MD&A 766 words changed in this paragraph; it is 50% similar to last year's version.
Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023 Credit funds •Primarily from one opportunistic credit fund, four direct lending funds and two alternative credit funds with $42.6 billion of IGAUM generating returns in excess of their hurdle rates: •Primarily from five direct lending funds, one opportunistic credit fund and two alternative credit funds with $36.2 billion of IGAUM generating returns in excess of their hurdle rates: •Primarily from six direct lending funds, three opportunistic credit funds and one alternative credit fund with $37.4 billion of IGAUM generating returns in excess of their hurdle rates: ◦Within our direct lending funds, Ares Capital Europe V, L.P. (“ACE V”), Ares Private Credit Solutions II, L.P. (“PCS II”) and Ares Capital Europe VI, L.P. (“ACE VI”) generated carried interest allocation of $153.2 million, $131.1 million and $54.5 million, respectively, driven by net investment income on an increasing invested capital base. Ares Capital Europe IV, L.P. (“ACE IV”) and Ares Private Credit Solutions, L.P. (“PCS I”) generated carried interest allocation of $57.0 million and $22.9 million, respectively, driven by net investment income during the period ◦Within our direct lending funds, ACE V, PCS II, Ares Sports Media and Entertainment Finance, L.P. and ACE VI generated carried interest allocation of $181.1 million, $37.6 million, $22.0 million and $16.6 million, respectively, driven by net investment income on an increasing invested capital base. ACE IV and PCS I generated carried interest allocation of $58.4 million and $45.3 million, respectively, primarily driven by net investment income during the period. Our direct lending funds have benefited from rising interest rates on predominately floating-rate loans ◦Within our opportunistic credit funds, Ares Special Opportunities Fund II, L.P. (“ASOF II”) generated carried interest allocation of $174.7 million, driven by improved profitability of portfolio companies that operate in the services, healthcare and industrial industries ◦Within our opportunistic credit funds, ASOF II generated carried interest allocation of $177.3 million, driven by improved operating performance metrics from portfolio companies that operate in the services and retail industries ◦Within our opportunistic credit direct lending funds, ASOF I Ares Capital Europe V, L.P. (“ACE V”), Ares Capital Europe VI, L.P. (“ACE VI”), Ares Private Credit Solutions II, L.P. (“PCS II”) and SSF IV Ares Capital Europe IV, L.P. (“ACE IV”) generated carried interest allocation of $82.7 $130.7 million, $119.2 million, $89.7 million and $79.8 $36.5 million, respectively, predominately driven by market appreciation net investment income during the period ◦Within our direct lending funds, ACE V, PCS II, ACE IV, ACE VI and improved operating performance of portfolio companies that operate in the services industry. ASOF II Ares Private Credit Solutions, L.P. (“PCS I”) generated carried interest allocation of $80.9 $153.2 million, $131.1 million, $57.0 million, $54.5 million and $22.9 million, respectively, driven by improved operating performance net investment income during the period ◦Within our alternative credit funds, Ares Pathfinder Fund II, L.P. (“Pathfinder II”) and Ares Pathfinder Fund, L.P. (“Pathfinder I”) generated carried interest allocation of portfolio companies that operate in $88.1 million and $63.0 million, respectively, driven by market appreciation of certain investments and net investment income during the healthcare industry period ◦Within our alternative credit funds, Pathfinder I and Pathfinder II generated carried interest allocation of $62.6 million and $39.1 million, respectively, driven by market appreciation of certain investments and net investment income during the period ◦Within our alternative credit funds, Pathfinder I generated carried interest allocation of $66.3 million, driven by market appreciation of certain investments and net investment income during the period •Reversal of unrealized carried interest allocation of $99.8 million and $23.7 million from Ares Special Situations Fund IV, L.P. (“SSF IV”) and Ares Special Opportunities Fund, Fund I, L.P. (“ASOF I”), I”) respectively, primarily due to the market depreciation of their investments in Savers Value Village, Inc. (“SVV”), driven by its lower stock price and lower operating performance of portfolio companies that primarily operate in the retail, services and healthcare industries •Reversal of unrealized carried interest allocation of $68.9 million from Ares Capital Europe III, L.P. (“ACE III”) due to lower valuations of certain investments Real Assets funds •Ares Infrastructure Debt Fund V, L.P. (“IDF V”) generated carried interest allocation of $63.8 $42.0 million, driven by net investment income during the period •IDF V generated carried interest allocation of $37.9 $63.8 million, driven by net investment income during the period •Ares Climate Infrastructure Partners, Partners II, L.P. (“ACIP I”) II”) and Ares Energy Investors Fund V, L.P. (“EIF V”) generated carried interest allocation of $26.6 million and $22.1 million, respectively, driven by the appreciation of certain portfolio investments •Ares Climate Infrastructure Partners, L.P. (“ACIP I”) and EIF V generated carried interest allocation of $44.0 million and $27.7 million, respectively, due to appreciation of certain investments •ACIP I generated carried interest allocation of $19.0 million due to market appreciation of certain investments •Reversal of unrealized carried interest allocation of $26.3 million from Ares European Real Estate Fund IV SCSp. SCSp (“EF IV”), primarily driven by the lower valuation of a residential property investment •U.S. Secondaries funds •Landmark Real Estate Fund IX, L.P. (“US (“LREF IX”) and Landmark Equity Partners XVII, L.P. (“LEP XVII”) generated carried interest allocation of $3.1 $27.1 million and $20.4 million, respectively, primarily driven by increasing operating income appreciation of certain portfolio investments •Ares Secondaries Infrastructure Solutions III, L.P. (“ASIS III”) and four private equity secondaries funds collectively generated carried interest allocation of $27.0 million, primarily from industrial and multifamily driven by the appreciation of certain portfolio investments •Reversal of unrealized carried interest allocation of $12.6 $28.9 million from EF IV, $5.7 million from Ares Real Estate Opportunity Fund III, Landmark Equity Partners XVI, L.P. (“AREOF III”), $5.5 million from Ares European Real Estate Fund V SCSp. (“EF V”) and $19.1 million from two European real estate equity funds, primarily driven by (“LEP XVI”), due to the lower valuations valuation of certain properties, which were impacted by the market environment Private Equity funds portfolio investments •Reversal of unrealized carried interest allocation of $474.9 $19.8 million from Ares Corporate Opportunities Landmark Real Estate Fund V, VIII, L.P. (“ACOF V”) due to the market depreciation of its investment in SVV, driven by its lower stock price •ACOF VI generated carried interest allocation of $190.0 million, driven by improved operating performance of portfolio companies that primarily operate in the retail and healthcare industries and market appreciation of an investment in a services company •Ares Corporate Opportunities Fund VI, L.P. (“ACOF VI”) generated carried interest allocation of $220.3 million, driven by improved operating performance metrics from portfolio companies that primarily operate in the healthcare, services, industrial and retail industries •Reversal of unrealized carried interest allocation of $268.1 million from ACOF V, (“LREF VIII”), primarily driven by a the lower stock price for SVV, and $35.8 million from Ares Corporate Opportunities Fund IV, L.P. (“ACOF IV”), primarily driven by lower operating performance metrics valuation of a portfolio company that operates certain investments with underlying interests in the healthcare industry multifamily portfolios
Source: Item 7, 10-K 0001628280-26-011413 vs Item 7, 10-K 0001628280-25-008665
Risk Factors 295 words changed in this paragraph; it is 36% similar to last year's version.
The EU, the U.K. and many other countries have implemented the OECD’s Common Reporting Standard for the automatic exchange of financial account information in tax matters (the “CRS”). EU Council Directive 2011/16/EU requires a mandatory automatic exchange of information regime on administrative co-operation in the field of taxation (as amended) (the “Directive on Administrative Co-Operation” or the “DAC”). The DAC, which effectively incorporates (among other items) the CRS into European law, like the CRS, requires governments to obtain detailed account information from financial institutions and exchange that information automatically with other jurisdictions annually. Neither the CRS nor the DAC imposes withholding taxes. EU Council Directive 2018/822 (“DAC 6”) amended the DAC to require ‘intermediaries’ (as defined in DAC 6) and, in some cases, taxpayers to disclose information to tax authorities about cross-border arrangements bearing specific hallmarks involving one or more EU member states. Certain cross-border arrangements are reportable to relevant taxing authorities. Similar reporting rules may apply or be introduced in other jurisdictions which implement the OECD mandatory disclosure rules (“OECD MDR”). With effect from December 31, 2020, the U.K. narrowed the scope of DAC 6 and the corresponding arrangements that need to be reported in the U.K. pursuant to DAC 6 (as implemented under U.K. law by the International Tax Enforcement (Disclosable Arrangements) Regulations 2020 (the “U.K. Regulations”)). In line with OECD standards (as a minimum) on exchange of information on cross-border planning arrangements such that only arrangements, very broadly, relating to the avoidance of obligations to report information in financial accounts or that obscure beneficial ownership (Category D Hallmarks), are required to be reporting in the U.K. under DAC 6. On March 28, 2023, new U.K. regulations (the International Tax Enforcement (Disclosable Arrangements) Regulations 2023 (the “U.K. MDR Regulations 2023”)) came into force in the U.K. which repealed and replaced the U.K. Regulations. The U.K. MDR Regulations 2023 implement OECD MDR into U.K. law and require U.K. 'intermediaries' (as defined under OECD MDR), and in some cases taxpayers, to report information to HMRC about certain types of arrangements known as CRS avoidance arrangements and opaque offshore structures. The EU has also signed separate automatic exchange of information agreements with certain non-EU countries, under which the EU and the relevant jurisdiction will automatically exchange information on the financial
Source: Item 1A, 10-K 0001628280-26-011413 vs Item 1A, 10-K 0001628280-25-008665