We're gonna get started. I'm Craig Siegenthaler from Bank of America, it's my pleasure to introduce Michael Arougheti. Michael is Co-founder, Director, President, and also CEO of Ares Management. Ares is one of the largest alternative asset managers in the world, with around $400 billion of AUM and offices that span the globe. The firm is best known for its industry-leading private credit business. Michael, thank you for joining us today. Thanks for having me. Let's just start with growth. Ares has been one of the fastest-growing alt managers over the last five years. Do you think this fast growth trajectory can continue? Do you think not having a $20 billion+ buyout fund is an advantage when you think about forward growth? Maybe I'm gonna separate the two, just because I think that the PE conversation we should talk about in the terms of growth, but also the trajectory of the P&L and flows and things like that. I absolutely think that the growth can and will continue. We are out with guidance that we put out at our Investor Day in August of 2021 that effectively put a target of $500 billion of AUM by the end of 2025, and growth in our FRE and our dividend of 20%+. On our earnings call last week, we clarified that that FRE guidance is intact, even excluding our performance-related FRE from our non-traded REITs. Obviously, being able to demonstrate that kind of conviction over a four and a half year period hopefully tells you, yes, I think we can continue the growth. The reason why is a combination of industry, secular trends, and company specific positioning. Hopefully not lost on folks in this room, alternative assets are generally taking share from traditional assets. That's true globally, and it's true in both the institutional and retail investor segments. We actually see demand for alternatives tends to increase when markets get choppy and volatile and people are looking for places to deploy with maybe a little bit more durable yield or a little less price volatility than they're seeing in the, in the public markets. We're also operating in very large global addressable markets. Even in markets where we and others like us have leading market shares, you know, you're talking about 1%- 3% share and penetration in some of these markets. Huge increase in global appetite for the investment outcomes we generate, real competitive advantages in very large global addressable markets. To Ares specifically, which is where the conviction comes, to your point, we have one of the most diversified product offerings in terms of the waterfront of capabilities in alts, but 70%+ of what we do is in and around the private credit markets. That's everything from middle market corporate credit globally, real estate lending, infrastructure lending, all forms of structured credit and alternative credit. Those markets are growing at a pretty healthy clip as investors are increasing allocation into those markets. They've been enjoying a pretty significant amount of momentum as rates are continuing to go up and people are looking for opportunities to capture incremental yield. Maybe lastly, I don't know if we'll talk about this, is because we're credit-oriented, the bulk of our P&L construction happens when we invest and deploy, not when we raise. Back to maybe your question about private equity. Private equity effectively turns their fees on when they raise a fund, they step down prior period funds. There's a step function of growth that happens in PE. In credit, when you raise capital, you don't get paid to raise the capital, you also don't step down your prior vintage funds. As you deploy, it just creates this big compounding income effect. We were able to look forward and say, based on the capital that we've raised in these credit vehicles over the last one, two, three years, based on deployment and a high marginal contribution from that incremental fee, really good visibility to earnings growth. We're also about to embark on a pretty significant fundraising push into 2023, which will then set us up for future growth in the 2025, 2026 timeframe. Mike, let's take that long-term question and shorten it a bit. You're in the middle of a big fundraising super cycle right now. You're raising funds in, most of your large flagships currently. How's that going, and are you seeing any headwinds, like from the denominator effect? It's going well. We talked about this on our earnings call. It's still early in the year, but we are in the market or soon to be in the market with seven of our 10 largest fund families in 2023. The bulk of those funds are some of our largest, longest tenured, you know, best performing private credit funds. That gives us a pretty high level of confidence because a lot of our capital, while we're increasing the number of institutional investors on the platform in any given period, the preponderance of capital actually comes from existing investors, which is an interesting growth dynamic in and of itself. In any given year, roughly 50% of our investors are new to the platform, but 80%-90% of the capital is coming from existing, which means they're rolling over and re-upping into the next vintage of fund. They're buying other fund product on the platform adjacent to something that they're already in, and they're usually doing it in larger dollars. Typically, when you're on a fund six or a fund seven, you have pretty good line of sight to what your existings are gonna do and, you know, how quickly or well you're gonna raise those funds. I would say therefore, not a lot of headwinds in private credit land, at least from our perspective. I think that speaks a little bit to our leadership position in that market, but also to the attractiveness of floating rate, short duration credit in a, in a market like this. Not really seeing a lot of headwinds in real assets, generally speaking. Infra, in particular, I think that's because most infra assets that we play in are either benefiting from a trend towards energy transition or a desire to find inflation-hedged, exposures. I think maybe the one place others are seeing it, I can't comment on ours because we're not really private equity heavy, is in the traditional private equity space, where the denominator effect is absolutely real. I also think there's a little bit of a numerator effect in the sense that PE portfolios went into 2023 fully allocated with having had great performance in the back half of 2020, 2021 and 2022. You had phenomenal performance, and then all of a sudden discount rate changed and that market froze up a little bit. It's gonna take some time for, I think, regular way private equity fundraising deployment realizations to thaw out. The good news is, while we have a very meaningful private equity business, it's an opportunistic credit and distress business on one side, which is a big growth area for us. In our core buyout business, we have a distress for control capability and track record. We'll see, you know, what our experience is with that fund as we get through this year and next. In terms of the denominator effect, I'd say it's at least up until this point, it's been a PE only issue. Mike, you obviously have a very diverse business, big in private credit, but, you know, pretty scaled across the board. As you take a step back and look at these verticals, which ones do you expect to be the fastest growers, across the industry, even before you think about the Ares business? It's hard to pinpoint because most of them are gonna be growing on an index basis in that kind of 15%-20%+ range just because of the dynamics I articulated before. If I think about where some of these markets are in their evolution, I'd probably say alternative credit has a meaningful amount of white space, and that's a combination of supply demand on both sides of that market. That's been one of the fastest-growing parts of our private credit franchise. I would say infrastructure, particularly around energy transition and infrastructure lending, I think is a big opportunity. We were talking earlier with some investors about what we perceive is gonna be a really interesting opportunistic and distressed opportunity in and around real estate credit and real estate structured equity, given some of the dynamics in certain parts of that market. And then I would say generally speaking, growth in the Asia Pacific markets and how we play that in different geographies or how the market develops is gonna be country and asset class specific. Just there's a big, I think, long-term opportunity to see alts grow as a% of market in APAC. Mike, Ares has always had somewhat of an individual investor focus just given ARCC is large, it's been around for a while, but you've really been building out that distribution over the last kind of five years. What does your private client distribution look like today? In terms of the servicing organization? Size servicing, you know, servicing wirehouse, RIA, IBD. Today we have about 115 people in that part of our organization, which is branded Ares Wealth Management Solutions. That's where we do all things retail. That's everything from our non-traded product through to our high net worth and ultra high net worth distribution. It touches the large wires, the RIAs and the IBDs. It also bleeds a little bit into some of the larger family office side of our business at the intersection of our institutional distribution. I'm glad you mentioned our long history because we've been in the retail market since 2004 when we IPO'd ARCC, which was our BDC, and that's now grown to be a $22 billion asset company with, we think, really good cycle-tested performance. That's true retail, right? That is we're listed, we're traded. We've been able to have other traded product that sits alongside that in the form of ACRE and ARDC, our closed-end credit fund. We've also been a very consistent raiser of capital in the high net worth channel. Roughly speaking, when we raise an institutional fund, it gets offered through one to three of the large global private banks. That's been a pretty consistent and consistently growing part of the business. Now we're kind of in this retail 2.0 world of how do we deliver alternative product deeper into the accredited mass affluent part of the market. Appropriately, people are paying attention to it because there are demand for the product. We've been developing product for that channel. Today, we have two non-traded REITs. One is a diversified REIT. The other is an industrial-focused REIT. Together they have about $14 billion of AUM. We have a credit interval fund that has about $3.5 billion of AUM in it. We launched a private equity-focused private markets fund that's scaling nicely. We launched that in the middle of last year. We are coming into the market, as we've talked about publicly with a non-traded BDC, which we think should be well received given our track record on the traded side. The, the business build is a combination of investing in that servicing organization of 115 people, as well as product development to make sure that we have a full suite of products to deliver into the, into the channel. You kind of answered my next question with your semi-liquid options. Mm-hmm. You know, as you, as you, as your distribution sells to wirehouses, private banks, IBDs, RIAs, what is the full suite of products? I mean, they're probably getting a piece of the flagships too, in addition to the semi-liquids and the public BDCs. What does that simply look like? Yeah. I mentioned what's currently there. I think the vision, without going into specific plans or specific funds, would be to continue to broaden out the distribution globally. We have announced that we've added a Head of European distribution. We've added a Head of Asia Pacific distribution. We've been building teams there. We have to keep globalizing and deepening the penetration of the channel, and then we've got to continue to broaden out the product set. We already have a pretty fully developed set, but I would expect that over time, the larger, more sophisticated advisors will want fewer brands on the platform with more investment opportunities that offer them diversified access to the different corners of alts. We'll be building out broad-based product. For example, our diversified credit fund offers a pretty wide-ranging exposure to all things that Ares does in private credit. There may be demand for geography-specific credit funds or asset class-specific funds that will ultimately become part of the suite, I would imagine as well. The one thing, Sorry, Craig, I think that what we're particularly excited about is, at least today, the bulk of that market is looking for yield, durable yield and total return, you know, beyond that. I think Ares is uniquely positioned given our franchise in private credit and yield product to really service the appetite there. We haven't quite seen, you know, full-scale demand turn on for non-income generating product. Mike, I wanna get your perspective on some of the private REITs out there that are limiting redemptions. I think the press has taken a fairly negative view, although, this is a mechanism that was built into the model that prevents for selling. Yeah. These are products that do give liquidity almost all the time, just not really in the middle of a fair market. Yeah. What is your perspective on this? I think you hit the nail on the head. I think they don't like writing. The media today doesn't love writing, it doesn't, you know, positive articles. That doesn't actually sell newspapers or clicks. I think it's an issue because it's testing the product. To your point, there are no gates in these products, that's just issue number one, which is, you know, the minute you start seeing redemptions, people are like, "Oh, they're getting gated." The products themselves have structural path to liquidity built into them. Generally speaking, these funds allow for about 5% liquidity per quarter, 20% liquidity per year, and they're designed, to your question, Craig, to allow for an orderly liquidation of assets if needed if the fund was moving in a different direction. You don't really gate the product. You, you're always there to provide 5% liquidity. I think what happened in this particular instance, which is why it's overblown, is you had non-company specific factors that basically had a couple of investors in Asia who were levered and were getting unwound on that leverage start redeeming. As with most products, when people are redeeming, you might as well raise your hand and take a look at getting some liquidity. I think that created that first wave. My own sense is what happened next was if you have 5% limited liquidity and you actually want liquidity, you're probably gonna subscribe for two to four times your desired liquidity amount because everyone's competing on a monthly basis for 5% of the fund, right? When you see a number like 8% of the fund wants liquidity, that's probably overblown, but everyone's just trying to get the most of that 5% best as they can. We haven't had that experience, so I can't speak to it specifically. I mean, I think we've been fortunate if you look at our flows in our non-traded REITs and interval funds, they've been net positive. While we've seen a slowing inflow, I think as a result of some of the issues you're bringing up and the market, but our outflows are not outpacing our inflows. My sense in looking at the peer set is the worst is probably behind them. That first, you know, first wave worked its way through a couple of months. The interesting thing about the liquidity mechanism is you have to ask for it every month. It's not a compounding queue. If you ask for liquidity in November, you get hit on whatever your pro rata share is. Some of these numbers are, again, the same folks looking for liquidity in a limited liquidity basket. I think once those people get resolved, I would imagine that the worst is behind them. I think the good news is, at least in talking to advisors, the product is doing what it's supposed to do, right? Which is kind of protect the investors from themselves looking for liquidity in a market where, you know, you probably shouldn't be looking for it. You're not seeing major foreselling of assets the way that you would in differently structured product. They are still seeing net inflows. It's given the performance of those assets, I think that you'll continue to see flow. Great. Mike, let's move on to the topic of investing. you know, we've watched you over many different down cycles, 2020, 2016 coming out of energy, 2011 European debt crisis to the financial crisis. What we've seen is you guys have invested sometimes more aggressively in the down cycles, and you can do that because you have a flexible mandate in some of your equity products- Yeah. You're a credit-heavy business. Mm-hmm. I wanted to see if you could maybe articulate this countercyclical feature where you can invest heavy into down cycles and how that accelerates your growth coming out of down cycles. Sure. You just made me feel really old. I think you're the youngest CEO of any major alt firm, so. I got that going for me, which is good. Let's talk about, let's talk about the structure of alts first before we talk about Ares, because the structure of alt, almost by definition, managed well, set you up to be countercyclical. Alt funds tend to be long-dated, if not permanent. They tend to be under-levered, if not unlevered. Where they do take on leverage, that leverage is almost always, again, if done the right way, matched to whatever your asset profile is. They tend to be drawdown structures, which means that you can actually express a view on the market by not investing. Whereas if you're a traditional manager and someone gives you a dollar in an equity fund or bond fund, you have to express a view of finding what you like in the market, whereas we can sit on liquidity, and it doesn't drag our returns down. almost by definition, if you look at the structure of our balance sheet, as you know, in terms of the capital that we manage, we're typically running 20% to 30% uninvested. That's true in almost any, in any market. If you look at where we ended the year, we had about $352 billion of headline AUM, and we had $85 billion of capital uninvested. This goes back to my earlier comments about the predictability of income generation from deployment. Having that amount of liquidity going into a dislocated market is a huge competitive advantage. Couple that then with the opportunity to raise more capital when people are looking for ways to play distress for control PE, opportunistic real estate, opportunistic corporate credit, all the things that we do are places where people wanna allocate in these types of markets. You're right, we tend to see increased fundraising because people view Ares as a good down market manager. We also tend to see higher rates of return. Interestingly, that's when you get on this flywheel, because if you're raising more capital and investing disproportionately in markets like this when the returns are the highest, when you then go back and look at a track record over a one, three, five or 15-year period, the returns generally are gonna be higher 'cause we're able to capture more of these, of these markets. So there's a lot structurally that sets us up for that success. I think as a company, because of the things that we do and the DNA of the firm, we are very good distressed and down market investors. That's actually the, you know, the genesis of the firm was in distress. Knowing how to navigate the cycles, how to leg into them, how to own companies from the credit side, how to buy companies through restructurings, those are all skill sets that are, we think, pretty unique at our scale that allows us to outperform. You're right, when you look at 2008, 2009, we grew faster through the financial crisis and COVID than at any other point in our history. It's a combination of all of those things. What you tend to find is you get into a tough market and, you know, kind of separates the wheat from the chaff, if you will, and you have a lot of smaller, less experienced managers that demonstrate poor performance, and you get share consolidation too. There has been this longer term consolidation trend in alts. There's a lot of reasons for that. One of them is just I think the larger platforms with more experience, more capital, more competitive advantage are outperforming. A lot of the smaller folks have gotten left behind. Our financials survey data is showing that an inflation hedge is becoming a more important quality for products today. As you look across your product offering, you know, where are you recommending clients to go when they wanna protect, they wanna protect their assets from rising interest rates and high inflation? Yeah. Most of our investors aren't that tactical, to be honest. I think, you know, they're rarely saying, "I have an inflation factor and I wanna do X." I'd say they're generally inflation aware. I would say at least our experience from a fundraising standpoint is people aren't coming to the platform through an inflation lens. That being said, when we're having that conversation with folks as to where to be invested in markets like this, the two things that jump out most consistently is floating rate credit. Back to the whole private credit demand and, you know, if you think about what that market offers an investor in this rate environment, generally speaking, across the different asset classes and the base rate environment, you're getting 10%-13%Type rate of return, high up a company's balance sheet, senior secured with continued convexity and short duration. It's a really good place to hang out for people who aren't even long-term committed to the private credit asset space. That is somewhat inflation protected as well, given the attachment point and the nature of the companies that tend to attract those types of loans and types of assets. Two, maybe not surprisingly, I mentioned it is infrastructure, debt and equity, because a lot of those underlying assets have inflation protections built into them. Those are the two places when we're having inflation conversations that we tend to guide people. When you take a step back and you think of, you know, what does inflation mean to the alt industry? You know, if it's good for private credit, it may not be that good for private equity, just in terms of the cost to borrow. Yeah. There's also- Oh, man. Did you see I just spilled on myself? Oh, no. I don't think anyone noticed, though. Well, now they did. You know, it raises the cost of the portfolio company's expense base. It raises the cost of debt. It has some, you know, negative factors across the industry. Ignoring the fact that it is good for private credit, infrastructure is an inflation hedge. What do you think it means for the private equity industry in terms of how the business is valued and really the private equity asset class? When we're talking about what it means for private equity, you have to talk about what does it mean at the company level. Yeah. From a goods and services cost standpoint, and then you have to say, what does it mean for rates and what do rates mean for private equity? They're obviously separate but related. Stating the obvious, when you have inflation and interest rates moving in the direction they're moving, you have a double impact on your private equity portfolio companies in the sense that you're getting margin squeezed, and as your free cash flow is getting reduced, the cost of your debt is going up. That's not a great place to be. I would say generally, taking rates out of it and just isolating inflation, I think most of the companies that we see across our portfolio, and we see a lot, they've dealt with it. You know, they tend to be well managed, professionally managed, professionally owned. They've passed through price increases. They've restructured their supply chains to the extent that they need to. They've reorg'd their business. That, if we were just talking about have they done well absorbing inflation, I think most buyout portfolios that we're looking at have navigated well. It's also been a little bit of a story of goods inflation moving to services and wage inflation. You haven't had this compounding effect for years on specific sectors, I think that's given people a little bit of a reprieve. I think the rise in rates is a real challenge. For 15 years, the buyout market generally has been enjoying the benefit of low rates, high valuation and ever-increasing valuation multiples. When you add 500 basis points to your base rate, that completely changes the valuation paradigm. There's gonna be, I don't wanna say some issues, but the duration of a lot of these private equity portfolios has just gotten extended by a pretty significant amount of time because people now need to grow back into, you know, a valuation that's frankly not achievable in this market right now. I'm sorry to hit the same topic multiple times. I think I hit on the earnings call. Yeah. I asked Kip this yesterday, but, I'm really interested in credit migration, especially just given the slowing economic backdrop. You know, what are you seeing inside your portfolios in terms of credit quality migration? You know, why should we be confident that, you know, whatever we see out there, whether it's kind of a soft or hard landing, that Ares will be okay? Sure. Past performance is not a predictor of future success. That's the disclaimer. We've been doing this a long time, and, you know, I think we've demonstrated through our track record that we're good underwriters of credit. You know, you could look, I don't know what Kip articulated, but if you look at our ARCC track record as a proxy for what we do through cycles, our loss rate in that portfolio is actually positive, meaning that we've generated gains in the portfolio in excess of credit losses, which is pretty unique. The one thing I think that people don't fully appreciate about this current environment in leveraged credit is I think the markets are trained to look at defaults as a predictor of loss. Maybe starting there, if you look at our ARCC again as a proxy, it's pretty consistent across everything we do, their non-accruals right now are about 1.7%, which is actually well below historical average. If you look at default rates in the traded markets, they're similarly low and below historical averages. Default doesn't mean bad for private credit. What's interesting about what's happening now, these companies are gonna get pushed into default first because rates are going up. When rates are going up, the private credit manager owner is actually getting all of that excess return. Typically, when we're talking about defaults and appropriately worrying about defaults, it's because earnings are going down and rates are going down. You kinda have this two-edged... You don't have a way to generate excess return. We really haven't seen this in ever, right? We've been clipping excess base rate for 12 months, soon to be 18, 24 months before we even start talking about average levels of default. When that happens, it's because they're having challenges with debt service on the interest side, not the earnings side. My own view is that for a well underwritten credit book, you're generating a significant amount of excess return to allow you to be flexible in how you wanna resolve problems in the credit book. I actually think it's gonna turn out to be that it's gonna be almost impossible for losses given defaults to outpace the amount of excess return that's being generated in the book. The other thing that people don't fully appreciate is most of that risk right now is gonna be on the equity, not the debt. Most of these capital structures have more equity in them than at any other prior cycle. Order of magnitude, if you look at where private credit sits in a company or an assets capital structure, it's top half. Which means that if you even increase leverage, let's say six times, which seems like a lot to some, that means that there is an institutional equity owner that has a cost basis in cash equity in that asset of six to 10 times below you. That amount of equity subordination is really, really valuable. If you go back and you look at where the market was pre-GFC, it was probably 30% equity, 70% debt. The willingness of asset owners and company owners to walk away from a credit not supported with resources, capital, and all of those things are just fundamentally different now. Michael McFerran said this on the earnings call. I absolutely expect, just given where rates are, that we'll see a pickup in amendment activity. Just by definition, people's cost of capital has changed to the point where they need to rethink their capital structure. That could be a very positive driver for us in terms of value creation and total return as opposed to a challenge. That's kinda what I expect will happen. Kind of in line with your commentary that loan to values have really improved a lot over the last 15 years. I think the quality of competition has also improved a lot over the last 15 years. There are BDCs that were having issues in the middle of the bull markets, like six, seven years ago. If the quality of competition's better and you guys have fared well in all these other sort of drawdown periods, what is your outlook for kind of losses across your peer group now in private credit? I think you'll have, you'll have winners and losers, but I think on an index basis, it will be quite strong. you know, because not only are there better competitors or more experienced competitors, but they own a disproportionate share of the market, right? The folks that will underperform, either because of lack of experience or candidly lower quality borrowers, just because they're smaller, less institutional, fewer levers to pull, maybe less sophisticated management, all of those things, they're just a smaller part of the market now. I think when you aggregate across the entire waterfront, you're gonna still see some pretty good performance. Great. I wanna hit on one important question, but then we'll take a question or two from the audience. You have a number of maturing credit funds. Mm-hmm. They haven't really generated any performance fees to date. The performance fees calculated on a European waterfall where it's at the end of the life cycle of a fund, but there's a very significant ramp coming. Yeah. this may not be fully baked into market expectations at this time. sort of these earnings are also pretty sticky and stable. Yep. Could you help articulate this for us? You know, from a modeling perspective, you know, what does this mean financially for Ares? Sure. It's a fairly complicated concept that we're trying to get better at simplifying and articulating, and I'm looking at our IR team over here. I think we'll continue to refine the way that we're talking about it. At a high level, and I just realized I never answered your private equity question, maybe this is a good quick place to put it in. Historical carried interest structures were what we all call American-style waterfalls, which means in a private equity portfolio, you have 20% carried interest, and you get to realize that carried interest when you sell an asset in the portfolio in excess of the preferred return. The way that carry comes through in a traditional private equity portfolio is you monetize an asset, you have to sell it to monetize it, and when you do, you get promote. There's also something called a clawback in an American-style fund, which is to say, to the extent you took that promote early in a fund's life, but then when everything is balanced and you look over the life of the fund, if you didn't actually earn it, you technically have to give it back. You rarely see that, but that is an interesting part about the timing because you pull it forward, and there's always risk of clawback. European-style waterfalls are actually structured to pay promote only at the end of fund life, once the investor has gotten their capital returned and the preferred return. You typically see European-style waterfalls in credit fund structures versus private equity structures and some real estate structures. The reason this is relevant, I'm glad that you brought it up, is going back to my earlier comment about this fundraising stacking effect in our credit business. We don't earn performance revenue on those funds until they get to the end of their life. When they do, they start paying promote or carried interest consistently, because once you're above the hurdle, dollars that come into the portfolio go to pay promote. It takes a while because if you have an eight-year fund, it takes a while for you to get into the promote. Once you do, it starts paying consistently as the fund matures. We're at this really interesting inflection point in the maturity of our large credit fund families in the sense that we have vintages from two vintages ago that are now hitting that waterfall moment. You saw that in Q4, where a significant amount of realized income from our credit, European waterfalls were starting to come into the P&L. What's also interesting about this now is in a rising rate environment, this carried interest is actually being measured against fixed rate hurdles somewhere between 5% and 7%. The value of the embedded European waterfall promote that we have is actually increasing in value. We're talking about it a little bit differently because I think the market's experience of this promote, given the size and diversity of our credit fund families, will start to pay quarterly, and it won't be episodic, and it won't be dependent on monetizations or a healthy, you know, transaction market the way the private equity promote is. If you look at our investor day, we articulated that we had basically $1.5 billion of that promote already embedded on the platform. We talked about on our earnings call based on new funds maturing. We've added about $1 billion to that number in the last 18 months. We're beginning, as you know, to start to articulate a little bit better guidance as to what the expectations can be in future quarters and future years for that. I'm glad you brought it up because it will, it will act much differently than the traditional carried interest that I think the market has been used to seeing from more private equity-heavy managers. Sounds like maybe it should trade at a higher multiple, so. I'll leave that for everybody else to decide. I would, but yeah. Let's see. Let me just see if there's a question in the audience. Please raise your hand and we can get you a mic. Can you guys hear me? Yes. Hi. Jim from Merrill Lynch. A great discussion, guys. Mike, you mentioned, a% of funds that are uninvested. Yes. Is that a set number, or do you tweak that based on where you think we are in the cycle? Sure. It is not a set number. There are some structural elements of private funds that keep it in that range, particularly on the commingled drawdown fund structure side of the house. It's different on the traded and non-traded side, but your typical drawdown fund can't raise its next vintage until you're either 70% or 80% committed. What winds up happening is if we have a large private equity fund, we won't go into the market with the next one until we're 70% committed, but we'll start to raise it, you know, when we're getting close to that. Generally there's this rolling 20%-30% uninvested as you're bringing new funds online, and that's largely what drives it. There's an overlay of are we being more cautious on deployment? What are we doing with some of our permanent capital vehicles and scaling those? Which is why it's in that range, but it will always generally be range bound because of the structural feature of not actually getting permission from your investors to raise the next fund until you're at a certain amount. Our goal would be within that constraint to run with as much liquidity as possible because again, it unlike a mutual fund or a non-traded vehicle, there's no drag on return because we only call the capital when we need it. From the investor's perspective, we're not getting penalized for not investing, which is actually a pretty interesting element about alts generally, as I said earlier. Great. We, I guess we have one more question. We have about a minute here. Hi. Can you update us on the Landmark acquisition and how have you been able to leverage the platform? Sure. So Landmark just quickly, 'cause I know we're short on time. It's an acquisition we made about two years ago. It is one of the pioneers in the secondaries space. The reason that we acquired it was there's a big secular shift happening in secondaries away from just secondaries providing liquidity to LPs, to now the secondaries market providing a whole host of structured liquidity solutions to GPs. Our interest was really around that piece of the secondaries market, given that we have we think the largest coverage effort globally to GPs, whether it's buyout funds, institutional real estate equity owners, institutional infra owners, et cetera. The integration's gone extremely well. At the end of last year, we actually rotated the Landmark name to now be Ares Secondaries. We have launched in earnest a credit secondaries business, which we think given our private credit expertise, is a market that we should, you know, have a significant share of. We have launched, as I mentioned earlier, a non-traded private markets fund with that team to drive secondaries exposure into the non-traded part of the market. We have raised a private equity fund that's now out of the market, and we're raising a real estate and infra fund. We've added a bunch of people. We've, you know, reorganized the management team in certain respects to drive more synergy. It's going well. I think, you know, more to come. The thesis around GP solutions and expansion into credit secondaries, and I should also mention global expansion into Europe and Asia is playing out extremely well here in the early days. Great. With that, we are out of time and questions. Mike, on behalf of all of us at Bank of America and Merrill-