KKR & Co. Inc. (KKR) Earnings Call Transcript & Summary

All right. Thanks, everyone, for joining us. I'm Mike Brown, the U.S. broker and asset managers analyst here at UBS. I'm pleased to welcome Rob Lewin, the CFO of KKR. KKR is one of the world's largest asset managers, overseeing roughly $744 billion in AUM as of year-end 2025 with a global diversified platform spanning private equity, credit, infrastructure, real assets and insurance. Rob, thank you for joining us.

Mike, thanks for having us.

Right. So let's start on the macro front. How are you thinking about rates, inflation, the broader economic outlook and what are you seeing lately in realizations and transaction activity? Will activity continue to accelerate in 2026?

Yes. It's probably as nuanced a moment we've had the broader macro space in a long, long time. If you think about what's going on, from a macro perspective, you layer on to that geopolitics, both domestically in the U.S., abroad as well, fiscal deficits, public policy. As you think about this moment in time, we're quite fortunate that we have leaned in on the resourcing side across all 3 of those areas, that I think really puts us in a relatively good position as we try and navigate what is said quite a nuanced moment in time. As it relates to how I think it's going to impact the go forward, we continue to believe that there will be a greater amount of activity in 2026. We do see deal flow picking up. We've talked about monetizations across our industry picking up. Our pipeline is definitely a lot better going into 2026 than it was going into 2025. So we are encouraged by the early signs, of course, watching some of the volatility that we saw in the markets last week, but overall, we feel pretty encouraged by the signals we're seeing.

Great. Okay. So in your view, what's the case for KKR over the next 3 years that the market is just not pricing in correctly at this moment?

Yes. So in a lot of ways, maybe a difficult question for us to answer, but let me throw out a couple of things for you that we were looking at over the past number of days. Number one, if you look -- we bottomed out last week in the high 90s, low 100s. If you look when we -- where we were roughly 2 years ago, it was right at that similar level. And look at what's happened at KKR for the last 2 years, our management fees are up 35%. Our fee-related earnings are up north of 50%. Our adjusted net income is up in the mid-40s. Our capital raising in the past 12 months was up 90% from the 12 months preceding that point in time, all at the same time that broader markets are up 40-plus percent. And so if I asked you at the time to put a price target on KKR with that facts in mind, I think, you would be obviously a lot north of where we are today. Now maybe the market got very wrong 2 years ago, more than likely it's somewhere in between. In terms of the piece that I think maybe the market is missing, and you can start across our asset class around the resiliency of the business models as we've gone through moments of volatility, like what we've seen in our share prices over the past 3 or 4 months. I think it's the broader diversification of the business models. And I do think the business model that we've created at KKR is the most diverse in the alternative asset manager space. You look at our asset management strategy, what we're doing in insurance and strategic holdings, but even if you just looked at our asset management business and the diversification of our asset management business. $4.1 billion of management fees last year, roughly 1/3 came from each of our 3 business lines, private equity, real assets and credit and liquid strategies. So that type of diversification you don't see definitely not on that scale across our peers. You layer on to that, that we are also the most global alternative asset manager. More than half of our investment professionals sit outside of the United States. We have a big presence in Asia Pacific, an area where we believe that more than half of global GDP growth will come from over the next 10 years. And so if you're going to ask what is the market missing? I think it's the diversification of the business models in the space. And I think in particular, I think if you look at what we have built over the past number of decades and what that looks like today, it is even vastly different from what it was a couple of years ago when our share price was at roughly the same place as it is today.

Right, right. Yes. The diversification at KKR is it definitely seems to be underappreciated by the market. Kind of leads in well to my next question, which was an exciting announcement last week with the acquisition of Arctos. Can you maybe just walk through the strategic rationale there? And that -- how does that kind of fit into the broader KKR M&A framework?

Sure. We're incredibly excited about the Arctos transaction. This has been at the top of our priority list for some time. And I don't just mean the asset classes that we're entering, I mean, partnering with Arctos specifically. It is very consistent with the M&A framework that we've laid out for our investors over the last number of years. Importantly, of course, we need to be in really large addressable markets, and we want to make sure that through strategic M&A that we could be world class at what we're doing. And if you look at Arctos today, it's really 3 separate asset classes. Number one, sports. This has become an asset class in its own right and growing at double-digit rates, Arctos is a clear global leader. What they're building in GP Solutions, also a very large addressable market. Arctos is on their first fund, already a top player in a tough fundraising environment, I think, shows the credibility that they have across the investor community. And then three, probably the largest addressable market, an area where we get asked about all the time is the secondary space. And when you look at the team at Arctos, their track record, their experience, their credibility in the marketplace, and you combine that with KKR's industry expertise, global reach and access to capital, we really do think we've got -- we will create a right to win in that space. And when you pull it all together, we think we can build a $100-plus billion business. I got a couple more areas to go through, Mike, if you got a minute for this. I think it's important. We focus a lot on duration of capital and strategic M&A. I think, it's very easy to make M&A in the asset manager space accretive over a 3- to 5-year period, it's really hard to do over a 10-plus year period. And if you look at the most recent transactions we've done going back to our partnership, with Franklin Square, Global Atlantic, KJRM, the REIT manager in Japan, HCR last year and now Arctos, the commonality, if you look across all of those acquisitions is in aggregate, it is as close to permanent capital as it gets in our space and gives us a lot more confidence in how we think about that 10-year vision in terms of the duration of that capital and the ability for it to stick around. Three, of course, we've got to make sure we can make each other better. A big opportunity here is around origination in the areas that Arctos traffic is in. And I would highlight, in particular, I think, could be really accretive to our insurance capital, which in turn gives Arctos more tools out in the marketplace as they're traffic in both with GPs as well as with sports teams globally. And then lastly and most importantly is the cultural piece. We don't just expect the Arctos team to fit into our culture. We expect them to add to our culture. Importantly, here, we have known this team for a very long time. First met their principal, Ian Charles, 10-plus years ago and worked on a deal together. And I think you learn a lot about people when you work on transactions together. So we couldn't be any more excited for this acquisition.

Great. Great. So you achieved significant fundraising in 2024 and 2025. So how would you characterize the fundraising environment today, maybe split it out by channel, institutional insurance in wealth. And then how could '26 and even '27 compared to those recent years?

Yes. So in 2025, we raised about $130 billion of capital. I mentioned that number is up approximately 90% from 2 years ago. We had outlined a goal of raising $300 billion of capital between 2024 and 2026. We're already 80-plus percent of the way through to that target, which we should meaningfully exceed. If you break down the fundraising channels into 3 channels, you can obviously go much deeper than that, but start with institutional. The institutional markets in the past few years have been the slowest. In a lot of ways, they're opening up, you look at two of our larger institutional-based products that are in the market and are in our Americas Private Equity Fund, our 14th fund. We've already raised $19 billion of capital. That's larger than the predecessor fund. We're less than a year from the first close. So a lot of momentum there in our largest institutional product. Our next largest global infrastructure product, we're north of $16 billion of capital and well on our way to exceed our predecessor fundraise there. So in both cases, an attractive outcome so far, and one we forecast to be really strong. And I think it does speak to the strength of the institutional market to the extent that you've got returns that you can rely on. Two would be the insurance channel, which is continuing to allocate to alternatives. We manage today $80-plus billion of capital for third-party insurance clients. That number is up north of 3x from when we first acquired Global Atlantic 5 years ago. So I think a validator to the fact that we have become a better partner to insurance companies globally by virtue of owning an insurance company ourselves. And then finally, on the private wealth side, I'm sure Mike will spend more time on the topic of private wealth as we go through this discussion, but a huge addressable market that is still very underallocated to alternatives. Today, we're managing through our suite of products north of $35 billion of capital, and it's an area that over the next 5 to 10 years, we would continue to expect pretty robust growth. Just to put that $35 billion of capital that we manage today in perspective, 12 months ago, that number was $18 billion. So a lot of momentum in that channel for us as well.

Right. Okay. So the momentum is just definitely clear there. You touched on 1 thing in your answer there, which is performance, which is really vital for your long-term growth. So how do you think about the capacity and fund sizing? So how do you avoid the AUM growth really diluting your returns and your franchise value?

Yes. I'm glad you asked that question because we talk about it a lot. And let me walk you through a few things that we talk about at KKR. Number one, we focus a lot on linear deployment, and so we largely use our investment periods in funds. I think that could be different from a lot of market participants that may overcommit their funds in a -- in one particular vintage. And so when we learned this lesson the hard way at KKR. We raised a lot of capital in 2006 and 2007, and then we spent most of it before the financial crisis hit. In a lot of ways, we got outcompeted through the financial crisis by our competitors. So we focus a lot on linear deployment. Number two, we still feel very much capital constraints. If you look in the past 2 years, we syndicated $25 billion of capital. And of that $25 billion that we syndicated 25% of that capital, we syndicated to non-limited partners at KKR. So this capital -- think about that capital that we needed to go out in the market and syndicate and to non-partners of the firm. And then I think the last thing -- and this really goes to business model and really fundamentally our long-term business model is -- and there's a lot of reasons why we have the business model we do, but one of them is that we -- so we don't need to be all things to all people and asset management. That's why we have an insurance business. It's why we have strategic holdings. And in a world where you don't have those avenues for growth, you always need to be chasing that incremental dollar of AUM to grow. And we don't feel that pressure at KKR given the model that we've chosen. And don't get me wrong, we see plenty of opportunities to grow our asset base at being great at the things we're doing. We think the Arctos acquisition and the beginning of the KKR Solutions investing unit as a result, gives us another avenue for growth, but as we think very much long term, no, we don't want to be all things to all people in asset management. And I think that allows us to focus on the things we're doing today, really be great at them, which includes delivering exceptional investment performance. And as I said, there's lots of reasons why we have the business model we do. That's a big one.

Great. Okay. Maybe if we shift gears a little bit here. A common investor question that we receive is really about the bridge to the 7 plus of ANI, the target for 2026. So while there's broad confidence in the FRE component, the insurance performance fee, investment income pieces, they're a little less clear, right? So that's kind of driven some skepticism in the market about hitting that target. So we're 1 month in through 2026. Can you maybe walk us through what needs to happen over the next 11 months for that $7-plus target to be achieved?

Sure. And thanks for asking that particular question. We obviously get it quite a bit. So -- and for background, back in 2021, we put out a target of $7-plus per share of adjusted net income in 2026, validated that again at our Investor Day a couple of years ago, continues to be a metric that we believe that we'll achieve through the course of 2026. And I think -- and I'll walk you through the building blocks of that, but keep in mind, we're going through the process of finalizing our budget, which is very much a bottoms-up budget. So as we think about that $7, we know what we need to achieve over the course of the next 11 months in order to be able to hit it. So let's start with fee-related earnings. And as you do your building blocks on fee-related earnings, the biggest driver is clearly management fees. I think we've demonstrated an ability to grow our management fees at a rate that exceeds our industry average, comfortably exceeds our industry average. We've got a lot of momentum there coming off the back of raising $130 billion of capital in 2025. Our capital markets business, lots of ways that we could win there. We've got the leading capital markets business across our space. It's been a big investment for us over the course of the past decade plus. We think that remains a large growth opportunity. Fee-related performance revenue, largely coming from our K-suite vehicles with the growth in K-suites got the ability to inflect in 2026. And then finally, and this is the piece that isn't talked about a lot, but is a big part of where we're going, which is operating leverage. And I talked about this a little bit on our earnings call last week. But if you look since 2022, so over the course of the last 3 years, we've grown our management fees by over 50%, but our operating expenses have grown by 23%. Now contrast that to our industry. If you look at our 3 largest public peers, at least those that we get compared to the most, each one of them has grown their operating expenses at a pace that exceeds their management fee growth. Again, we're 2x in the other direction. And so we already have industry-leading FRE margins, but our business model, we think, allows for more operating leverage over time. Our insurance business, we talked about that business being plus or minus $1 billion of operating income in 2026. Strategic Holdings, we believe year-on-year will grow at a pace of north of 100% and deliver operating earnings that exceed $350 million this year. So a lot of momentum if you look across our more recurring earnings. So then you get to our investing earnings, both our realized performance revenue as well as our realized investment income. And we enter 2026 with $18.6 billion of embedded gains on our balance sheet today when you look at both carried interests and our investment portfolio. That number is up roughly 20% from a year ago. In addition to that, I guided on our earnings call last week, that we've got visibility of generating $900-plus million of monetization-related revenue from things that have already happened or been signed up. This time last year, that number was $400 million. And so there's obviously a lot that will take place over the course of the next 11 months. We've got quite a bit to get done, but if we're able to get the things done that we think we can, we're going to scale our realized carry in the year. We think we can materially scale our realized investment income, which has got a high flow-through to adjusted net income. And we're confident that we can achieve the $7-plus as a result. Now in order to achieve the investing earnings component, we do need a conducive market environment to achieve it back to where we started this conversation, we do expect that in 2026, but at the same time, we're not going to force anything into the market. We would never sacrifice future growth for the near term, but we've got a bottoms-up plan. And as I said, with the conducive market environment, we think we'll be able to achieve it.

Great. Okay. Maybe just to double-click a little on the insurance side of the equation there. So -- can you just maybe walk us through the internal ROE bridge, spread versus capital efficiency versus health allocation expenses? What's going to be the biggest unlock to get you to your end goal on the ROE?

Yes. I would say since we bought 100% of Global Atlantic, there's some -- there's been some noise from a, let's call it, more of an accounting perspective as we are pursuing our strategy, which is a strategy that is for the next decade plus. When we bought 100% of Global Atlantic, it had a de minimis exposure to alternatives, 0 exposure to private equity as an example, which you wouldn't have expected when you think that many of the largest mutuals in the world are investors in KKR's private equity product, Global Atlantic was not. In order to do that, we need to elongate our liabilities, take leverage down to pursue that strategy. We're well on our way of doing that. You look at the liabilities we originated in 2025, 95%, plus or minus, we're 5-plus years in duration; 75%, we're 7-plus years in duration. I think some of the noise that we created on the accounting side is as we're migrating the book into alts, we've made the decision, which we think is the right decision for us not to cash account -- excuse me, not to mark-to-market those alternatives in the P&L, but rather to cash account for them. That is different than a lot of industry peers do it. And I would say there's no right or wrong answer. It's just the convention that we've chosen. So as we're ramping into that alts portfolio, we're putting P&L pressure within our insurance business on the basis of not getting the benefit of mark-to-market, but yet not being through the J curve where we're starting to get the cash income. We think that cash income starts materializing in our P&L in 2027 and 2028. But as we look at 2026, I mentioned earlier, we expect roughly $1 billion of operating earnings at Global Atlantic. At the same time, we expect mark-to-market of roughly $350 million through the year if our assets perform. So it's a pretty big delta. The last piece of the strategy, that in a lot of ways might be the most important and most differentiated versus the vast majority of insurance company is around scaling our third-party capital. And we talked about on our earnings call last week, having $6.5 billion of dry powder of equity to be able to invest up and down the assets and liabilities of Global Atlantic. We think once that capital is put to work, it will through operating leverage of an insurance -- reinsurance business translate to north of $65 billion of additional fee-paying assets for KKR. So quite meaningful in the context of managing a little bit north of $700 billion of AUM across the firm and a little bit north of $600 billion of fee-paying assets across the firm. And I think that piece of the strategy there's not a lot of insurance companies, probably only one that have the ability to raise that kind of scale third-party capital. And we think that's got a number of advantages associated with it. ROE is definitely one as we scale into it. The other importantly, as you think about when insurance companies have the ability to drive the best ROEs, it's in moments of dislocation, because there's less competition on the liability side at the same moment that spreads on the asset are a lot higher. And we think having the ability to draw down third-party capital, much in the same way that we would draw down private equity capital or infrastructure capital to invest in dislocation provides a real competitive advantage in a dislocated market.

Okay. Great. Let's change gears to the wealth platform. You did talk a little bit about the K-Series products earlier. But maybe just kind of higher level, what are the most important KPIs that you track? And what do you see as the biggest bottlenecks to continuing to scale in wealth?

Yes. The #1, 2 and 3 KPIs that we track is really around client experience, which includes delivering exceptional investment performance. It is not about capital raising. We've got a management team that really does think 10-plus years out into the future. And given the size of the addressable market that we're talking about, the fact that the individual investor still is low single digits allocated to alternatives, and if that scales to mid-single digits, you're talking about trillions of dollars of addressable market. We know that if we deliver an awesome client experience with our brand attached to it with the products that we've created in the market that the AUM will follow. Now we've had a lot of momentum on the capital raising side, including really solid capital raising month in January, where I think our industry saw a lot of volatility. We were up roughly 20% versus January of 2025, but for us, that number said 1, 2 and 3 KPI is about what we can build in the future, which is going to be a function of delivering an awesome client experience.

Some investor concerns out there about the wealth channel broadly. A lot of the focus and the challenges that you mentioned recently have been much more focused on the nontraded BDC private credit side of the space. Your exposure is relatively smaller than some of your peers. Do you have any concerns about some spillover effect to the broader wealth channel if folks start to go more risk off and kind of sit on their hands near term?

Yes. Mike, maybe the first thing I'd say is it's interesting if we were sitting here 3 or 6 months ago, you'd probably say how come your private credit business of scale relative to your peers. Now it's an advantage. Listen, one of the things we did, and it's a longer story, we probably don't have time for -- in this discussion, but I'll try and summarize. We learned a lot of lessons given some of the liquidity crunch in the private wealth space in our industry that were happening 3 years ago is right before we launched our private equity infrastructure K-suite vehicles. We paused those vehicles, and we said, "How do we make sure that we create the most durable vehicles as possible?" And we made a number of changes to the vehicles before we launched them. In fact, like we were ready to go. We had a whole sales team ready to start selling these products January 1, 2023. And we really pushed that out to the middle of the year. And one of the big changes we made was we introduced a 2-year soft lock on those vehicles, which is different than the marketplace. And of course, that's going to have an impact on capital raising. But the reason why we did that is that we wanted people -- financial advisers who are recommending our product and individuals who are investing in our product to be doing so in order to save for their retirement. If they were looking to go buy a house in the next couple of years, we weren't at the right place for them to be investing. And we do think introducing that soft lock and there's a 5-point penalty to be clear, that penalty doesn't go to us, it goes to the vehicle. We think that, that, I'm sure, creates some headwinds and pressure as it relates to near-term capital raising, but creates much more durability of these vehicles, makes them harder to back lever, again, impacts capital raising to a degree, but makes these vehicles more durable. There's other things we've done on the product creation side that I think are really important. Our private wealth vehicles, invest Pari Passu in the waterfall with our institutional vehicles because we want to make sure that the individual investor has a similar investing experience to our institutional investor. Most of our peers have not done that. They rely on white space or larger co-investments. And so you could be in a scenario where your institutional investor and your private wealth investor have vastly different exposures. We didn't want that.

Okay. Great. So on the call, Scott, you referred to 10 periods since the IPO that the stock fell 20% in 1 month. Help us maybe benchmark this current period of uncertainty related to AI and software to historical periods, maybe compared to events like the commercial real estate crisis, COVID, GFC, maybe take us through how you assess and address risk in your portfolios and then maybe talk through the actual performance or loss rates that you experienced and maybe how this situation could differ?

Yes. Mike, I mentioned this at the outset. I think this scenario is different in a couple of ways. Number one, what the market got very nervous about in the past 10 or so days was not something that was new for us as we thought about portfolio construction, what we're buying, what we're -- importantly, what we're selling. The other thing that I think is very different and frankly, was more surprising to me, and I would say, let's say us, I know Craig Larson, who runs Investor Relations for us is here in the room today, too, would say the same thing, goes to where we started this conversation around both the durability of the business model and then importantly, the diversification of the business model. I was with somebody this week and he said to me, which I hadn't appreciated that the alternatives last week, the alternative asset managers were actually down greater than the software index was down last week, which again does not tie together in any way to, again, the durability and importantly, diversification of all the alternative asset managers that are out there before you even get to our model, which we talked about earlier today. So I think, obviously, tough to like compare loss rates one time over the other. I could tell you, we feel really good about our aggregate exposures across the portfolio. We mentioned roughly 7% of our AUM across the firm, exposed to software, 15% in our private equity business exposed to software. We've tried to be pretty expansive about how we define software, as an example, we might have something that sits in our health care industry vertical, but as a software-oriented company. We, of course, included that in the software exposure on the denominator side. But that's not to say we don't see a risk that exists in the market from the adoption of AI. We've sold businesses over the past few years for sure that we were worried about that even though we saw a near-term risk. And I would also say and this goes back to the diversification of the business model point. We sit on roughly $120 billion of dry powder to be able to invest into the dislocation and a significant amount of our capital investing over the past number of years has gone to support the adoption of AI through a number of our investments in digital infrastructure and data centers. So as you think about our net exposure here to AI that's very different to the gross exposure you're talking about in software businesses.

Right. So we touched on the nontraded BDC side of credit. But if we take a step back and talk about maybe credit as kind of the broader asset class, it's been a major driver of your inflows. There are some growing questions about the golden age of private credit. So maybe just touch on your strategic asset mix, how you think about how credit AUM can continue to compound in 2026. And can you continue to grow at that rate even if spreads stay tight and base rates continue to come down?

Yes. So when you -- private credit gets painted with one brush. I'll tell you how we look at it at KKR and how we segment it. We've got roughly $135 billion of capital in private credit, $85 billion of that is in asset-based finance, $50 billion of that is in direct lending. We continue to believe that asset-based finance will grow at a faster space, both secularly and for us than direct lending. We feel good about the credit fundamentals of both today. And I know there's a lot of headlines, and there's a lot of noise. We talk a lot internally and a little bit externally about separating the signals from the noise a lot. We feel good about the fundamentals that we're seeing today in the market and risk return, and we can talk about some areas where we're leaning in, maybe some areas where we're leaning out to. And so we feel good on the fundamentals. And honestly, our clients do too. If you look at 2025, we had a record capital raising year in our credit business, largely on the back of what we're doing in private credit.

Yes, why don't we double-click a little bit deeper there? Where do you see the best opportunities in ABF today? And where are you kind of leaning away from?

In ABF, there's a real theme -- number one, the market today is huge at $6 trillion. We think that's grown to $9 trillion. We think historically, much of that exposure has been on regional bank balance sheets. And 1 of the things our industry does very well, which is very differentiated from a regional bank is we can aggregate very long-duration liabilities to match to the long-duration assets. Areas of opportunity to us thematically businesses moving from capital-heavy to capital-light. Our partnerships with Harley-Davidson, with Sallie Mae with PayPal, are examples of that. There are very few companies out there that can bring the scale of capital that we can to an ABF opportunity. A lot of private investment grade that's being created in the marketplace today, we think is really attractive on the risk return side. And the area where we're really trying to lean out organizationally is more around the stress consumer. And so as you go to lower FICO scores in the U.S., that's an area that sort of regardless on how it's modeling today, we're largely staying away from.

Great. And just a reminder for those in the room, if you want to submit a question, you can do so through the app. Okay. So, Rob, maybe if we switch gears to real assets. So KKR has one of the largest and fastest-growing infrastructure platforms. How do you think about the durability of that growth? And what will be kind of the key drivers post the flagship fundraise? And then specifically on the real estate side, where are you seeing more concrete signs of the real estate recovery?

Yes. So let me take them in turn. Our infrastructure business today is about $100 billion of AUM. I want to put that in context. Five years ago, that number was $18 billion, and all of that growth has been organic. We are now solidly a top 3 global infrastructure player, still quite a bit of room between the top 2 in the market and us, but we are catching up to them. There was a couple of things here, I would say thematically that are in our favor to continue to achieving really robust growth in infrastructure. Number one, just global demands for infrastructure spending, and we all know what's going on in the digital infrastructure side, but even away from that, the needs for infrastructure spend over the next decade. -- especially in parts of the market like Asia where we've got real leadership position are immense. Our clients are still looking to catch up on their allocations to infrastructure, including our private wealth clients, importantly. And we think over the years, we've really developed and created a best-in-class team. We approach the market through a number of different strategies that have all have scale in their own right. I mentioned our global infrastructure business earlier. $16 billion of capital raise for our fifth fund, and we're not finished yet. We have the largest Asia infrastructure platform, our last fund was a little over $6 billion. We've said we think our next fund could be north of that as we're out in the market and have already achieved an anchor close. We've got a core real estate strategy that's become a top 3 player very quickly. We've got a climate transition strategy. So a lot of different ways that we think we can pursue scaled growth in the infrastructure space. Real estate different, clearly, in a couple of different ways. But just to put in context, we manage about $85 billion of capital in real estate roughly 50% on the equity side of our business and 50% on the credit side. We do think it probably happened 12, 18 months ago, real estate values bottomed, but it has still been a challenging place to raise capital, both on the institutional side, also on the wealth side of things. We do know at some point, the market will turn. And our job as a management team is to make sure that we put ourselves in as good a position as possible. I think we have done that to be able to take real share when the market turns, but it hasn't yet even in spite of our belief that values have bottomed.

Maybe just a quick follow-up, Rob, on the real estate side. When do you think we could start to see more monetization, more transactions actually happen there?

Yes. You are seeing a much more liquid real estate credit market than you had even 12 months ago. And clearly, you need very healthy and functioning capital markets to see transaction volumes come back, and we're seeing that. So I don't want to predict when you're going to start to see meaningful flow come back in part that's going to be predicated on capital raising, too, and that hasn't come back across the industry. But I think the most important piece is the capital markets, and those are pretty liquid today. certainly relative to how they were over the past couple of years.

Maybe just transition to the capital markets fees, right? That's a business that can certainly be lumpy, but we -- as we think about '26 and the years coming, have we seen the full potential of this platform yet? And what is maybe the right way to think about the normalized contribution from that business?

Sure. Punchline is we don't think we've reached our potential in that business. We think it's a growth-oriented business for us. But before I get there, maybe just to go through, you did mention it was lumpy, but I think it's probably a lot less lumpy than people perceive. If you look at 2022 and 2023, you want to go back to those times, the capital markets were largely shut very little happening in leveraged finance, almost no IPOs to speak of. Our capital markets business still generated $600-plus million of revenue. So we really have taken the floor off in that business quite a bit. Fast forward to '24 and '25, the market's much more open and conducive to transactions, we average between those years roughly $950 million of revenue. Growth areas for us are going to come as KKR does more around the world. We're well-staffed-up in our capital markets business to follow that opportunity. And as you think about something like Arctos, we believe that will create more opportunities for us. Number two, we've talked about the opportunity to build out a really robust capital markets efforts alongside our insurance business. You look at our closest public peer business model-wise on the insurance side is Apollo and Athene, and they provided a really good road map for what is achievable there. We've talked about this being a hundreds of millions of dollar annual opportunity for us. In 2025, we generated just $60 million of revenue from that opportunity. And then finally, you still haven't really seen mid-market deal flow come back, but we've got a really robust third-party capital markets effort that historically has been north of 20% of our fee base. Last year, it was about 15% of our fee base. And so we believe that remains an opportunity that you haven't really seen flow through our P&L over the past couple of years. So we -- a longer answer to your question on whether we've reached our potential, but the short answer is no, we have not.

Great. Okay. Well, we have reached the end of our time. So thank you, Rob, so much. Thanks for being with us.

Yes, Mike, thank you. Thank you, everyone.