First Brands' Fram air filters at an auto parts store in Provo, Utah. Recent failures in the credit markets, including First Brands Group and Tricolor Holdings, have fueled a frenzy around how much risk is sitting in private debt portfolios. But for Ares Management Corp. executives, the losses actually make private credit look good, while presenting an opportunity to snag more deals. Neither of the collapses are “really impacting our market that much so far,” Kort Schnabel, the chief executive officer of ...

Core Insights - Ares Management Corporation has successfully raised approximately $1.5 billion for its Ares Direct Lending's dedicated specialty healthcare strategy, which includes the final closing of the inaugural Ares Specialty Healthcare Fund [1] Group 1: Fundraising and Strategy - The capital raised will support both sponsored and non-sponsored specialty healthcare companies [1] - The fundraising includes anticipated leverage, indicating a strategy to enhance investment capacity [1]

Core Viewpoint - Ares Management and Slate Asset Management have agreed to acquire a portfolio of 36 properties in Poland valued at over €300 million from Trei Real Estate, highlighting confidence in the Polish real estate market and the European retail sector [1][3]. Company Overview - Ares Management Corporation is a leading global alternative investment manager with over $572 billion in assets under management as of June 30, 2025, and has been investing in Polish real estate for over two decades [6]. - Slate Asset Management has been active in the European real estate market since 2016, completing over €1 billion in essential real estate acquisitions in 2025 alone, and this acquisition marks its first investment in Poland [4][7]. Portfolio Details - The acquired portfolio consists of 36 recently developed and fully occupied convenience-led retail parks located in major Polish metropolitan areas, with income primarily derived from large regional retailers and essential goods providers [2][4]. - The assets are protected against inflation through CPI-linked lease agreements with tenants that have strong covenants [2]. Strategic Intent - Ares Management views the portfolio as an opportunity for additional value creation and plans to work closely with Slate to unlock its full potential [3]. - Slate Asset Management aims to enhance its exposure to high-quality essential real estate in Europe, focusing on convenience and necessity-based retail [4]. Transaction Timeline - The transaction is expected to close by December 31, 2025, pending customary and regulatory approvals [5].

Core Insights - GreenBarn Investment Group and Sabal Investment Holdings announced a partnership for the refinancing of 817 Broadway, involving a $37.5 million mezzanine loan and a $91 million senior mortgage from Ares Real Estate funds [1][4] Company Overview - 817 Broadway is a 14-story, 140,000-square-foot Class A office building located in Greenwich Village, developed by Taconic Partners. The building has undergone extensive renovations while preserving its historic character [2][3] - The property is fully leased and serves as a hub for various leading firms, including Union Square Partners and Unity Technologies, and features a notable Italian restaurant, Leon's [3] Investment Strategy - GreenBarn's investment strategy focuses on identifying best-in-class assets that provide attractive risk-adjusted returns, with a strong demand for high-quality office space in the area [4] - Taconic Partners expressed confidence in the New York City office market and aims to expand its portfolio through strategic refinancing [4][6] - Sabal Investment Holdings targets high-quality debt and preferred equity investments in prime markets, maintaining confidence in the long-term strength of New York City's office market [4][5] Market Context - Ares Management Corporation, with over $572 billion in assets under management as of June 30, 2025, plays a significant role in providing flexible capital across various asset classes, including real estate [8]

Core Viewpoint - High-yield alternative asset management firms are facing stock price pressure due to a series of high-profile bankruptcies raising concerns about bad debts, but Goldman Sachs sees this as a potential "buying opportunity" for Apollo Global Management, Ares Management, and Blue Owl Capital [1][2] Group 1: Market Sentiment and Stock Performance - The recent bankruptcies of First Brands and Tricolor have heightened tension in the debt market, with JPMorgan CEO Jamie Dimon warning that seeing one "cockroach" often indicates more to come [1] - Year-to-date, Apollo Global Management's stock has dropped approximately 13%, Ares Management by about 18%, and Blue Owl Capital nearly 30% [1] - Goldman Sachs notes that the current risk-reward ratio for these three companies is becoming increasingly attractive, maintaining a "buy" rating for Apollo and Ares, while giving Blue Owl a "neutral" rating [1] Group 2: Default Risks and Private Credit - Current market focus on defaults is primarily on traditional bank-led syndicate loans rather than private credit, with non-performing loans in private credit at only about 1%, significantly lower than the 3%-4% peak during past downturns and 7%-8% during the financial crisis [1] - Even if defaults are controlled, asset management companies' stock prices may still be pressured by redemption pressures, which could weaken fee income [2] - Private credit funds typically have long lock-up periods, and retail funds often limit quarterly redemptions to 5% of assets, which helps stabilize management fees despite market fluctuations [2] Group 3: Valuation and Future Outlook - The private credit concept has been overly successful in the past three years, leading to inflated expectations and stock prices for asset management companies [2] - Despite potential pressures in 2025, these companies have significantly outperformed the S&P 500 over the past three years [2] - Current valuations reflect this reality, with Ares' forward P/E ratio over 24 times (up from 17 times three years ago), Apollo at 14 times (up from 8 times), and Blue Owl at 17 times (up from 14 times) [2] - The combination of manageable bad debts, limited redemptions, stable fee bases, and valuation corrections suggests that current pullbacks may present opportunities for long-term investors rather than signaling an end [2]

Group 1 - Ares Management Corporation has appointed Bill Benjamin as Vice Chairman, effective January 1, 2026 [1] - Bill Benjamin is currently the Co-Head of Ares Real Estate [1] - Julie Solomon will continue to lead the Ares Real Estate team as the global Head of Real Estate [1] Group 2 - Bill Benjamin will report to Kipp deVeer and Blair Jacobson, who are Co-Presidents of Ares [1]

Core Viewpoint - The bankruptcy of First Brands has triggered a significant decline in the stock prices of major private equity (PE) firms, despite the overall stability of the U.S. stock market, indicating a deep-rooted concern about the financial health of the private credit market and its potential systemic risks [2][3][19]. Group 1: Impact of First Brands Bankruptcy - First Brands filed for bankruptcy on September 28, with liabilities estimated between $10 billion and $50 billion and assets between $1 billion and $10 billion [18]. - The bankruptcy has affected numerous lenders, including traditional financial institutions and private credit funds, leading to concerns about broader implications for the financial system [18][19]. - The incident has raised fears that First Brands' collapse could be the first in a series of failures, potentially leading to a wider financial crisis, reminiscent of the subprime mortgage crisis [18][19]. Group 2: First Brands Company Overview - First Brands was a rapidly expanding automotive parts manufacturer, focusing on the aftermarket with a wide range of products [4][8]. - The company was founded in 2013 and grew through aggressive acquisitions, becoming a major player in the automotive aftermarket by 2024, with net sales reaching $5 billion [8][10]. - The company employed a "paired acquisition" strategy, acquiring brands with strong market presence and those with local manufacturing capabilities to enhance production efficiency [7][10]. Group 3: Financial Practices and Risks - First Brands' expansion was heavily financed through unconventional means, including private credit and complex off-balance-sheet financing, leading to a significant accumulation of hidden debt [11][12]. - The lack of regulatory oversight allowed First Brands to avoid disclosing the full extent of its off-balance-sheet liabilities, creating a misleading picture of its financial health [11][12]. - The company's financial troubles became apparent when it attempted to refinance $6.2 billion in debt, leading to a collapse in bond prices and a downgrade to junk status by rating agencies [12][13]. Group 4: Broader Industry Implications - The rapid growth of the private credit market, which has expanded tenfold over the past decade, has created a new "shadow banking" system, raising concerns about the quality of assets held by investors [19]. - Major PE firms, despite not being directly linked to First Brands, have seen their stock prices decline due to fears surrounding their own private credit operations, which have become crucial revenue sources [19].

Core Insights - LenderMAC has entered into a strategic relationship with Ares Alternative Credit funds, involving a structured debt investment and buying arrangement, which will enhance LenderMAC's growth and origination efforts [1][2] - The partnership is expected to accelerate LenderMAC's growth trajectory in 2026, as the company aims to expand its product offerings and customer base while maintaining cost efficiency for homeowners [2] Company Overview - LenderMAC, founded in 2021 and headquartered in Cypress, California, specializes in a diversified portfolio of mortgage products and services, focusing on innovative lending solutions [4] - Since its acquisition in May 2025, LenderMAC has achieved significant milestones, including establishing a wholesale channel, expanding its lending footprint to over 20 states, and funding its first $100 million in loans [2] Strategic Developments - The collaboration with Ares is seen as a significant opportunity for LenderMAC to capitalize on market growth, with Ares expressing enthusiasm about working with LenderMAC's management team [3] - LenderMAC has refined its AI platform to enhance operational efficiency, including the development of a bank statement analyzer and other AI-driven initiatives [2] Ares Management Overview - Ares Management Corporation is a leading global alternative investment manager with over $572 billion in assets under management as of June 30, 2025, offering investment solutions across various asset classes [5]

Core Viewpoint - The recent turmoil in the credit market has ignited a debate between banks and private credit firms regarding their resilience in the face of potential downturns, highlighted by JPMorgan's losses and responses from private credit executives [1][2][3]. Group 1: Bank and Private Credit Dynamics - JPMorgan Chase's CEO Jamie Dimon pointed to the bank's losses from Tricolor Holdings as indicative of broader issues in the credit market, suggesting that problems are not isolated [1][7]. - Blue Owl Capital's Marc Lipschultz countered that the issues stem from loans led by banks, urging Dimon to examine his own institution's practices [2][3]. - The conflict reflects the shifting landscape in financing, where banks must adapt to the growing presence of private credit firms, which have begun to encroach on traditional banking roles [3][4]. Group 2: Market Conditions and Risks - The current environment is described as fraught with risks, with experts noting that both banks and private credit firms are facing challenges [4][5]. - Dimon expressed concerns about the underwriting standards of some nonbank lenders, suggesting that a downturn could lead to increased credit losses [6][7]. - The private credit industry is experiencing scrutiny as it navigates a period of potential higher defaults, with significant implications for its growth trajectory [10][12]. Group 3: Performance Indicators - Private credit firms, including Blue Owl, are seeing their shares decline, with Blue Owl's stock down 27% this year, indicating market skepticism about their stability [13][14]. - The rise in payment-in-kind (PIK) investments within Blue Owl's portfolio, which defers cash interest payments, signals stress in the sector [14]. - Executives from private credit firms argue that their business models require more rigorous diligence compared to traditional banks, which may mitigate some risks [11][12].

Core Insights - Ares Management (ARES) shares increased by 4.1% to $149.58, following a significant volume of trading, contrasting with a 20.2% loss over the past four weeks [1] - The stock's rise is attributed to strategic acquisitions and analyst upgrades, including an upgrade to Outperform by Oppenheimer, highlighting the stock's attractive valuation [2] - Ares Management announced the acquisition of a stake in a diversified U.S. renewable energy portfolio from EDP Renovaveis, driven by demand in sectors like data centers and AI [2] Financial Performance Expectations - Ares Management is projected to report quarterly earnings of $1.14 per share, reflecting a year-over-year increase of 20%, with revenues expected to reach $1.1 billion, a 37.3% increase from the previous year [3] - However, the consensus EPS estimate has been revised 1.1% lower over the last 30 days, indicating a negative trend in earnings estimate revisions, which typically does not lead to price appreciation [4] Industry Context - Ares Management holds a Zacks Rank of 3 (Hold), while Invesco (IVZ), another company in the same financial investment management industry, has a Zacks Rank of 2 (Buy) and has seen a 0.7% increase in its stock price [5][6]