Ares Management Corp (ARES) FY 2024 MD&A

Results of Operations

Consolidated Results of Operations

Although the consolidated results presented below include the results of our operations together with those of the Consolidated Funds and other joint ventures, we separate our analysis of those items primarily impacting the Company from those of the Consolidated Funds.

The following table presents our summarized consolidated results of operations ($ in thousands):

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Consolidated Results of Operations of the Company

The following discussion sets forth information regarding our consolidated results of operations:

Revenues

Management Fees. Capital deployment in direct lending and alternative credit funds within the Credit Group led to a rise in FPAUM, contributing an increase in management fees of $230.6 million for the year ended December 31, 2024 compared to the prior year. Part I Fees increased by $96.3 million for the year ended December 31, 2024 compared to the prior year. The increase in Part I Fees was primarily due to: (i) the increase in pre-incentive fee net investment income generated by ASIF, ARCC and CADC, driven by an increase in the average size of their portfolios; and (ii) the increase in pre-incentive fee net investment income from our open-ended European direct lending fund that began generating Part I Fees after the third quarter of 2023. For detail regarding the fluctuations of management fees within each of our segments, see “—Results of Operations by Segment.”

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Carried Interest Allocation. The following table sets forth carried interest allocation by segment ($ in millions):

The activity was principally composed of the following:

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Incentive Fees. The following table sets forth incentive fees by segment ($ in millions):

We earned higher incentive fees for the year ended December 31, 2024 compared to the year ended December 31, 2023 as a result of growth in our IGAUM, primarily driven by deployment of capital within credit funds that are generating returns in excess of their hurdle rates mostly in our U.S. and European direct lending strategies and our alternative credit strategy. For further detail regarding the incentive fees within each of our segments, see discussion of fee related performance revenues and realized net performance income within “—Results of Operations by Segment.”

Principal Investment Income. For equity method investments where we serve as general partner, we present the activity of net realized and unrealized gains on investments and realized investment income together with net capital activity. The following tables present the change in fair value of our equity method investments where we serve as general partner ($ in millions):

The activity for the year ended December 31, 2024 was primarily attributable to:

•Principal investment income, primarily due to: (i) realized gains generated from funds within our infrastructure debt, real estate debt and our U.S. and European direct lending strategies; and (ii) interest income from newly admitted investors in an insurance fund

•Net capital activity from our investments in credit funds, primarily driven by transfers of capital investments within European direct lending and APAC credit funds to employee co-investment vehicles

The activity for the year ended December 31, 2023 was primarily attributable to:

•Principal investment income from realized gains generated from funds within our infrastructure debt and our U.S. and European direct lending strategies

•Net capital activities from our investments in credit and private equity funds, primarily driven by: (i) transfers of capital investments within opportunistic credit, alternative credit and corporate private equity funds to employee co-investment vehicles; partially offset by (ii) investments made within our real estate debt strategy

Administrative, Transaction and Other Fees. The increase for the year ended December 31, 2024 compared to the prior year was driven by: (i) higher administrative service fees of $17.8 million primarily from private funds within our Credit Group that are based on invested capital and from our perpetual wealth vehicles; and (ii) higher administrative fees of $5.2

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million from a commercial finance fund that were previously eliminated when this fund was consolidated into our results until the second quarter of 2023; and (iii) higher property management and development fees of $3.5 million resulting from an increase in property-related activities within certain North American real estate equity funds; partially offset by (iv) lower credit transaction fees of $11.0 million, primarily from the infrastructure debt strategy, which are infrequent in nature and lower loan origination income earned from certain managed accounts within the U.S. direct lending strategy, driven by a lower capacity of investable capital; and (v) lower asset-based, net distribution fees associated with our non-traded REITs of $5.3 million.

Expenses

Compensation and Benefits. The increase in compensation and benefits for the year ended December 31, 2024 compared to the prior year reflects the continued growth in salary and benefits for increased staff levels. The most significant expense increases were equity-based compensation, salary expense and Part I Fee compensation. Equity-based compensation expense increased by $96.9 million from the prior year as result of newly issued unvested awards, magnified by our increased stock price. In addition, we accelerated expense for certain awards requiring no future service as retirement provisions have been achieved. These provisions increased expense by $17.4 million and $10.0 million for the years ended December 31, 2024 and 2023, respectively.

The increase in compensation and benefits for the year ended December 31, 2024 compared to the prior year was also driven by: (i) an increase in salary expense of $54.2 million primarily attributable to headcount growth to support the expansion of our business; and (ii) higher Part I Fee compensation of $43.1 million.

Compensation and benefits for the year ended December 31, 2024 also included: (i) $20.0 million from the performance-based, acquisition-related compensation arrangement established in connection with the acquisition of Crescent Point Capital (“Crescent Point”) (the “Crescent Point Acquisition”) that closed in the fourth quarter of 2023; and (ii) $17.7 million of bonus payments made at the close of the WSM Acquisition. The performance-based, acquisition-related compensation arrangement for the Crescent Point Acquisition contributed $5.0 million of expense for the year ended December 31, 2023. See “Note 8. Commitments and Contingencies” for a further description of the contingent liabilities related to the Crescent Point Acquisition arrangement.

Average headcount increased by 11% to 2,971 professionals for the year-to-date period in 2024 from 2,674 professionals in 2023.

For detail regarding the fluctuations of compensation and benefits within each of our segments see “—Results of Operations by Segment.”

Performance Related Compensation. Changes in performance related compensation are directly associated with the changes in carried interest allocation and incentive fees described above and include associated payroll-related taxes as well as carried interest and incentive fees allocated to charitable organizations as part of our philanthropic initiatives. Performance related compensation generally represents 60% to 80% of carried interest allocation and incentive fees recognized before giving effect to payroll taxes and will vary based on the mix of funds generating carried interest allocation and incentive fees for that period.

General, Administrative and Other Expenses. The increase in general, administrative and other expenses for the year ended December 31, 2024 compared to the prior year reflects the continued growth to support staff levels and fundraising activities. The most significant expense increases were marketing costs, acquisition-related costs, occupancy costs, information services costs and information technology costs.

Marketing costs, which include placement fees and supplemental distribution fees, increased by $62.8 million for the year ended December 31, 2024 compared to the prior year, to support fundraising for our funds and distribution of shares in our perpetual wealth vehicles. Supplemental distribution fees increased by $37.3 million over the comparative periods as a result of increases in sales volumes and net asset value of our wealth products. We expect that these fees will fluctuate with sales

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volumes and net asset value as we have expanded the diversity of our wealth products. Placement fees increased by $14.2 million for the year ended December 31, 2024 compared to the prior year primarily due to new commitments to Ares Senior Direct Lending Fund III, L.P. (“SDL III”). Marketing costs associated with fund formation, program sponsorships and investor events increased by $11.3 million for the year ended December 31, 2024 compared to the prior year, including our first firmwide annual general meeting with investors (“AGM”).

Acquisition-related costs increased by $45.4 million for the year ended December 31, 2024 compared to the prior year. Acquisition-related costs generally precede a business combination, varying with the size, scale and complexity of the transaction. The majority of the costs incurred in the current year are related to the GCP Acquisition. The GCP Acquisition is expected to close in the first half of 2025. We also incurred costs in the current year for various strategic acquisitions, including the WSM Acquisition which was completed in the fourth quarter of 2024. We expect to continue to incur acquisition-related costs until acquisitions are completed.

In addition, occupancy costs, information services and information technology costs collectively increased by $39.7 million for the year ended December 31, 2024 compared to the prior year to support our growing headcount and the expansion of our business, including costs for our new corporate headquarters that we occupied beginning in third quarter of 2024.

During the year ended December 31, 2024, we recognized a non-cash impairment charge of $8.9 million to the fair value of management contracts of certain funds primarily within the Credit Group. During the year ended December 31, 2023, we recognized a non-cash impairment charge of $78.7 million, primarily related to the value of client relationships from the acquisition of Landmark Partners, LLC (the “Landmark Acquisition”).

Other Income (Expense)

Net Realized and Unrealized Gains on Investments; Interest and Dividend Income. For investments where we do not serve as general partner, we present the activity of net realized and unrealized gains on investments and interest and dividend income together with net capital activity. The following tables present the change in fair value of these investments ($ in millions):

The activity for the year ended December 31, 2024 was primarily attributable to:

•Net unrealized gains from the appreciation of our investment in APMF

•Interest and dividend income, primarily due to: (i) interest income generated from our investments in CLOs; and (ii) $11.5 million of interest income generated from capital raised in anticipation of the GCP Acquisition, which was temporarily invested in treasury-backed securities. Following the completion of the GCP Acquisition, this portion of interest income will subside

•Net capital activity driven by the collection of principal associated with loans that we made within our real estate debt strategy

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The activity for the year ended December 31, 2023 was primarily attributable to:

•Net gains from our strategic investments in a U.S. energy company, primarily as a result of the increase in value of our various common and preferred equity investments, and unrealized gains on our investments from: (i) APMF; and (ii) certain strategic investments in companies that manage portfolios of non-performing loans and real estate owned properties

•Interest and dividend income, primarily due to: (i) interest income generated from our investments in CLOs; and (ii) dividends from our investment in APMF

•Net capital activity driven by an investment made in a strategic investment in a Brazilian alternative asset manager and the deployment of capital into an investment within our real estate debt strategy

Interest Expense. Interest expense increased for the year ended December 31, 2024 compared to the prior year primarily due to the issuance of the 2028 Senior Notes in November 2023 and 2054 Senior Notes in October 2024 that collectively increased interest expense by $37.8 million. The increase in interest expense was partially offset by reductions of: (i) $4.5 million from our Credit Facility due to lower average outstanding balance during the second half of 2024; and (ii) $2.5 million from the repayment of our 2024 Senior Notes in October 2024. We expect interest expense to trend higher in future periods as the issuance of our 2054 Senior Notes is expected to result in greater interest expense than the collective savings resulting from the lower anticipated balances from our Credit Facility and repayment of our 2024 Senior Notes.

The activity for the year ended December 31, 2024 also included $5.5 million of one-time interest expense related to a temporary bridge facility that was established in connection with the GCP Acquisition. The facility was not utilized and was terminated in the fourth quarter of 2024.

Other Income, Net. The activity for the years ended December 31, 2024 and 2023 included transaction gains (losses) associated with currency fluctuations impacting the revaluation of assets and liabilities denominated in foreign currencies other than an entity’s functional currency. The year ended December 31, 2024 included an insignificant amount of transaction gains associated with currency fluctuations. Transaction losses for the year ended December 31, 2023 were primarily due to the Euro weakening against the British pound.

Income Tax Expense

The decrease in income tax expense was attributable to lower pre-tax income allocable to AMC for the year ended December 31, 2024 compared to the prior year as the income attributed to redeemable and non-controlling interests is generally passed through to partners and not subject to corporate income taxes. The calculation of income taxes is also sensitive to any changes in weighted average daily ownership.

The following table summarizes weighted average daily ownership:

The change in ownership compared to the prior year was primarily driven by the issuances of shares of Class A common stock in connection with exchanges of AOG Units, the public offering that closed during the year ended December 31, 2024 (the “Offering”), stock option exercises and vesting of restricted unit awards.

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Redeemable and Non-Controlling Interests

The change in net income attributable to non-controlling interests in AOG entities compared to the prior year was a result of the respective changes in income before taxes and weighted average daily ownership, as presented above.

Consolidated Results of Operations of the Consolidated Funds

The following table presents the results of operations of the Consolidated Funds ($ in thousands):

The results of operations of the Consolidated Funds primarily represent activities from certain funds that we are deemed to control. When a fund is consolidated, we reflect the revenues and expenses of the entity on a gross basis, subject to eliminations from consolidation. Substantially all of our results of operations related to the Consolidated Funds are attributable to ownership interests that third parties hold in those funds. The Consolidated Funds are not necessarily the same funds in each year presented due to changes in ownership, changes in limited partners’ or investor rights, and the creation or termination of funds and entities. Accordingly, such amounts may not be comparable for the periods presented, and in any event have no material impact on net income attributable to Ares Management Corporation.

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Segment Analysis

For segment reporting purposes, revenues and expenses are presented before giving effect to the results of our Consolidated Funds and the results attributable to non-controlling interests of joint ventures that we consolidate. As a result, segment revenues from management fees, fee related performance revenues, performance income and investment income are different than those presented on a consolidated basis in accordance with GAAP. Revenues recognized from Consolidated Funds are eliminated in consolidation and those attributable to the non-controlling interests of joint ventures have been excluded by us. Furthermore, expenses and the effects of other income (expense) are different than related amounts presented on a consolidated basis in accordance with GAAP due to the exclusion of the results of Consolidated Funds and the non-controlling interests of joint ventures.

Non-GAAP Financial Measures

We use Realized Income (“RI”) as a non-GAAP profit measure in making operating decisions, assessing performance and allocating resources. Fee Related Earnings (“FRE”) is a component of RI that excludes realized activities associated with investment income and performance income.

FRE and RI should be considered in addition to and not in lieu of, the results of operations, which are discussed further under “—Components of Consolidated Results of Operations” and are prepared in accordance with GAAP. We operate through our distinct operating segments. On January 1, 2024, we changed our segment composition. The special opportunities strategy, historically part of the Private Equity Group, was renamed to opportunistic credit and integrated into the Credit Group. Historical results have been modified to conform with the current presentation. On December 1, 2024, we completed the WSM Acquisition. The acquired business is presented within the Real Assets Group within our North American real estate equity strategy, which we renamed from U.S. real estate equity following the WSM Acquisition. The strategy name change did not result in any change to the historical composition of our segments.

The following table sets forth FRE and RI by reportable segment and the OMG ($ in thousands):

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Income before provision for income taxes is the GAAP financial measure most comparable to RI. The following table presents the reconciliation of income before taxes as reported within the Consolidated Statements of Operations to RI and FRE of the reportable segments and the OMG ($ in thousands):

(1)Represents bonus payments and contingent liabilities (“earnouts”) in connection with various acquisitions that are recorded as compensation expense and are presented within compensation and benefits within our Consolidated Statements of Operations.

For the specific components and calculations of these non-GAAP measures, as well as additional reconciliations to the most comparable measures in accordance with GAAP, see “Note 14. Segment Reporting” within our consolidated financial statements included in this Annual Report on Form 10-K. Discussed below are our results of operations for our reportable segments and the OMG.

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Results of Operations by Segment

Credit Group—Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Fee Related Earnings

The following table presents the components of the Credit Group’s FRE ($ in thousands):

Management Fees. The chart below presents Credit Group management fees and effective management fee rates ($ in millions):

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The following table presents the components of and causes for changes in the Credit Group’s management fees for the year ended December 31, 2024 compared to the prior year ($ in millions):

The increase in effective management fee rate for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily driven by the increase in Part I Fees’ contribution to the effective management fee rate.

Fee Related Performance Revenues. The chart below presents fee related performance revenues, including the number of funds generating, for the Credit Group by strategy ($ in millions):

The increase in fee related performance revenues for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily attributable to higher incentive fees earned from an open-ended core alternative credit fund, which increased its IGAUM over the current year measurement period.

Other Fees. The increase in other fees for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily driven by higher administrative service fees of $7.7 million, which are earned from certain private funds that pay on invested capital.

Compensation and Benefits. The increase in compensation and benefits for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily driven by higher Part I Fee compensation of $43.1 million, corresponding to the increase in Part I Fees. For the years ended December 31, 2024 and 2023, we reduced Part I Fee compensation by $11.7 million and $2.6 million, respectively, to reclaim a portion of the supplemental distribution fees that we paid to distribution partners. The increase in compensation and benefits compared to the prior year was also driven by: (i)

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higher fee related performance compensation of $27.7 million, corresponding to the increase in fee related performance revenues; and (ii) an increase in salary expense of $11.0 million, primarily attributable to headcount growth to support the expansion of our business; partially offset by (iii) lower incentive-based compensation.

Average headcount increased by 12% to 672 investment and investment support professionals for the year-to-date period in 2024 from 602 professionals in 2023 as we continued to add professionals, primarily to support our growing direct lending and alternative credit platforms.

General, Administrative and Other Expenses. The increase in general, administrative and other expenses was primarily due to costs incurred to support distribution of shares in our perpetual wealth vehicles and fundraising for our funds. Supplemental distribution fees were $30.4 million for the year ended December 31, 2024 and increased by $18.6 million for the year ended December 31, 2024 compared to the prior year as we continue to develop our distribution relationships and expand our wealth product offerings. The increase in general, administrative and other expenses for the year ended December 31, 2024 compared to the prior year was also driven by fundraising related expenses including: (i) marketing costs of $5.7 million, largely attributable to fund formation costs for ACE VI and investor events, including our firmwide AGM event; and (ii) placement fees of $2.9 million, primarily due to new commitments to SDL III.

Additionally, certain expenses increased during the current year, including occupancy costs, information services and information technology costs. These expenses collectively increased by $8.4 million for the year ended December 31, 2024 compared to the prior year to support our growing headcount and the expansion of our business, including costs for our new corporate headquarters that we occupied beginning in third quarter of 2024. Separately, professional service fees rose by $8.0 million for the year ended December 31, 2024 compared to the prior year, primarily related to certain non-recurring legal fees.

Realized Income

The following table presents the components of the Credit Group’s RI ($ in thousands):

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The Credit Group’s realized activities were principally composed of and caused by the following:

Interest expense, which is allocated among our segments based on the cost basis of our balance sheet investments, increased over the comparative periods primarily due to the issuance of the 2028 Senior Notes in November 2023 and 2054 Senior Notes in October 2024.

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Credit Group—Performance Income

The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Credit Group. Accrued net performance income excludes net performance income that has been realized but not yet received as of the reporting date ($ in millions):

The following table presents the change in accrued performance income for the Credit Group ($ in millions):

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Credit Group—Assets Under Management

The tables below present rollforwards of AUM for the Credit Group ($ in millions):

The components of our AUM for the Credit Group are presented below ($ in billions):

(1) Includes $14.4 billion and $15.1 billion of AUM of funds from which we indirectly earn management fees as of December 31, 2024 and 2023, respectively, and includes $2.0 billion and $1.8 billion of non-fee paying AUM from our general partner and employee commitments as of December 31, 2024 and 2023, respectively.

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Credit Group—Fee Paying AUM

The tables below present rollforwards of fee paying AUM for the Credit Group ($ in millions):

The charts below present FPAUM for the Credit Group by its fee bases ($ in billions):

(1)Includes $46.4 billion and $35.4 billion from funds that primarily invest in illiquid strategies as of December 31, 2024 and 2023, respectively. The underlying investments held in these funds are generally subject to less market volatility than investments held in liquid strategies.

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Credit Group—Fund Performance Metrics as of December 31, 2024

ARCC contributed approximately 34% of the Credit Group’s total management fees for the year ended December 31, 2024. In addition, the Credit Group’s other significant funds, which are presented in the tables below, collectively contributed approximately 34% of the Credit Group’s management fees for the year ended December 31, 2024.

The following table presents the performance data for our significant funds that are not drawdown funds in the Credit Group as of December 31, 2024 ($ in millions):

(1)Since inception returns are annualized.

(2)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Net returns are calculated using the fund’s NAV and assume dividends are reinvested at the closest quarter-end NAV to the relevant quarterly ex-dividend dates. Additional information related to ARCC can be found in its filings with the SEC, which are not part of this report.

(3)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. Returns are shown for institutional share class. Shares of other classes may have lower returns due to higher selling commissions and fees. Net returns are calculated using the fund’s NAV and assume distributions are reinvested at the NAV on the date of distribution. Additional information related to CADC and ASIF can be found in its filings with the SEC, which are not part of this report.

(4)Returns are time-weighted rates of return and include the reinvestment of income and other earnings from securities or other investments and reflect the deduction of all trading expenses. The fund is made up of a Main Class (“Class M”) and a Constrained Class (“Class C”). Class M includes investors electing to participate in all investments and Class C includes investors electing to be excluded from exposure to liquid investments. Returns presented in the table are for onshore Class M. The current quarter gross and net returns for Class M (offshore) are 2.9% and 2.0%, respectively. The year-to-date gross and net returns for Class M (offshore) are 14.9% and 10.4%, respectively. The since inception gross and net returns for Class M (offshore) are 11.6% and 8.2%, respectively. The current quarter gross and net returns for Class C (offshore) are 2.9% and 1.6%, respectively. The year-to-date gross and net returns for Class C (offshore) are 13.6% and 9.2%, respectively. The since inception gross and net returns for Class C (offshore) are 11.3% and 8.0%, respectively.

The following table presents the performance data of the Credit Group’s significant drawdown funds as of December 31, 2024 ($ in millions):

(1)For funds other than our opportunistic credit funds, realized value represent the sum of all cash distributions to all partners and if applicable, exclude tax and incentive distributions made to the general partner. For our opportunistic credit funds, realized value represent the sum of all cash distributions to the fee-paying limited partners and if applicable, exclude tax and incentive distributions made to the general partner.

(2)Unrealized value represents the fund's NAV reduced by the accrued incentive allocation, if applicable. There can be no assurance that unrealized values will be realized at the valuations indicated. For funds other than our opportunistic credit funds, the unrealized value is based on all partners. For our opportunistic credit funds, the unrealized value is based on the fee-paying limited partners.

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(3)The gross multiple of invested capital (“MoIC”) is calculated at the fund-level and is based on the interests of the fee-paying limited partners and if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The gross MoIC is before giving effect to management fees, carried interest and other expenses, as applicable, but after giving effect to credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Early in the life of a fund, the gross fund-level MoICs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(4)The net MoIC is calculated at the fund-level and is based on the interests of the fee-paying limited partners and if applicable, excludes those interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The net MoIC is after giving effect to management fees and carried interest, other expenses and credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Early in the life of a fund, the net fund-level MoICs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(5)The gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Gross IRR reflects returns to the fee-paying limited partners and, if applicable, excludes interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the gross IRR calculation are based on the actual dates of the cash flows. The gross IRRs are calculated before giving effect to management fees, carried interest and other expenses, as applicable, but after giving effect to credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Gross fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(6)The net IRR is an annualized since inception net internal rate of return of cash flows to and from the fund and the fund’s residual value at the end of the measurement period. Net IRRs reflect returns to the fee-paying limited partners and, if applicable, exclude interests attributable to the non-fee paying limited partners and/or the general partner which does not pay management fees or carried interest. The cash flow dates used in the net IRR calculations are based on the actual dates of the cash flows. The net IRRs are calculated after giving effect to management fees and carried interest, other expenses and credit facility interest expenses, as applicable. The funds may utilize a credit facility during the investment period and for general cash management purposes. Net fund-level IRRs would generally have been lower had such fund called capital from its limited partners instead of utilizing the credit facility.

(7)ACE IV is made up of four parallel funds, two denominated in Euros and two denominated in pound sterling: ACE IV (E) Unlevered, ACE IV (G) Unlevered, ACE IV (E) Levered and ACE IV (G) Levered and one feeder fund: ACE IV (D) Levered. ACE IV (E) Levered includes the ACE IV (D) Levered feeder fund. The gross and net IRR and MoIC presented in the table are for ACE IV (E) Unlevered and ACE IV (E) Levered. Metrics for ACE IV (E) Levered exclude the U.S. dollar denominated feeder fund. The gross and net IRR for ACE IV (G) Unlevered are 9.7% and 7.1%, respectively. The gross and net MoIC for ACE IV (G) Unlevered are 1.5x and 1.4x, respectively. The gross and net IRR for ACE IV (G) Levered are 12.7% and 9.1%, respectively. The gross and net MoIC for ACE IV (G) Levered are 1.6x and 1.4x, respectively. The gross and net IRR for ACE IV (D) Levered are 12.9% and 9.5%, respectively. The gross and net MoIC for ACE IV (D) Levered are 1.6x and 1.5x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund’s closing. All other values for ACE IV Unlevered and ACE IV Levered are for the combined levered and unlevered parallel funds and are converted to U.S. dollars at the prevailing quarter-end exchange rate.

(8)ACE V is made up of four parallel funds, two denominated in Euros and two denominated in pound sterling: ACE V (E) Unlevered, ACE V (G) Unlevered, ACE V (E) Levered, and ACE V (G) Levered, and two feeder funds: ACE V (D) Levered and ACE V (Y) Unlevered. ACE V (E) Levered includes the ACE V (D) Levered feeder fund and ACE V (E) Unlevered includes the ACE V (Y) Unlevered feeder fund. The gross and net IRR and gross and net MoIC presented in the table are for ACE V (E) Unlevered and ACE V (E) Levered. Metrics for ACE V (E) Levered exclude the ACE V (D) Levered feeder fund and metrics for ACE V (E) Unlevered exclude the ACE V (Y) Unlevered feeder fund. The gross and net IRR for ACE V (G) Unlevered are 12.7% and 9.5%, respectively. The gross and net MoIC for ACE V (G) Unlevered are 1.3x and 1.3x, respectively. The gross and net IRR for ACE V (G) Levered are 16.9% and 12.3%, respectively. The gross and net MoIC for ACE V (G) Levered are 1.4x and 1.3x, respectively. The gross and net IRR for ACE V (D) Levered are 15.7% and 11.7%, respectively. The gross and net MoIC for ACE V (D) Levered are 1.4x and 1.3x, respectively. The gross and net IRR for ACE V (Y) Unlevered are 12.0% and 8.8%, respectively. The gross and net MoIC for ACE V (Y) Unlevered are 1.3x and 1.2x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE V Unlevered and ACE V Levered are for the combined levered and unlevered parallel funds and are converted to U.S. dollars at the prevailing quarter-end exchange rate.

(9)ACE VI is made up of six parallel funds, four denominated in Euros and two denominated in pound sterling: ACE VI (E) Unlevered, ACE VI (E) II Unlevered, ACE VI (G) Unlevered, ACE VI (E) Levered, ACE VI (E) II Levered, and ACE VI (G) Levered, and three feeder funds: ACE VI (D) Levered, ACE VI (Y) Unlevered and ACE VI (D) Rated Notes. ACE VI (E) II Levered includes ACE VI (D) Levered feeder fund and ACE VI (E) II Unlevered includes ACE VI (Y) Unlevered and ACE VI (D) Rated Notes feeder funds. The gross and net IRR and gross and net MoIC presented in the table are for ACE VI (E) Unlevered and ACE VI (E) Levered. Metrics for ACE VI (E) II Levered exclude the ACE VI (D) Levered feeder fund and metrics for ACE VI (E) II Unlevered exclude ACE VI (Y) Unlevered and ACE VI (D) Rated Notes feeder funds. The gross and net IRR for ACE VI (G) Unlevered are 22.2% and 15.9%, respectively. The gross and net MoIC for ACE VI (G) Unlevered are 1.1x and 1.1x, respectively. The gross and net IRR for ACE VI (G) Levered are 18.9% and 7.7%, respectively. The gross and net MoIC for ACE VI (G) Levered are 1.1x and 1.1x, respectively. The gross and net IRR for ACE VI (E) II Unlevered are 22.4% and 17.5%, respectively. The gross and net MoIC for ACE VI (E) II Unlevered are 1.1x and 1.1x, respectively. The gross and net IRR for ACE VI (E) II Levered are 20.9% and 14.9%, respectively. The gross and net MoIC for ACE VI (E) II Levered are 1.1x and 1.1x, respectively. The gross and net IRR for ACE VI (D) Levered are 23.5% and 17.0%, respectively. The gross and net MoIC for ACE VI (D) Levered are 1.1x and 1.1x, respectively. The gross and net IRR for ACE VI (Y) Unlevered are 15.8% and 11.1%, respectively. The gross and net MoIC for ACE VI (Y) Unlevered are 1.1x and 1.1x, respectively. The gross and net IRR for ACE VI (D) Rated Notes are 26.0% and 14.0%, respectively. The gross and net MoIC for ACE VI (D) Rated Notes are 1.2x and 1.1x, respectively. Original capital commitments are converted to U.S. dollars at the prevailing exchange rate at the time of the fund's closing. All other values for ACE VI Unlevered and ACE VI Levered are for the combined levered and unlevered parallel funds and are converted to U.S. dollars at the prevailing quarter-end exchange rate.

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Real Assets Group—Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Fee Related Earnings

The following table presents the components of the Real Assets Group’s FRE ($ in thousands):

Management Fees. The chart below presents Real Assets Group management fees and effective management fee rates ($ in millions):

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The following table presents the components of and causes for changes in the Real Assets Group’s management fees for the year ended December 31, 2024 compared to the prior year ($ in millions):

The increase in effective management fee rate for the year ended December 31, 2024 compared to the prior year was primarily driven by the deployment of capital within our real estate equity funds. Certain of our private real estate equity funds pay a fee on committed capital that increases once that capital is invested. As a result, our effective management fee rate increases as capital is deployed.

Other Fees. The decrease in other fees for the year ended December 31, 2024 compared to the prior year was driven by: (i) lower credit transaction fees of $8.1 million from the infrastructure debt strategy, which are infrequent in nature; partially offset by (ii) higher administrative service fees of $1.7 million, mostly from certain infrastructure debt funds that started paying such fees to us subsequent to the third quarter of 2023; and (iii) higher property management and development fees of $3.5 million resulting from an increase in property-related activities within certain North American real estate equity funds.

Compensation and Benefits. The increase in compensation and benefits for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily driven by (i) an increase in salary expenses of $7.4 million, primarily attributable to headcount growth to support the expansion of our business; and (ii) an increase in payroll-related taxes of $2.8 million, primarily due to the higher stock price associated with equity awards that vested during the first quarter of 2024; partially offset by (iii) lower incentive-based compensation; and (iv) higher administrative fees reimbursement of expenses for increased services provided throughout the current year.

Average headcount increased by 10% to 391 investment and investment support professionals for the year-to-date period in 2024 from 356 professionals for the same period in 2023.

General, Administrative and Other Expenses. The increase in general, administrative and other expenses for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to marketing and fundraising activities, including supplemental distribution fees charged in connection with an amended servicing arrangement with a distribution partner. Supplemental distribution fees increased by $3.3 million for the year ended December 31, 2024 compared to the prior year. Other marketing costs also increased by $2.0 million over the comparative periods, driven by: (i) investor events, including our firmwide AGM event; and (ii) fund formation costs for AREOF IV.

In addition, certain expenses increased for the year ended December 31, 2024 compared to the prior year, including: (i) higher information technology costs related to software license fees of $3.1 million; and (ii) higher professional service fees of $2.0 million, which included non-recurring legal expenses of $1.5 million incurred during the first quarter of 2024.

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Realized Income

The following table presents the components of the Real Assets Group’s RI ($ in thousands):

The Real Assets Group’s realized activities were principally composed of and caused by the following:

Interest expense, which is allocated among our segments based on the cost basis of our balance sheet investments, increased over the comparative periods primarily due to the issuance of the 2028 Senior Notes in November 2023 and 2054 Senior Notes in October 2024.

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Real Assets Group—Performance Income

The following table presents the accrued carried interest, also referred to as accrued performance income, and related performance compensation for the Real Assets Group. Accrued net performance income excludes net performance income that has been realized but not yet received as of the reporting date ($ in millions):

The following table presents the change in accrued performance income for the Real Assets Group ($ in millions):

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Real Assets Group—Assets Under Management

The tables below present rollforwards of AUM for the Real Assets Group ($ in millions):