expand upon what the strategy is and how it's going to work, what the economics are for you guys?

The private markets fund is really a way to get into the retail channel exposure to private equity. And one of the things that we know from speaking to -- our wholesaler speaking to RIAs and others is that there's a high desire for yield in that space. So really the private equity product that most benefits that market -- that retail market is something that is yielding, which is much more in line with the secondaries product. So a secondary is often later in the life of a private equity fund. We're maybe a single asset or it may be a continuation fund or something like that nature, it's often kicking off cash. So it's often a yielding asset. So being able to provide that private equity exposure to retail investors, we thought was something that was very attractive and to have the Ares name along with it, we think it was certainly beneficial as well. So we're really excited about that prospect. And when we look at the marketplace for that, there's really only 1 major player at scale that has kind of set the tone for it and shown us the path that we can follow. So the hope is that we can grow that 1 into the multibillions over the next several years and it will be a core product in the retail channel.

And it's just all secondaries so no partner?

It does have the ability to do some primaries. You obviously want to be able to mix and match so that you're benefiting the shareholder and you're providing that yield, but it does have the ability to be flexible.

Got it. And how do you think about more broadly accessing the retail channel now that you have the Black Creek distribution team, it would seem that sort of prime for more opportunities in that challenge?

I think we clearly agree. Retail has a tremendous amount of opportunities. I wouldn't want to lose sight of how important the institutional investors are in that part of the business is. But at the same time, going into the retail channel, brand in the retail space matters a lot and really getting your brand name out there and understanding what the products you offer are, I think, is extremely important. And the good news is for us, as we penetrate that market, we have a team of 105 people. And if you look at our campaign funds, they were already largely going through the wire houses to do fundraising. So that they -- all the people in those environments have a great understanding of who Ares is, what we can deliver to investors and that makes that path easier as we're adding more wirehouses to the distribution channel. And I think then the next step is educating the RIAs and others about what products we have. I do you think this is a scenario where you benefit from having multiple products in the channel. So we have A REIT and AI REIT. We also have our interval fund that's done through a joint venture. We now have a private markets fund, and we've talked publicly about how we've filed but have not yet launched our non-traded BDC. I think our nontraded BDC is something that investors are excited about. These certainly know the brand name from ARCC. And they know that this is an area of our specialty. But having those -- that multiple opportunities when our wholesalers go in to discuss the product allows them if the RIA is not interested in the REIT to also have these credit funds to have the private markets on to have multiple things that people may be interested in investing. There's probably a critical mass. It's not 20 products. It's probably in that neighborhood of somewhere 5% to 10% of having the right products with the right mix that gives yield to retail investors and really extends and enhances the brand.

So you have a handful, I think, you mentioned at least 4 right now that you have in the marketplace, maybe you put on the way but the non-traded BDC. But how do you think about product development, you look across the Ares platform, there's a lot of different strategies that you offer to institutions today. How do you think about what strategies could make sense and wrappers as you kind of think about addressing that white space in the retail channel?

One of the challenges of the retail channel is the cash comes in all at once. So it has to be deployed relatively quickly. So that's where -- when we talked a little bit about the private markets fund and the secondaries when you're yielding and it's creating cash, and it's a little bit easier to deploy as opposed to you're going out and looking for opportunities to buy a primary like you would in a private equity fund because we wouldn't then buy it until we call it capital, right? But here, we have capital we immediately have to deploy it. So you need to risk weight that with the return that you'll ultimately get. So as we look across our platform and what the opportunities might be, we want to see things that we will have a yield that won't be dragged down by having too much cash to deploy, right? So you need to be thoughtful about what you could ultimately put in there and how it will ultimately work. I think fixed income works extremely well in that channel. And whether you think about real estate debt or you're thinking about other geographies, those are all places that I think could really benefit from it. You've seen recently, we announced, I think, what, 2 days ago, last week, the higher end of Henry Lee in the Asian market, looking at other geographies, I think, is another area of interest. I think that the ability to do some of the things we do in the United States and other geographies I think it also is a great opportunity for the retail space.

Great. So you mentioned a number of acquisitions that you guys have done, and you update us on a whole host of them there from Landmark, black Creek, AMP. What's the go-forward strategy on M&A at this point? What gaps if any remain? And where would you like to have more of a presence?

Sure. I think the bar has gotten a little higher on buy versus build. We have a very scaled platform that has a multitude of strategies. So it's really about finding the right strategy that we maybe don't have the benefits the things that we're doing. I step back and think of it in 2 different ways. Sponsors are customers. They're the people that borrow money for their portfolio companies, and they come to us for solutioning. So when we're acquiring things, having options for sponsors is important. So if you think about what Landmark did, that provides a sponsor another avenue with which they may monetize some of their portfolio investments through a continuation fund or other GP solutions or LP solutions. Obviously, the credit platform does that as well. So adding capabilities for sponsors is one thing that I think is important, adding opportunities for LPs that serve nicely across the platform, I think, it is important, too. The more opportunities we have for LPs to invest across the platform, the better I think it makes the LPs happier to be able to go to a singular relationship for a number of their investing solutions and to have 1 person to kind of talk to and go through and understand. So I think that when you take those things into consideration, that's really how you look at it and you say, okay, well, what don't we have that would benefit either of those groups. Geographies, again, is another important area. So building out the things that we have in the United States, in Europe, in the Asian markets, I think, is something that's interesting. Growth capital is something that we don't really have right now and could be compelling. So I think finding those niches, we did have a press release last year on our triple-net lease group that we've added in that works and well in all credit and that strategy works well in real estate. So that's something that there's a buy versus build decision, how fast do you want to get there. So those are all areas that I think we look at and focus on. We have strategy team that's fully dedicated to looking at how do we enhance the platform, whether it's product releases or whether it's acquisitions, and they've not -- I probably looked at trillions of dollars of opportunities Over the last several years.

And is there a scenario where maybe liquid markets can make sense as you think about building out the platform?

It's not something that we've really looked at it. It's different than the type of capital that we are typically attracted to. So we like to have long-dated, locked-up capital that allows us to be on offense in times like we talked about. So we want to go into markets that are a little bit more dislocated and volatile with the ability not to have to sell in our portfolio and defend the portfolio, but the ability to deploy and perform well to ultimately monetize in that type of situation. So things that are a little bit more liquid with more fee pressure maybe isn't always as attractive.

Okay. Why don't we see if there's any questions from the audience? Sure. Any questions? Please just raise your hand if you do. Insurance, we haven't touched upon that. You have a lot of initiatives going on in Ares. That's a large addressable market opportunity there. You're taking a little bit of a different approach than what we're seeing from peers. So maybe you could just talk us through your insurance strategy talk about the approach you're taking, why and how is it different from peers?

Yes. I think an important thing to consider is that we had about $40 billion of AUM with various insurance companies. So we had a number of different LPs, where we're providing investment solutions for. And we wouldn't want to do anything to jeopardize those relationships or make them feel like we were a major competitor of theirs. So along with our balance sheet light strategy, we thought that it was able to build really a speed off of the balance sheet using third-party capital as opposed to primarily our own capital. In doing so, I think we do have some creative solutions that's primarily a reinsurance and life and annuities contract writing, which it's going to begin doing soon in 35 states with the remaining 14 ex-New York probably by the end of the year. That platform was doing about $1.7 billion of annuities prior to our acquisition of it. So we're very hopeful that its tech-enabled properties will enable us to at least do that, if not more, on a go-forward basis. And we've been doing between $1 billion and $2 billion of reinsurance contracts really over the last couple of years per year. And then looking out to 2025, the guidance we gave last year, our investment -- at our Investor Day was that we thought this would be about a $25 billion platform with the ability to have an exit, whether it be IPO or otherwise at some period after that. But we think that, that was the right strategy, both in line with our balance sheet light and with respect to those other insurance companies that are our LPs throughout other.

Did you just mention exit or IPO?

Yes, I said -- I noted that, that could be in the future an option for it, among other monetizations past that 2025.

And how much of it do you own today?

Right now, we'll look to -- we always have to hold, I believe, between like 10% and 20%.

Okay. Got it. So if you were to sort of, I guess, have a realization event, then that would go down to 0 arguably and then you still would manage the contracts or...

I don't think you'd be able to in the insurance world, the way the insurance world work.

I see. So it would be a partial monetization, basically. Okay. What do you think about the capability set that you guys bring to the insurance customer set with the SPA platform and you think about the capabilities, how are you guys positioning that for success? And how is that maybe a little bit differentiated from peers on the speed side

Yes, I think 1 of the exciting things about speed and 1 of the things that we really liked about the platform was its tech enablement. The annuity space is still fairly antiquated and that platform enabled us to write and receive annuity contracts electronically using the Internet, which to everyone in here probably doesn't sound that novel, but in the annuity space is actually quite novel and fairly exciting. So we're very hopeful that, that brings a way that a person who's interested in a life insurance contract can essentially access the alternatives market.

Great. Well, we have about 1.5 minutes left. So final question. How do we think about the vision that you guys have for Ares looking out over the next 3 to 5 years? And why is now a good time to buy the stock in Ares?

I think we've shown historically that we're excellent downmarket investors. We've seen our fastest period of management fee growth and AUM growth during periods of high volatility and dislocation, whether it be the global financial crisis or the beginning of the COVID pandemic. So I think that this is a time of terrific opportunity for deployment across the platform. I think that as we've broadened our platform, it's given us more opportunities to deploy in multiple types of environments to really fill out all the gaps and to provide those solutions on the sponsor side and on the LP side. And as an investor in Ares management, you're really investing in the manager. We don't have a bunch of assets on our balance sheet that will be volatile in times of distress or that we'll have that kind of mark-to-market risk. We're really investing in the manager. If you want to invest in our products, you can directly invest in our products.

Great. We'll have to leave it there. Jarrod, thank you so much.

All right. Thank you.

Really appreciate it.

it.