Welcome to Ares Management Corporation's third quarter earnings conference call. At this time, all participants are in a listen-only mode. As a reminder, this conference call is being recorded on Tuesday, October 31, 2023. I will now turn the call over to Carl Drake, Head of Public Markets Investor Relations for Ares Management. Good morning, and thank you for joining us today for our third quarter conference call. I'm joined today by Michael Arougheti, our Chief Executive Officer, and Jarrod Phillips, our Chief Financial Officer. We also have a number of senior professionals with us today who will be available during the Q&A session. Before we begin, I want to remind you that comments made during this call contain forward-looking statements and are subject to risks and uncertainties, including those identified in our risk factors in our SEC filings. Our actual results could differ materially, and we undertake no obligation to update any such forward-looking statements. Please also note that past performance is not a guarantee of future results, and nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Ares fund. During this call, we will refer to certain non-GAAP financial measures, which should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. Please refer to our third quarter earnings presentation, available on the Investor Resources section of our website, for reconciliations of the measures to the most directly comparable GAAP measures. Note that we plan to file our Form 10-Q in the first week of November. This morning, we announced that we declared our fourth quarter common dividend of $0.77 per share on the company's Class A and non-voting common stock, representing an increase of 26% over our dividend for the same quarter a year ago. The dividend will be paid on December 29, 2023, to holders of record on December 15. Of note, we plan to update investors about our new quarterly dividends for 2024 during our fourth quarter earnings call early next year. Now I will turn the call over to Michael Arougheti. Thank you, Carl, and good morning. Before we begin, I wanted to take a moment to acknowledge the horrific terrorist attacks that occurred in Israel and the subsequent loss of lives. Our hearts go out to all the innocent people and for the pain and suffering on both sides throughout the region. We are all holding on to hope for a peaceful resolution. Now, I'd like to begin with some market commentary and quarterly business and strategic highlights. During the third quarter, the markets adjusted to the expectation for rates to stay higher for longer, while the underlying economy remained resilient, with robust GDP, a strong labor market, and continued modest growth in corporate profits. We're seeing the lag effects from higher rates and this slow and uneven economic growth play out across the global markets that we invest in. Transaction activity remains slower than usual due to the higher cost of capital and valuation disparities among buyers and sellers. Yet there's significant pent-up demand and a large amount of aging private equity dry powder available to be invested. We're seeing our private pipeline build generally with higher quality assets and strong growth characteristics coming to market. We're also seeing a growing need for creative liquidity solutions, recapitalizations and rescue financings, and more interest in secondaries. With this economic backdrop, it remains a compelling time to invest across private market assets with defensive characteristics, particularly within private credit, as we see risk/reward characteristics that are as favorable as we've seen in many years. Our quarterly results continue to demonstrate our strong growth and resiliency in these slower and more challenging market environments. We raised $21.9 billion in new commitments in the quarter, our second highest fundraising quarter in the history of our firm, and we've now raised $53.4 billion through the end of the third quarter. We continue to benefit from our existing institutional investors who re-up or cross over into new Ares fund products, along with new investors who recognize our consistent fund performance and leadership in managing private assets. We also saw an increase in flows from our Wealth Management Channel, supported by our newly launched nontraded BDC. Fund performance across our primary investment strategies also continues to be a highlight, as approximately three quarters of those strategies performed well compared to their respective relative public indices or exceeded their annualized target returns in the third quarter. We also incrementally increased our third quarter deployment, which supported growth in our management fees and fee-related earnings. For the first nine months, our management fees and fee-related earnings each grew by 20% or better compared to the same period last year. Now, let me provide an update on our three private credit funds, which are all on track or have already closed at levels in excess of prior vintages. In the third quarter, we held the first close for our 3rd U.S. Senior Direct Lending Fund of nearly $6.5 billion in equity commitments, plus nearly $2 billion in committed fund leverage. The first closing of LP commitments for this fund exceeded 80% of the total equity commitments for the predecessor fund. With additional closes expected into the first half of next year, we expect to meaningfully exceed the prior fund size of $8 billion in equity commitments and $15 billion in total investable capital. Overall, our U.S. direct lending business raised $11.6 billion in the third quarter, which brought our total AUM in this strategy to nearly $118 billion. As a market leader, we believe that our global direct lending business continues to have significant white space as the private credit markets are meaningfully undersized compared to the $5 trillion of private equity AUM. We also raised an additional EUR 750 million for our 6th European Direct Lending Fund in the third quarter, and almost EUR 800 million more euros in October, bringing total commitments to EUR 9.9 billion to date. We have line of sight to over EUR 11 billion of equity commitments by year-end, which would equal or exceed our prior fund vintage. We expect to surpass our prior vintage with additional closings from investors in our pipeline by early in the second quarter of 2024. With over 85 investment professionals located in six offices across Europe, we believe that we have the largest and most tenured direct lending franchise on the continent, managing over $60 billion of AUM. With our leading alternative credit strategy, Pathfinder II closed approximately $2.2 billion in the third quarter, bringing total commitments to $5.8 billion at quarter end. As we publicly announced yesterday, Pathfinder II held its final close at its hard cap of $6.6 billion, nearly double the size of the predecessor fund. We experienced significant investor demand, hitting our hard cap in only 7 months since the first closing. In addition to Pathfinder II, our open-end core alternative credit fund raised $750 million in the quarter, bringing total commitments to over $4.2 billion. The strong investor demand for alternative credit strategies is driven in part by filling the gaps created by a pullback from traditional providers, along with the structural changes that we're witnessing in the banking industry. With more than $32 billion in AUM, our alternative credit business is a leader in the private, non-rated, and illiquid segment of the asset-backed market, and is poised for growth in what we believe is at least a $4 trillion global addressable market. In Asia Credit, we raised nearly $400 million in the quarter, including an approximate $200 million final close in Ares SSG Capital Partners VI, bringing final commitments to $2.4 billion, including a sidecar fund. We're seeing strong economic trends and robust corporate earnings growth in India and Australia, which account for 60% of our investments across the region, and we're seeing a growing opportunity set for financing solutions for sponsor-led acquisitions in these markets. Within real assets, we raised more than $500 million in a European real estate debt mandate, which now totals over $1 billion, and we anticipate that this strategy will continue to grow. Our real estate debt business now exceeds $11 billion, and we believe the team is well positioned for further growth due to investor demand and the current acute need for capital in the industry. Our 2nd Climate Infrastructure Fund raised another $200 million in the quarter, plus an additional $300 million in October, and this completed the fund's first close, with total equity commitments of nearly $1.1 billion, or approximately 80% of the total equity commitments in the prior fund vintage. We currently have over 30 funds in the market, and by year-end, we expect to have first closes in our 7th Corporate Private Equity Fund, our inaugural Credit Secondaries Fund, and our 3rd Infrastructure Secondaries Fund, as well as additional closings in our larger funds, such as our 4th U.S. Opportunistic Real Estate Equity Fund, our 2nd Climate Infrastructure Fund, and our 6th European Direct Lending Fund, as just discussed. Through the end of October, we have now raised nearly $58 billion, and we expect total fundraising for the year to exceed $65 billion, well ahead of the $57 billion we raised last year. Throughout next year, we have several of our largest fund series expected to hold first closings for successor funds, including our 6th Infrastructure Debt Fund, our 3rd Special Opportunities Fund, and our 3rd U.S. Junior Direct Lending Fund. While our core fundraising continues to be supported by expanding within the global institutional market, our strategically important insurance and Wealth Management Channels are also poised for growth. Our affiliated insurance business, Aspida, continued its organic growth with new assets of more than $1 billion, bringing total AUM to $10.6 billion by quarter end. We believe investors are attracted not only to Ares's credit and investing expertise, but also the technological advantages that Aspida is bringing to the annuity market. Our growth outlook is promising as we're seeing demand for new annuities, reinsurance flow, and opportunities for block trades, which we would expect to fund largely with third-party capital. We believe that we are on track to meet or exceed our goal of reaching $25 billion or more in Aspida AUM by the end of 2025. Within wealth management, our ongoing objective is to market a limited number of core, semi-liquid, institutional-quality products through our global Wealth Management C hannel. We're well on our way to accomplishing this over the next several years, and today we're one of the largest alternative managers in the wealth industry, with over 120 professionals, a footprint across North America, Europe, and Asia, 6 products, and relationships with nearly every major wirehouse and private bank. We expect to continue adding strategic partnerships and gain market share as we scale each one of these products. After launching our nontraded BDC, ASIF, primarily on one wirehouse in June, it has seen steady momentum, with approximately $550 million raised in the first three months, including the September flows, which closed on October first, bringing total AUM to over $2.7 billion. There are four additional global platforms that we expect will add ASIF in the first half of 2024. Despite a tough market for real estate fundraising, we continued to see net aggregate flows collectively across our two nontraded REITs, including the 1031 exchange programs. Turning to deployment, we invested $16.7 billion in the third quarter, which was up from the $15.2 billion in the second quarter, but down from $18.3 billion in the third quarter of 2022. We're beginning to see signs of large deal activity returning, as Q3 was the third highest quarter for $1 billion-plus uni tranche deals financed by the private credit markets. While still early and markets remain slower than we'd like, we're encouraged by our fourth quarter-to-date investment activity and our pipelines. For 2024, we currently expect market activity to improve due to the aging private equity dry powder that is approaching the end of its investment period, growing pressure from LPs to return capital, stronger sentiment among middle market companies, and further pressure on balance sheets and capital structures as rates stay higher for longer. We're also seeing a growing opportunity to partner with the banking sector through our alternative credit business. The bank market continues to be impacted by regulatory changes, asset liability mismatches, and an inverted yield curve, all of which change the way banks participate in certain segments of the market. Over the years, we've developed extensive bank partnerships where we have the opportunity to provide solutions to augment their existing businesses, to improve risk weightings and reduce capital charges, while at the same time generate attractive returns for our investors. Our alternative credit team believes that we're in the early innings of these types of transactions, and we're seeing an increase in our collaboration with our banking partners. Finally, we continue to explore inorganic growth opportunities to expand our business through both product and geographic expansion. In October, we closed on the acquisition of Crescent Point, a leading Asia-focused private equity firm with $3.7 billion in assets under management. The Asia Pacific region is a key geographic target for us, and we continue to look at various ways to expand each of our business lines into that region, either through organic team builds or strategic acquisitions. As you may have seen, we also recently closed a strategic partnership and investment in Vinci Partners, a leading alternative asset manager in Latin America. We've known the Vinci team for over a decade and are excited to collaborate on distribution, product development, and other business opportunities in Brazil and across Latin America. We believe that the Latin American markets are in the very early stages of shifting capital into the private markets, particularly within private credit. This is similar to the trends that we saw in the early 2000s in Europe, and what we're seeing now beginning to play out in the APAC region. We'll continue to look for unique and attractive global growth opportunities for our business. Now I'd like to turn the call over to Jarrod for comments on our financial results. Jarrod? Thanks, Mike. Hello, everyone. Thanks for joining us today. In the third quarter, we continue to see strong growth in our management fees, fee-related earnings, AUM, and fee-paying AUM compared to the third quarter of 2022. While realizations were light in the third quarter, as we expected, we have a clear line of sight on stronger fourth quarter realizations due to our European-style waterfall funds. We're also on track to recognize a meaningful year-over-year increase in FRPR from our credit funds, as I will discuss. Starting with AUM, we ended the third quarter with $395 billion of AUM, and we're tracking well to meet or exceed our target of $500 billion or more by the end of 2025. Our FPAUM grew to over $247 billion, up from over $218 billion this time last year, driven by deployment across our credit and special opportunities funds and new commitments to funds in our real assets group. For the first time in our firm's history, we have over $100 billion in dry powder, of which over $65 billion is AUM, not yet paying fees and available for future deployment. Upon deployment, this would generate nearly $650 million in incremental management fees and position us for continued FRE growth and margin efficiencies. From a revenue perspective, our management fees totaled over $643 million in the quarter, an increase of 17% compared to the same period last year, primarily driven by deployment of our available capital in our credit group. Other fee income of approximately $20 million was down from the prior period, as there were certain episodic transaction fees that contributed to our second quarter's results. As it relates to FRPR in 2023, we continue to expect approximately 95% of our FRPR to be realized in the fourth quarter. Currently, the potential FRPR from our credit funds is tracking well ahead of last year as we're experiencing the benefits of a higher for longer interest rate environment, along with a modestly positive impact on loan pricing from tighter credit spreads. We are currently estimating FRPR from our credit funds of approximately $110 million-$120 million for the fourth quarter, or $40 million-$44 million of FRE after compensation expenses. I will caveat that this is still subject to the total return performance of these credit strategies for the full year, including changes in market values in the fourth quarter. Regarding FRPR from our real estate group as of September 30th, the two nontraded REITs had not accrued any incentive fees on their balance sheets. Given the upward pressure on cap rates, we do not expect to recognize FRPR from these nontraded REITs in 2023, and earning FRPR in 2024 from these REITs may require an improvement in the current valuation environment.... Fee-related earnings totaled $274 million, an increase of 18% from the third quarter of 2022, driven by higher management fees from deployment. For the year-to-date period, we're tracking at over 20% growth in FRE. We remain confident in our ability to generate 20% or better FRE growth annually through 2025, excluding any FRPR from our nontraded REITs, as we discussed on our call in February. Our FRE margin in the third quarter was 41.2%, a roughly 40 basis point improvement from the second quarter of 2023, and a 100 basis point improvement from the year ago period. As we have said in the past, we expect to see a gradual expansion in margins that could accelerate in periods of higher deployment and corresponding growth in FPAUM. As a reminder, in the fourth quarter, we typically see a drag on our FRE margins related to FRPR, which are typically in the mid-30% range. Excluding this FRPR impact, we do expect continued moderate FRE margin expansion in Q4, and we remain confident in our ability to reach a 45% run rate FRE margin by the end of 2025. Our realization activity was slower in the third quarter due to limited American-style realizations in several of our equity strategies, coupled with the typically slow third quarter for European-style waterfall realizations, as discussed on our last call. Given the early ages of many of our European waterfall-style funds, we typically see tax-related distributions in the fourth quarter, with a cleanup amount in the second quarter related to tax filing. However, as our 2017 and 2018 vintage European waterfall-style funds continue to season, we expect to see larger and more consistent European waterfall realizations likely beginning in 2025 and thereafter. For the fourth quarter, we currently expect approximately $45 million in European-style waterfall net realized performance income. Looking forward, our potential net performance fee income from European-style funds has increased from $2.5 billion earlier in the year to $3.5 billion. This potential amount has continued to grow as we raise additional European-style funds, along with the compounding effect of higher interest rates in our credit-like funds. At the same time, we're seeing the duration of these expected cash flows extend out as there are fewer repayments and less overall transaction activity. The extended fund duration has a positive compounding effect on the total realization value as the investments remain in our portfolio longer, but it impacts the timing of these realizations. Based on our updated estimates and including the fourth quarter guidance I provided, we currently expect approximately $80 million of net realized performance income in 2023 from our EU waterfall funds and about $160 million in 2024. Our initial view is that there's more than $250 million in 2025. Our net accrued performance receivables stood at $969 million, up 9% from the year ago period, despite nearly $150 million in distributed net realized performance income over the last 12 months. Notably, approximately $94 million of this increase comes from our credit funds, where we're seeing the benefits of higher interest rates above our fixed hurdle rates. Unlike equity-style funds, where increases in performance fees are based on capital appreciation driven by market multiples and EBITDA growth, our eligible credit funds can generate more predictable income from net returns after any credit losses above fixed hurdle rates, with limited mark-to-market risk. For example, of the $969 million of net accrued performance receivables, $694 million, or over 70%, were in European-style waterfall funds, with over $500 million in private credit-like funds. We now have nearly $125 billion, or over 50% of our incentive-eligible AUM in European-style waterfall funds, and we expect this balance will continue to grow. Realized income in the third quarter totaled $264 million, and after-tax realized income per share of Class A common stock was $0.83, up 11% compared to the third quarter of 2022. As Mike mentioned earlier, approximately three quarters of our primary investment strategies performed well compared to their respective relative public indices or exceeded their annualized target returns for the third quarter, with particular strength across U.S. direct lending, alternative credit, Asia Credit, infrastructure debt, and special opportunities. In credit, all of our primary investment strategies have generated double-digit gross returns in the last 12 months as we continue to benefit from higher base rates, attractive spreads, low defaults, and strong fundamental performance. Our credit metrics remain strong across our portfolios. As an example, in U.S. direct lending, Ares Capital Corp's nonaccruals at costs declined to 1.2%, which remains well below our historical average and the industry averages. Portfolio company EBITDA growth remains in the healthy mid- to high-single digits for our U.S. and European direct lending portfolios. Loan-to-value ratios also remain attractive in the low 40% range in the U.S. and mid-40% for our European portfolios. In private equity, both of our investment strategies performed well compared to the public equity markets in the third quarter. We continue to see double-digit EBITDA growth across our ACOF portfolios. Within real estate, higher cap rates are offsetting the relatively strong rent growth that we're seeing in our portfolios, which are heavily weighted toward the more resilient industrial and multifamily sectors. This is leading to muted returns for the third quarter, yet due to our significant overweighting in these strongest performing sectors of industrial and multifamily, which account for more than 75% of our real estate gross value, our U.S. and European real estate strategies have performed well relative to the respective public real estate markets over the past 2 years.... With that, I'll turn the call back to Mike for closing remarks. Great. Thanks, Jarrod. In our view, the long-term secular drivers for our business remain very much intact. Both institutional and retail investors continue to seek out higher risk-adjusted returns in less volatile and uncorrelated alternative assets. At the same time, we're seeing traditional capital providers and banks continue to retrench for a whole host of reasons, and Ares continues to play a key role in filling the gaps and providing solutions into these markets. As you saw with our performance to date, as well as past market cycles, we can generate strong growth even in tougher market environments. We continue to make investments for future growth by enhancing our product capabilities in adjacent areas, expanding into new geographies, and deepening our distribution channels. With a record amount of dry powder, we're well positioned to invest our capital opportunistically in highly attractive sectors. And because of the scaling of our private credit business over the past six years, we're in a great position to realize a growing amount of performance income in the coming years from our European-style waterfall funds. All of this is to say that we have strong visibility on continued earnings growth, dividend growth, and margin expansion. As always, I'm grateful for the hard work and dedication of our team around the globe, and I'm appreciative of our investors' continuing support for our company. And operator, I think we can now open up the line for questions. At this time, if you would like to ask a question, please press star then one on your touch-tone phone. If you would like to withdraw your question, please press star then two. Our first question comes from the line of Craig Siegenthaler with Bank of America. Please proceed with your question. Good morning, Mike, Jarrod. Hope everyone's doing well. My first question is an update on the formation of bank partnerships, and how Ares is working much closer with banks now on asset acquisitions, especially in the ABF market. I think PacWest, that purchase in June might have been the last big announcement. So, you know, since then, have you been forming new partnerships? Are you seeing the flow of assets pick up from banks? And what are your expectations for the future with your bank partners? Hi, Craig. Thanks for the question. PacWest, yes, was the largest transaction that we announced, but I think the press picked up some recent activity, too, where we did a very significant strategic risk transfer, a couple of weeks back with a regional bank. You know, there's about $2 trillion of consumer loan assets sitting on bank balance sheets that are going to need to get addressed in some form or fashion, not to mention, you know, some of the challenges that we expect we'll continue to see in the real estate books. Given that we just had our final close on the Pathfinder Fund at $6.6 billion, and given that that's where the bulk of this activity is going to reside, we're still pretty optimistic that the opportunity to partner with banks is still in the early innings and that we're well positioned for it. Just as my follow-up, similar question, but more on the investing side, focusing on asset-backed finance and the $7 billion Pathfinder fund. You know, I know this vertical now is $32 billion at Ares, which is very large. What vertical is Joel and team focusing on now? Are there any that he's—that he and they're avoiding? And looking at Ares' capabilities today in ABF, you know, do you broadly fill all the verticals? Are there still some white spaces where you could add investment professionals to sort of fill in in the future? Without getting into too many specifics, Craig, I think the good news is we have probably one of the biggest and broadest teams in the space, particularly around the sub-investment grade part of the market, which we think requires. We're focused on now. We talked about resolution of some consumer loan portfolios and lender finance portfolios within the banking system. In a recent newsletter that team put out, there was a pretty good discussion, I thought, on the opportunity in NAV Lending, which is about a $100 billion opportunity. So I'd say, broadly speaking, you know, you want to be in a position to move between markets and geographies as the opportunity set develops, and there are very few people who can make those types of relative value decisions the way that our team can. But, yeah, I think for the time being, we're going to be focused on much of the core things that we've been talking about around bank partnerships and, and lender finance. Thank you, Mike. Our next question comes from the line of Alex Blostein, Goldman Sachs. Please proceed with your question. Hi, good morning, guys. My question for you, outside of credit, maybe just a quick refresher on the opportunities you guys see for fundraising over the next, call it 6-12 months, in things like private equity and other verticals. So maybe we could start there. Sure. Thanks for the question, Alex. As we've talked about on prior calls, I think the good news is, is year-over-year, you're going to see, you know, less dispersion in, in fundraising outcomes, largely because we have an increased number of larger, you know, flagship and, and core vehicles. Obviously, we're building momentum in the wealth channel and the insurance channel, and then the family of open-ended products that are on continuous offer are growing. So we're going into any given year just with a much higher floor to jump off of with the large institutional flagships. As we talked about in the prepared remarks, we'll clean up the large credit funds here towards the end of the year and into the first half of next year. And then we would expect to see first closes towards the end of this year into the beginning of next year for our 7th C orporate Private Equity Fund, our 6th I nfrastructure Debt Fund, our Climate Infrastructure Fund, so on and so forth. And then the big things on the horizon, I think, for next year are going to be our 3rd S pecial Ops Fund, our 3rd J unior Debt F und, are probably the two, the two big ones. And then obviously, we'll be growing into our 6th I nfrastructure Debt Fund. So yeah, it's interesting, as the product set is growing and diversifying, and then we're showing that we can scale vintage over vintage, we're no longer in this world where we're just focusing on a handful of flagships, and you can see that just in terms of the quarter-over-quarter fundraising performance, and I'd expect that to continue into the first half as well. Great. That helps. Thanks. The second question I had for you guys is zoning in on some of the retail initiatives. Helpful to hear that ASIF is going to be, I guess, on four additional platforms in the first half of next year. Any lessons learned, I guess, from the existing platform and how good of a read-across that could be to some of the other ones that you mentioned, given pretty robust momentum we've seen so far? And then I think you launched a European version of that as well. So maybe help us understand, sort of, how does the competitive market in Europe vary versus the U.S., and the opportunity there you see for the European version of this product relative to the early traction you've seen in the U.S.? Sure. Just to frame it so that everybody's looking at the same numbers. We raised in our wealth products alone, so not looking at our traded product, wealth product, we did about $1.7 billion in the third quarter, obviously, with good momentum on ASIF with only the one platform. I would expect, Alex, just given the, the, the attractiveness of the product at this moment in time and our BDC track record and leadership in private debt, that adding those platforms is a pretty good read-across. You know, we'll know it when we're in those platforms, just how much they scale, but I think there's a pretty significant amount of pent-up demand and respect for the brand in that channel, and so, you know, I think that's a good starting point to expect that it would be a good read-across. Europe, you know, it's interesting because the European wealth market generally is less developed, so we just don't have a great amount of precedent to know. But from a competitive standpoint, we have, by far, the leading private credit franchise in that market, both in terms of length of track record, scale of capital, and size of team. So you know, it's interesting. You have a less mature distribution channel, but we have a significantly better competitive positioning, I think, relative to others in that market. And so the two combined, you know, hopefully has us having similar experience with that product as we're having with the U.S. product. Great. Thank you very much. Our next question comes from the line of Ben Budish with Barclays. Please proceed with your question. Hi, good morning, and thanks for taking the question. I wanted to ask about some of the LP dynamics. We've been seeing some reports in the media, not about Ares specifically, but about private credit in general. Things like investors sort of asking for lower hurdles, pricing concessions. We've seen some competitors concede incentive fees on some of their credit funds. Just curious if there's anything you're seeing in your interactions with your clients that are similar to what we've been hearing elsewhere. We are absolutely not seeing that in any way, shape, or form. I would not read into that, at least vis-à-vis our platform or the market generally. I would maybe just make a comment that to the extent that someone was trying to play catch up in a growing market without a long track record of performance, you might have to cut fee in order to attract capital, but that has not been our experience in one bit. All right. That's very clear. Maybe one follow-up. Just thinking—I know the Aspida is not a huge portion of your business, but thinking about the expected DOL proposed rule today, the updated fiduciary rule, can you kind of just remind us, what is your sort of overall annuity exposure? How much of the business is—or how much of your growth prospects are sort of reliant on that channel? And what is sort of the makeup of Aspida today? Thanks. Sure. We appreciate you highlighting, and obviously, you know, this is all unfolding real time, so we're digesting that, the same way that you are. We have, as we've said before, taken a more measured approach to the growth of our insurance affiliate than some of our peers. We believe in the investment thesis of asset expertise married with insurance company balance sheets, but, you know, continue to have a very large and growing stable of important insurance partners, in our third-party business and continue to grow that part of our company as well. Aspida today has raised close to $1 billion of capital, and the total AUM there is about $11.1 billion, $10.6 billion. About 60% of that balance sheet is advised and sub-advised by Ares, as one would expect. If you go back to our investor day in the summer of 2021, when we put forward our guidance, you'll see that we largely expected that Aspida would grow roughly $5 billion a year to get us to $25 billion of AUM at the end of 2025. So if you looked at the $500 billion that we put out for guidance, $25 billion for Aspida, that would have it at about 5% of our assets. And if you look at where we are on that business plan, we're kind of tracking to that. So I would expect that we will continue to grow that in a measured fashion. We do think that we have some technological advantages in terms of the way that we are originating and onboarding new business. I think as many folks know, we're obviously smaller, but we also do not have any legacy exposures, given that this was a de novo build. So when you look at what is in the book, it's all effectively new vintage, new vintage credit. So we'll, we'll keep an eye on this. But again, I think the good news is for at least, you know, for Ares, it's a, a, a small part of what we do, and my expectation is that whatever develops here, like we've seen, in the past, it will largely hopefully be around, you know, enhanced disclosures, around certain products from the channel, but not, not really a change to the economic proposition to the client. Got it. I appreciate all the color. Thanks, Mike. Thanks. Our next question comes from the line of Brennan Hawken with UBS. Please proceed with your question. Morning. Thanks for taking my question. I know real estate is small for you, but could you maybe give some color on where the cap rates are in your nontraded REITs, and maybe how much those have changed versus a couple of years ago? You had spoken to the rent growth there as an offset, but just kind of curious about the base cap rates. Bill, do you want to take that one? I thought Bill Benjamin, our head of real estate, was on. I'm happy to take it. If you look at the nontraded REITs, for Q3 this year, when you look at what's underpinning the valuation, we had cap rates roughly 5.5%-5.6%, depending on the vehicle. If you go back a year, you know, we were probably 50-70 basis points tight of that 4.8 and five point two. So we have seen cap rate expansion, but as we mentioned, given that these funds are largely focused either exclusively on industrial logistics properties and multis, we are continuing to see pretty significant and healthy fundamental performance in terms of NOI growth and the development of the rent rolls. Excellent. Thanks for that. And then kind of curious about, on the European waterfall and expectations for 2024. I believe you said $160 million, but, you know, I, I thought that on the last call, that was more like about $175 million, with the potential for upside. So, am I remembering that correctly? And could you maybe walk through what happened, to that, revision, and how we should be thinking about, upside and what could drive that from here? Sure. I'll take that one. Got it. Ultimately... Yeah, yeah. What we tried to lay out, and we added the 2025 guidance with a little bit more clarity, kind of splitting out the periods between 2024 and 2025. Based on the current market environment, what we're seeing is a little bit of the extension of the duration of the underlying assets of these funds, which means that it pushes out the overall maturity of the fund a little bit. Actually ends up being a net positive for us in terms of these are assets, these are, credit assets that are yielding well above the hurdle. But because of the current market environment, they actually aren't refinancing quite as early as they used to. That's what's pushing out that duration. So ultimately, what we're seeing is a build over a longer period of time, with now we're expecting it more to land in that 2025 period, as opposed to towards the end of 2024. And that's a little bit of what we've seen happen here in Q4, as well as we're expecting kind of a push of some of that in terms of what we've given as guidance in the past into 2024, and then some of that 2024 really extending into 2025. So I wouldn't really call it a loss of it. It's actually a build and a larger build, but it's pushing it out just a little bit due to the current market environment. Got it. And is it possible for that duration to continue to get extended if we see, you know, conditions remain challenging for refi, or that's, like, a realistic worst-case scenario- Yeah -right now? Yeah, not, not too much, because we're really approaching the natural maturity of a lot of those assets. So it's, it's really just in terms of what the refi activity looks like. And if the market picks up, well, that could all cause refinances and turnover in those earlier portfolios. ... which would then accelerate the recognition of that. So it's really just a matter of what is the exact timing. We know what the total amount could be, and the total amount continues to grow. It's when that will perfectly occur, and there's kind of arbitrary dates along the way. Got it. Thanks for walking me through that. Yeah. Our next question comes from the line of Ken Worthington with JP Morgan. Please proceed with your question. Hi, good morning, and thanks for taking the question. Maybe first on the fundraising guidance, I think your comments that you're on track for $65 billion this year suggests a reasonable slowdown in fourth quarter commitments. Is that just, you know, you being conservative, or did some funds that you expect in 4Q maybe get pushed to 1Q? Can you give us a little more flavor there? Yeah, I think we said in excess of 65, Ken, just because, you know, as you get into the end of the year, you have certain things that will either be pulled forward or roll. So, you know, I think we're just trying to be, you know, cautious given that some things may slip. But the funds that we've articulated are all, you know, in the process of having their closes here, you know, in the fourth quarter. One or two may slip, one or two may not, and that's really gonna drive the ultimate, you know, the ultimate change. But there's nothing other than timing, affecting what the ultimate outcome is gonna be. Okay, great. I sort of figured that. In alt credit, I think there's been a talk of a rush of deals to come before year-end. Is that what you're expecting, and what's driving this push into year-end? I think the pipeline there is building significantly. It's probably one of the busiest parts of the firm right now. You know, a lot of this is Basel Endgame driven and, you know, I think just folks trying to get focused on balance sheet composition and construction, going into the end of the year. I don't think there's anything more than that, but we are absolutely experiencing that. The pipeline is building. Transaction activity there is probably turned on more so than other parts of the firm right now. Okay, great. Thank you very much. Sure. Our next question comes from the line of Michael Cyprys with Morgan Stanley. Please proceed with your question. Great. Good morning. Thanks for taking the question. Maybe just on commercial real estate, I believe in the past you've mentioned that you'd expect, the bulk of the primary market opportunity out of the regional banks to come from CRE lending. So I guess, how much activity have you seen so far on the CRE lending front? What steps might you need to take to enhance the platform, if at all, in terms of hiring or build outs, in order to best capture the market opportunity set that you guys see? Thanks, Mike. Yeah, I don't think that we need to do a lot more, you know, than we're currently doing. We have a very well-developed team, both in the U.S. and in Europe. We've been building capability in Asia Pacific as well. As we highlighted on our prepared remarks, we have been forming capital, and we'll continue to do so. I think, you know, when you think about what's going on in the world of commercial real estate and the change in basis, most of the exciting stuff is gonna be happening, you know, in the top to middle part of the balance sheet of these entities, and that's gonna be a combination of real estate lending solutions, real estate secondaries, structured equity through our opportunistic real estate business, and obviously, we have large teams against all three of those. So I think the bigger issue is really gonna be, you know, investor behavior, because as much as everybody appreciates how big of an opportunity that is, you have a lot of investors that are also, you know, playing defense within their existing exposures. And until they kind of get their heads around what it is that they currently own, I think it's gonna be a little hard for them to get on offense. So I think for me, it's really gonna be all on the capital side, not the capability side. Okay, thanks. So just a follow-up question. Wanted to circle back to your comments on deployment. I think you mentioned that you were encouraged by the activity so far here in the fourth quarter and the pipeline. I think you mentioned alternative credit, busiest part of the firm. Just wanted to double-click on that, if you could maybe just elaborate a little bit more. You know, it picked up in the third quarter here, but what's the opportunity set for the deployment activity to broaden out beyond alternative credit, beyond credit, into some of the other areas of the firm? And how do you see deployment activity evolving as you look out over the next 12-24 months? And maybe you could just remind us around some of the seasonality. Does that broadly pick up in Q4 and then slow down in the first quarter? Sure. I'll try to hit this from a couple different places. Number one, I think given the diversity of strategies that we have, similar to my comments on fundraising, I'll make a similar commentary on deployment, which is, you know, when you look at the deployment experience, you'll see, you know, obviously a slowdown, but on a relative basis, still healthy deployment. So if you look a year ago, Q3 2022, we deployed about $18.3 billion, obviously led by credit. And in Q3 2023, we deployed $16.7 billion, and that was up from $15.2 billion last quarter. So you kind of begin to see these ranges emerge. If you look at it on an LTM basis, LTM this year, about $66 billion. LTM last year, about $90 billion. So obviously, if we get into a market where we're seeing heightened transaction activity, that also gives you another, you know, way to think about the range of outcomes. And then just measure that against the $100 billion of dry powder that we referenced earlier, and it'll give you a general sense for where we are, from a deployment opportunity standpoint as we deploy the dry powder. Most of what is happening now, and it goes back to what I just talked about with real estate, is gonna be in and around the opportunistic sides of the business: rescue lending, opportunistic refinancings, secondaries, you know, structured equity, et cetera, because the new issue volumes, both in corporate private equity and institutional real estate are slow. We continue to have a competitive advantage, just given our incumbency and the size of our portfolio. So if you look at our U.S. and European direct lending portfolios, you'll see, you know, continuing 40%-50% of deal volume at Ares is coming from the installed book of business. And so that's a nice, you know, ballast as you think about the ability to deploy into a, you know, a tougher new issue market. I am optimistic that that transaction volume will pick up. We're seeing it build in the pipelines. If you talk to the sell side, they'll tell you that there's a significant pent-up demand for asset sales to be coming to market. We're seeing it across the platform. But the math of it, if you just look at, for example, private equity, and you say, today, buyout funds are sitting on about $2.8 trillion of unexited assets relative to about $1.1 trillion of dry powder. And if you look at that installed base or the aging of it, 50% of the companies that are currently owned by buyout funds are, have been owned in excess of four years. And so if you just think about the weight of that money needing to transact and return capital to LPs, while most of what we're doing is kind of on that opportunistic side, I still believe that you're gonna see new transaction volumes pick up, particularly now that you're getting into a, you know, a stabilized rate environment. Great. Thank you. Our next question comes from the line of Patrick Davitt with Autonomous Research. Please proceed with your question. Hey, thanks for the questions. A quick follow-up on that one. Is the cadence of the pipeline building more of a 2024 pop, or, or should we expect to pick up, you know, more immediately in 4Q? I think Q4 is shaping up nicely. You know, again, it's always, there's always a seasonal pickup in Q4 as people rush to get deals done by year-end, typically, you know, just around tax planning and closing out the year. So, you know, there is always a flurry of activity towards the end of the year. Sometimes that slips, sometimes it doesn't. But I would expect that it will be a nice, nice ramp through Q4 and then into Q1, just based on everything I'm seeing. Great. Then, high-level question: There was a rating agency out last week with a report showing large direct lending deals increasingly coming with no maintenance covenants, I think trying to argue that there's more pressure to converge terms with the, the broadly syndicated market. I'm not sure how they even know that, given these are private deals, but is that a trend you're seeing? Is Ares participating, and if so, what, what is the argument, I guess, for lowering your protections to...? Yeah, I don't really know. To your point, I don't know where that's coming from. You know, you can't paint the entire private credit market with the same brush. I'll make a couple of comments. I do think that in some of these private executions that are, you know, syndicated loan proxies, one would expect that some syndicated loan documentation terms would find their way into the private market. That, to me, is not really newsworthy or noteworthy. In the core middle market, that is not the case. You know, the structures continue to be strong. They're as good as we've ever seen. The pendulum has swung to be obviously more lender-friendly than borrower-friendly, and so it feels a little sensational, but... and I would expect that that will continue. The other thing I would just point out, if you actually go back and look at the history of covenant-light loans, there's no evidence to say that covenant-light loans actually performed worse than covenanted loans. And I think the reason is twofold: one, the best quality credits are those that can actually command, you know, better structures. And number two, sad as it may be, oftentimes in syndicated structures, many of the participants in those syndicates have different, you know, structural constraints or agendas, and so when you get into a restructuring conversation, you may have a CLO that can't put new money in or can't take a ratings downgrade. You may have a credit fund that is at the end of fund life and can't participate in a junior security. And so there's all sorts of friction that you see in those syndicated loans that, frankly, when you have no covenants, it's protective of value, and I think that's why you could argue pretty strongly that covenant-light loans for the best borrowers will actually outperform. That's actually what we saw happen through the GFC. I'd make one last comment, which is why I think everybody is so excited about private credit relative to traded credit, at least vis-à-vis defaults and loss given default. When you are in a private credit instrument, covenanted or not covenanted, it's a bilateral agreement between a borrower and a lender or a very small lender group, and there is no ability for anyone else in the market with a different agenda or different entry point to come into that security and destroy value. Oftentimes in the traded market, obviously, you can see people coming into capital structure and being disruptive in a way that you just don't see in the private market. So even in the absence of covenants, they perform differently because you restructure them through a bilateral negotiation between borrower and lender. And, you know, the deals that are getting done are no different than what we've seen for the last 30 years. Makes sense. Thank you. Our next question comes from the line of Mike Brown with KBW. Please proceed with your question. Great. I just wanted to follow up on the European waterfall fund dynamic. So, Jarrod, it sounds like the amount that you guys were guiding to for the cumulative 2024 and 2025 period would be about in line with the base estimate that you had talked about in the past. You did talk about potential for a high estimate of $650 previously, if I recall correctly. So, should we just assume that that perhaps has been pushed out based on some of the duration commentary that you talked about? Or does that high estimate still hold, and it's just a matter of the range is still, you know, somewhat wide and timing is still, you know, relatively uncertain at this point? I think it's more a case of that. It's in terms of looking at the overall environment, again, as I mentioned earlier in the call, if we start to see repayments happen faster, well, you're going to come closer to that higher end of the range because you're pulling a lot of that up. We're trying to be as accurate as we can with that lower end of the range. But yeah, I wouldn't say that there's really a change to the range. The good news is, as I mentioned earlier again, is that the accrued balance continues to grow, and this is actually an advantageous market for that to be occurring in terms of extending the duration. Okay, great. Thanks for that clarification. And I guess, you know, the credit metrics, they just continue to hold up really well and seem to really be outperforming expectations. What is really kind of driving that strength in your view here, particularly for Ares? And then when does the pressure from higher rates on cash flows really start to have a greater impact? You know, what would kind of be your outlook here on the credit side if we think out over the next 12-18 months? You know, it's funny 'cause we have not been in the, you know, recession camp for quite some time, and I think everyone just continues to, you know, hope for it for some reason. It's just not coming. And the simple answer, without being cheeky, is we just put up a 4.5%+ GDP print in the quarter, and the economy is really strong. And we're seeing that play out in our portfolios, and we've tried to articulate that, you know, one of the benefits that we have, given the breadth of our platform, is that we're seeing private market information roll through on a monthly basis. And, you know, for, for the most part, we're seeing, you know, broad strength. There are obviously pockets of the economy that are, are weakening. There are certain segments of the consumer economy that are weaker, but, you know, taken in the aggregate, it paints a picture of continued economic strength. I think Kipp and the team have done a good job talking about, you know, the credit metrics at ARCC, and I'd reiterate they're consistent across the private credit book. But the biggest protection is coming from the loan-to-value positioning of those portfolios and the continued growth in EBITDA, which is obviously promoting dollar deleveraging. If you look at where those books sit today, they're at about a 1.6-1.7 times interest coverage ratio on a very conservative definition of interest coverage, meaning, you know, pro forma for today's rate environment, not trailing. And I think we all would agree that whether we get one or two hikes here, that we're towards the end. And so I think we feel more confident than we have that we know... you know, we know that we're in a safe place in terms of the interest coverage ratio. Obviously, at these levels, if rates stay higher for longer, any diminishment in, you know, fundamental performance, you'll be having more conversations with more owners of companies and assets than we're having now. But again, I just want to highlight that is not necessarily a bad thing for credit performance. And, and, you know, if the past is any indicator, that probably has those books generating higher net rates of return, given their ability to participate in equity value and to get incremental margin and, and fees. And so again, I think the books are in a really good spot right now. Okay, great. Thank you, Mike, and thank you, Jarrod. We have reached the end of the question and answer session. Therefore, I will turn the call back over to Michael Arougheti for closing remarks. Operator, Craig Siegenthaler missed the answer to one question, so we're going to repeat that before Mike's closing remarks. Craig asked, "What verticals in the alternative credit space is he most focused on or we're most focused on? What are we avoiding? And does Ares need to move this business further horizontally to fill in additional white spaces where you might now have investment staff today? Sure. So I hope what I say now is consistent with what I said before, at least from what you guys heard. Look, the simple answer is I do not think that we need to add capability. One of the reasons why our business is growing the way that it is, is that we are, you know, one of the larger teams and one of the better capitalized platforms in the market. We have a fully developed capability around, you know, most of the important, relevant, large segments of alternative credit. And that is a big advantage. This is a market that, like other parts of the private credit landscape, is moving to scale. We're obviously growing alongside of it, and as we grow, we continue to invest in, you know, in capability, both in different geographies and around different asset classes, but not a big build in order to capture the full, you know, the full market opportunity. So again, it's gonna be about just continuing to form capital, drive partnerships with other market participants and the banks. Places that we're spending a lot of time on right now, as we've talked about, are bank asset portfolios, and lender finance, including NAV lending. You know, NAV lending is a $100 billion market opportunity in my estimation, and we're uniquely positioned to execute. We are working on a number of what I would call rescue loans and structured equity-type investments into the financial services market, for good platforms with bad balance sheets, and so I'd expect that you'll see more of that. Eventually, I think the consumer part of the business will turn on. As I said earlier, there's about $2 trillion of consumer loans sitting on bank balance sheets that we think are gonna need some form of resolution, which is a pretty big addressable market for us. And Craig had asked if there are things that we avoid. I think generally, the team has done a good job, you know, saying that there are certain things that we, you know, categorically avoid, like patent litigation, for example, or viaticals. You know, but at the end of the day, the whole reason for this platform to exist is to be able to move around with a really good relative value lens between the different parts of the alternative credit landscape and the different geographies. So we're pretty excited about what, what lies ahead for that team. Okay. So thanks, Carl, for pulling us back online, and sorry, Craig, that we, we didn't get to you the first time around. I didn't have anything to say other than, again, to thank everybody for their time today and, and continued support. We look forward to seeing everybody next quarter, and Happy Halloween. Ladies and gentlemen, this concludes our conference call for today. If you missed any part of today's call, an archived replay of this conference call will be available through November 28, 2023, by dialing 877-660-6853, and for international callers by dialing 201-612-7415. For all replays, please reference conference number 13740717. An archived replay will also be available on a webcast link located on the homepage of the Investor Resources section of our website.