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SEGMENT REPORTING | 6 Months Ended
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Jun. 30, 2023
Segment Reporting [Abstract] |
SEGMENT REPORTING | 13. SEGMENT REPORTING The Company operates through its distinct operating segments. On March 31, 2023, the Company executed the SSG Buyout. The Company rebranded Ares SSG as Ares Asia and the Ares SSG credit business, including the Asian special situations, Asian secured lending and APAC direct lending strategies, as Asia credit. Asia credit has been reclassified effective January 1, 2023 and is now presented within the Credit Group. In connection with this reclassification, the Company will no longer use Strategic Initiatives to describe all other operating segments, instead reporting the collective results as Other. The Company reclassified activities of Asia credit to the Credit Group to better align the segment presentation with the global asset classes and investment strategies. The Company has modified historical results to conform with its current presentation. The Company operating segments are summarized below: Credit Group: The Credit Group manages credit strategies across the liquid and illiquid spectrum, including liquid credit, alternative credit and direct lending. Our liquid credit investment solutions help traditional fixed income investors access the syndicated loan and high yield bond markets and capitalize on opportunities across multi-asset credit. The syndicated loans strategy focuses on evaluating individual credit opportunities related primarily to non-investment grade senior secured loans and primarily targets first lien secured debt, with a secondary focus on second lien secured loans and subordinated and other unsecured loans. The high yield bond strategy seeks to deliver a diversified portfolio of liquid, traded non-investment grade corporate bonds, including secured, unsecured and subordinated debt instruments. Multi-asset credit is a “go anywhere” strategy designed to offer investors a flexible solution to global credit investing by allowing us to tactically allocate between multiple asset classes in various market conditions. The alternative credit strategy seeks to capitalize on asset-focused investment opportunities that fall outside of traditional, well-defined markets such as corporate debt, real estate and private equity. The alternative credit strategy emphasizes downside protection and capital preservation through a focus on investments that tend to share the following key attributes: asset security, covenants, structural protections and cash flow velocity. The direct lending strategy is one of the largest self-originating direct lenders, lending in the U.S., European and Asia-Pacific markets with a multi-channel origination strategy designed to address a broad set of investment opportunities in the middle market. The direct lending team maintains a flexible investment strategy with the capability to invest in first lien senior secured loans (including unitranche loans which are loans that combine senior and subordinated debt, generally in a first lien position), second lien senior secured loans, subordinated debt, preferred equity and non-control equity co-investments in private middle market companies. U.S. direct lending activities are managed through a publicly-traded business development company (“BDC”), Ares Capital Corporation (“ARCC”), our non-traded BDC, Ares Strategic Income Fund (“ASIF”), as well as through private commingled funds and separately managed accounts (“SMAs”). Our Asia credit platform provides flexible, value-add capital solutions to complex situations through our local origination presence and experience. Private Equity Group: The Private Equity Group broadly categorizes its investment strategies as corporate private equity and special opportunities. In the corporate private equity strategy, the Company targets four principal transactions types: (i) prudently leveraged control buyouts; (ii) growth equity; (iii) rescue capital and (iv) distressed-for-control. This differentiated strategy, together with the broad resources of the Ares platform, widens our universe of potential investment opportunities and allows us to remain active across various market environments and to be highly selective in making investments by identifying the most attractive relative value opportunities. In the special opportunities strategy, the Company employs a flexible capital strategy to finance debt and non-control equity solutions in middle market companies undergoing transformational change or stress. The strategy seeks to consistently invest in a range of private, special-situation opportunities and flex into distressed public market debt when attractive. Real Assets Group: The Real Assets Group manages comprehensive equity and debt strategies across real estate and infrastructure investments. The real estate strategy focuses on activities categorized as core/core-plus, value-add, opportunistic and debt. Real estate equity strategies involve high-quality properties and locations and de-risked developments with an opportunity to create value through repositioning, lease-up, re-tenanting, redevelopment, and/or complex recapitalizations. The U.S. core/core-plus investment activities focuses on the acquisition of assets with strong long-term cash flow potential and durable tenancy diversified across end-user industries and geographies. The value-add investment activities focus on acquiring underperforming, income-producing, institutional-quality assets that can be improved through select value-creation initiatives across the U.S. and Europe. The opportunistic activities focus on capitalizing on distressed and special situations, repositioning underperforming assets and undertaking select development and redevelopment projects across the U.S. and Europe. The real estate debt strategy primarily focuses on directly originating a wide range of financing opportunities in the U.S. and Europe leveraging the Real Asset Group’s diverse sources of capital. In addition to managing private commingled funds and SMAs investing in equity and debt strategies, the real estate strategy also makes investments through Ares Real Estate Income Trust, Inc. (“AREIT”) and Ares Industrial Real Estate Income Trust, Inc. (“AIREIT”), its non-traded REITs, and ACRE, a publicly traded commercial mortgage REIT. The infrastructure strategy focuses on investment strategies broadly categorized as infrastructure opportunities and infrastructure debt. Infrastructure opportunities is a market leader in infrastructure and power investing with a focus on climate infrastructure, natural gas generation and energy transportation sectors. The infrastructure opportunities strategy targets essential infrastructure assets and companies with stable cash flow profiles through long-term contracts and high-barriers to entry. The infrastructure debt strategy targets global assets and businesses with defensive characteristics across the digital, transport, energy and utility sectors. Leveraging the established long standing relationships, the strategy seeks to generate exclusive deal flow and high-quality investment opportunities. Secondaries Group: The Secondaries Group invests in secondary markets across a range of alternative asset class strategies, including private equity, real estate, infrastructure and credit. The Company acquires interests across a range of partnership vehicles, including funds, multi-asset portfolios and single asset joint ventures. Activities within each strategy include recapitalizing and restructuring the funds, including transactions that can address pending fund maturity, strategy change or the need for additional equity capital. The private equity secondaries strategy seeks to achieve attractive secondary cash flow and diversification characteristics by investing across the spectrum of private equity secondaries transactions, including through Ares Private Markets Fund (“APMF”). In the real estate secondaries strategy, the Company seeks broad diversification by property sector and geography and to drive investment results through underwriting, transaction structuring and portfolio construction. In the infrastructure secondaries strategy, the Company focuses on achieving diversification through a portfolio that provides inflation protection and exposure to uncorrelated assets. The credit secondaries strategy seeks to create a highly diversified portfolio of primarily senior secured private credit interests across North America and Europe, acquired directly or indirectly through secondary market transactions. Other: Other represents a compilation of operating segments and strategic investments that seek to expand the Company’s reach and its scale in new and existing global markets but individually do not meet reporting thresholds. These results include activities from: (i) Ares Insurance Solutions (“AIS”), the Company’s insurance platform that provides solutions to insurance clients including asset management, capital solutions and corporate development and (ii) the SPACs sponsored by the Company, among others. The OMG consists of shared resource groups to support the Company’s operating segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, legal, compliance, human resources, strategy, relationship management and distribution. The OMG includes Ares Wealth Management Solutions, LLC (“AWMS”) that facilitates the product development, distribution, marketing and client management activities for investment offerings in the global wealth management channel. Additionally, the OMG provides services to certain of the Company’s managed funds and vehicles, which reimburse the OMG for expenses equal to the costs of services provided. The OMG’s revenues and expenses are not allocated to the Company’s operating segments but the Company does consider the financial results of the OMG when evaluating its financial performance. Segment Profit Measures: These measures supplement and should be considered in addition to, and not in lieu of, the Condensed Consolidated Statements of Operations prepared in accordance with GAAP. Fee related earnings (“FRE”) is used to assess core operating performance by determining whether recurring revenue, primarily consisting of management fees and fee related performance revenues, is sufficient to cover operating expenses and to generate profits. FRE differs from income before taxes computed in accordance with GAAP as it excludes net performance income, investment income from our funds and adjusts for certain other items that the Company believes are not indicative of its core operating performance. Fee related performance revenues, together with fee related performance compensation, is presented within FRE because it represents incentive fees from perpetual capital vehicles that is measured and received on a recurring basis and not dependent on realization events from the underlying investments. Realized income (“RI”) is an operating metric used by management to evaluate performance of the business based on operating performance and the contribution of each of the business segments to that performance, while removing the fluctuations of unrealized income and expenses, which may or may not be eventually realized at the levels presented and whose realizations depend more on future outcomes than current business operations. RI differs from income before taxes by excluding: (i) operating results of the Consolidated Funds; (ii) depreciation and amortization expense; (iii) the effects of changes arising from corporate actions; (iv) unrealized gains and losses related to carried interest, incentive fees and investment performance; and adjusting for certain other items that the Company believes are not indicative of operating performance. Changes arising from corporate actions include equity-based compensation expenses, the amortization of intangible assets, transaction costs associated with mergers, acquisitions and capital activities, underwriting costs and expenses incurred in connection with corporate reorganization. Placement fee adjustment represents the net portion of either expense deferral or amortization that is required to match the timing of expense recognition with the period over which management fees are expected to be earned from the associated fund for segment purposes but have been expensed up front in accordance with GAAP. For periods in which the amortization of placement fees for segment purposes is higher than the GAAP expense, the placement fee adjustment is presented as a reduction to RI. Management believes RI is a more appropriate metric to evaluate the Company’s current business operations. Management makes operating decisions and assesses the performance of each of the Company’s business segments based on financial and operating metrics and other data that is presented before giving effect to the consolidation of any of the Consolidated Funds. Consequently, all segment data excludes the assets, liabilities and operating results related to the Consolidated Funds and non-consolidated funds. Total assets by segments is not disclosed because such information is not used by the Company’s chief operating decision maker in evaluating the segments. The following tables present the financial results for the Company’s operating segments, as well as the OMG:
| Three months ended June 30, 2023
| Credit Group |  | Private Equity Group |  | Real Assets Group |  | Secondaries Group |  | Other |  | Total Segments |  | OMG |  | Total
Management fees | $ | 422,662 |  |  | $ | 55,518 |  |  | $ | 95,239 |  |  | $ | 41,785 |  |  | $ | 6,548 |  |  | $ | 621,752 |  |  | $ | — |  |  | $ | 621,752 |
Fee related performance revenues | 222 |  |  | — |  |  | 334 |  |  | 298 |  |  | — |  |  | 854 |  |  | — |  |  | 854 |
Other fees | 9,142 |  |  | 738 |  |  | 11,846 |  |  | 5 |  |  | 135 |  |  | 21,866 |  |  | 7,848 |  |  | 29,714 |
Compensation and benefits | (122,922) |  |  | (20,348) |  |  | (40,638) |  |  | (16,623) |  |  | (3,386) |  |  | (203,917) |  |  | (86,011) |  |  | (289,928) |
General, administrative and other expenses | (23,443) |  |  | (7,734) |  |  | (10,863) |  |  | (4,151) |  |  | (588) |  |  | (46,779) |  |  | (49,467) |  |  | (96,246) |
Fee related earnings | 285,661 |  |  | 28,174 |  |  | 55,918 |  |  | 21,314 |  |  | 2,709 |  |  | 393,776 |  |  | (127,630) |  |  | 266,146 |
Performance income—realized | 62,760 |  |  | 69,678 |  |  | 2,737 |  |  | 5,460 |  |  | — |  |  | 140,635 |  |  | — |  |  | 140,635 |
Performance related compensation—realized | (39,040) |  |  | (53,723) |  |  | (1,668) |  |  | (4,678) |  |  | — |  |  | (99,109) |  |  | — |  |  | (99,109) |
Realized net performance income | 23,720 |  |  | 15,955 |  |  | 1,069 |  |  | 782 |  |  | — |  |  | 41,526 |  |  | — |  |  | 41,526 |
Investment income (loss)—realized | 17,565 |  |  | 2,084 |  |  | (1,549) |  |  | — |  |  | — |  |  | 18,100 |  |  | — |  |  | 18,100 |
Interest and other investment income—realized | 5,672 |  |  | 1,863 |  |  | 2,393 |  |  | 182 |  |  | 1,839 |  |  | 11,949 |  |  | 328 |  |  | 12,277 |
Interest expense | (8,001) |  |  | (5,735) |  |  | (4,106) |  |  | (2,451) |  |  | (5,535) |  |  | (25,828) |  |  | (11) |  |  | (25,839) |
Realized net investment income (loss) | 15,236 |  |  | (1,788) |  |  | (3,262) |  |  | (2,269) |  |  | (3,696) |  |  | 4,221 |  |  | 317 |  |  | 4,538 |
Realized income | $ | 324,617 |  |  | $ | 42,341 |  |  | $ | 53,725 |  |  | $ | 19,827 |  |  | $ | (987) |  |  | $ | 439,523 |  |  | $ | (127,313) |  |  | $ | 312,210 |
| Three months ended June 30, 2022
| Credit Group |  | Private Equity Group |  | Real Assets Group |  | Secondaries Group |  | Other |  | Total Segments |  | OMG |  | Total
Management fees | $ | 338,134 |  |  | $ | 47,396 |  |  | $ | 90,733 |  |  | $ | 46,201 |  |  | $ | 2,417 |  |  | $ | 524,881 |  |  | $ | — |  |  | $ | 524,881 |
Fee related performance revenues | 275 |  |  | — |  |  | 965 |  |  | — |  |  | — |  |  | 1,240 |  |  | — |  |  | 1,240 |
Other fees | 6,633 |  |  | 408 |  |  | 8,565 |  |  | — |  |  | 50 |  |  | 15,656 |  |  | 6,298 |  |  | 21,954 |
Compensation and benefits | (98,688) |  |  | (24,293) |  |  | (40,599) |  |  | (15,133) |  |  | (1,398) |  |  | (180,111) |  |  | (71,341) |  |  | (251,452) |
General, administrative and other expenses | (19,445) |  |  | (7,880) |  |  | (10,639) |  |  | (2,957) |  |  | (698) |  |  | (41,619) |  |  | (35,225) |  |  | (76,844) |
Fee related earnings | 226,909 |  |  | 15,631 |  |  | 49,025 |  |  | 28,111 |  |  | 371 |  |  | 320,047 |  |  | (100,268) |  |  | 219,779 |
Performance income—realized | 48,533 |  |  | — |  |  | 17,405 |  |  | 4,156 |  |  | — |  |  | 70,094 |  |  | — |  |  | 70,094 |
Performance related compensation—realized | (29,358) |  |  | — |  |  | (11,186) |  |  | (3,514) |  |  | — |  |  | (44,058) |  |  | — |  |  | (44,058) |
Realized net performance income | 19,175 |  |  | — |  |  | 6,219 |  |  | 642 |  |  | — |  |  | 26,036 |  |  | — |  |  | 26,036 |
Investment income (loss)—realized | 1,607 |  |  | 672 |  |  | 432 |  |  | — |  |  | (1) |  |  | 2,710 |  |  | — |  |  | 2,710 |
Interest and other investment income (expense)—realized | 6,682 |  |  | 195 |  |  | 2,640 |  |  | 2,200 |  |  | 5,219 |  |  | 16,936 |  |  | (995) |  |  | 15,941 |
Interest expense | (3,657) |  |  | (3,629) |  |  | (2,713) |  |  | (1,557) |  |  | (5,486) |  |  | (17,042) |  |  | (179) |  |  | (17,221) |
Realized net investment income (loss) | 4,632 |  |  | (2,762) |  |  | 359 |  |  | 643 |  |  | (268) |  |  | 2,604 |  |  | (1,174) |  |  | 1,430 |
Realized income | $ | 250,716 |  |  | $ | 12,869 |  |  | $ | 55,603 |  |  | $ | 29,396 |  |  | $ | 103 |  |  | $ | 348,687 |  |  | $ | (101,442) |  |  | $ | 247,245 |
| Six months ended June 30, 2023
| Credit Group |  | Private Equity Group |  | Real Assets Group |  | Secondaries Group |  | Other |  | Total Segments |  | OMG |  | Total
Management fees | $ | 828,312 |  |  | $ | 110,175 |  |  | $ | 192,709 |  |  | $ | 81,648 |  |  | $ | 11,527 |  |  | $ | 1,224,371 |  |  | $ | — |  |  | $ | 1,224,371 |
Fee related performance revenues | 822 |  |  | — |  |  | 334 |  |  | 3,569 |  |  | — |  |  | 4,725 |  |  | — |  |  | 4,725 |
Other fees | 18,012 |  |  | 1,411 |  |  | 18,308 |  |  | 5 |  |  | 185 |  |  | 37,921 |  |  | 12,488 |  |  | 50,409 |
Compensation and benefits | (239,138) |  |  | (42,658) |  |  | (78,624) |  |  | (30,035) |  |  | (6,526) |  |  | (396,981) |  |  | (170,978) |  |  | (567,959) |
General, administrative and other expenses | (45,038) |  |  | (17,300) |  |  | (23,147) |  |  | (8,443) |  |  | (1,196) |  |  | (95,124) |  |  | (95,639) |  |  | (190,763) |
Fee related earnings | 562,970 |  |  | 51,628 |  |  | 109,580 |  |  | 46,744 |  |  | 3,990 |  |  | 774,912 |  |  | (254,129) |  |  | 520,783 |
Performance income—realized | 69,353 |  |  | 88,135 |  |  | 8,823 |  |  | 5,460 |  |  | — |  |  | 171,771 |  |  | — |  |  | 171,771 |
Performance related compensation—realized | (44,037) |  |  | (68,827) |  |  | (5,426) |  |  | (4,678) |  |  | — |  |  | (122,968) |  |  | — |  |  | (122,968) |
Realized net performance income | 25,316 |  |  | 19,308 |  |  | 3,397 |  |  | 782 |  |  | — |  |  | 48,803 |  |  | — |  |  | 48,803 |
Investment income (loss)—realized | 18,071 |  |  | 2,963 |  |  | (3,321) |  |  | — |  |  | 170 |  |  | 17,883 |  |  | — |  |  | 17,883 |
Interest and other investment income—realized | 12,090 |  |  | 3,724 |  |  | 4,214 |  |  | 1,407 |  |  | 8,187 |  |  | 29,622 |  |  | 236 |  |  | 29,858 |
Interest expense | (15,821) |  |  | (11,350) |  |  | (8,002) |  |  | (4,756) |  |  | (10,859) |  |  | (50,788) |  |  | (37) |  |  | (50,825) |
Realized net investment income (loss) | 14,340 |  |  | (4,663) |  |  | (7,109) |  |  | (3,349) |  |  | (2,502) |  |  | (3,283) |  |  | 199 |  |  | (3,084) |
Realized income | $ | 602,626 |  |  | $ | 66,273 |  |  | $ | 105,868 |  |  | $ | 44,177 |  |  | $ | 1,488 |  |  | $ | 820,432 |  |  | $ | (253,930) |  |  | $ | 566,502 |
| Six months ended June 30, 2022
| Credit Group |  | Private Equity Group |  | Real Assets Group |  | Secondaries Group |  | Other |  | Total Segments |  | OMG |  | Total
Management fees | $ | 655,623 |  |  | $ | 93,353 |  |  | $ | 163,220 |  |  | $ | 90,705 |  |  | $ | 4,901 |  |  | $ | 1,007,802 |  |  | $ | — |  |  | $ | 1,007,802 |
Fee related performance revenues | 12,628 |  |  | — |  |  | 1,323 |  |  | — |  |  | — |  |  | 13,951 |  |  | — |  |  | 13,951 |
Other fees | 12,399 |  |  | 705 |  |  | 16,431 |  |  | — |  |  | 100 |  |  | 29,635 |  |  | 12,174 |  |  | 41,809 |
Compensation and benefits | (209,399) |  |  | (43,859) |  |  | (74,236) |  |  | (26,773) |  |  | (3,784) |  |  | (358,051) |  |  | (135,408) |  |  | (493,459) |
General, administrative and other expenses | (37,638) |  |  | (14,168) |  |  | (18,276) |  |  | (6,035) |  |  | (928) |  |  | (77,045) |  |  | (67,609) |  |  | (144,654) |
Fee related earnings | 433,613 |  |  | 36,031 |  |  | 88,462 |  |  | 57,897 |  |  | 289 |  |  | 616,292 |  |  | (190,843) |  |  | 425,449 |
Performance income—realized | 55,896 |  |  | 2,212 |  |  | 51,698 |  |  | 4,156 |  |  | — |  |  | 113,962 |  |  | — |  |  | 113,962 |
Performance related compensation—realized | (33,938) |  |  | (1,786) |  |  | (33,395) |  |  | (3,514) |  |  | — |  |  | (72,633) |  |  | — |  |  | (72,633) |
Realized net performance income | 21,958 |  |  | 426 |  |  | 18,303 |  |  | 642 |  |  | — |  |  | 41,329 |  |  | — |  |  | 41,329 |
Investment income—realized | 2,022 |  |  | 2,275 |  |  | 3,885 |  |  | — |  |  | 860 |  |  | 9,042 |  |  | — |  |  | 9,042 |
Interest and other investment income (expense)—realized | 12,410 |  |  | 1,697 |  |  | 5,417 |  |  | 2,844 |  |  | 5,220 |  |  | 27,588 |  |  | (1,279) |  |  | 26,309 |
Interest expense | (7,125) |  |  | (7,002) |  |  | (5,102) |  |  | (2,022) |  |  | (11,270) |  |  | (32,521) |  |  | (346) |  |  | (32,867) |
Realized net investment income (loss) | 7,307 |  |  | (3,030) |  |  | 4,200 |  |  | 822 |  |  | (5,190) |  |  | 4,109 |  |  | (1,625) |  |  | 2,484 |
Realized income | $ | 462,878 |  |  | $ | 33,427 |  |  | $ | 110,965 |  |  | $ | 59,361 |  |  | $ | (4,901) |  |  | $ | 661,730 |  |  | $ | (192,468) |  |  | $ | 469,262 |
The following table presents the components of the Company’s operating segments’ revenue, expenses and realized net investment income:
| Three months ended June 30, |  | Six months ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Segment revenues |  |  |  |  |  |  |  |  |
Management fees | $ | 621,752 |  |  | $ | 524,881 |  |  | $ | 1,224,371 |  |  | $ | 1,007,802 |  |  |
Fee related performance revenues | 854 |  |  | 1,240 |  |  | 4,725 |  |  | 13,951 |  |  |
Other fees | 21,866 |  |  | 15,656 |  |  | 37,921 |  |  | 29,635 |  |  |
Performance income—realized | 140,635 |  |  | 70,094 |  |  | 171,771 |  |  | 113,962 |  |  |
Total segment revenues | $ | 785,107 |  |  | $ | 611,871 |  |  | $ | 1,438,788 |  |  | $ | 1,165,350 |  |  |
Segment expenses |  |  |  |  |  |  |  |  |
Compensation and benefits | $ | 203,917 |  |  | $ | 180,111 |  |  | $ | 396,981 |  |  | $ | 358,051 |  |  |
General, administrative and other expenses | 46,779 |  |  | 41,619 |  |  | 95,124 |  |  | 77,045 |  |  |
Performance related compensation—realized | 99,109 |  |  | 44,058 |  |  | 122,968 |  |  | 72,633 |  |  |
Total segment expenses | $ | 349,805 |  |  | $ | 265,788 |  |  | $ | 615,073 |  |  | $ | 507,729 |  |  |
Segment realized net investment income (expense) |  |  |  |  |  |  |  |  |
Investment income—realized | $ | 18,100 |  |  | $ | 2,710 |  |  | $ | 17,883 |  |  | $ | 9,042 |  |  |
Interest and other investment income —realized | 11,949 |  |  | 16,936 |  |  | 29,622 |  |  | 27,588 |  |  |
Interest expense | (25,828) |  |  | (17,042) |  |  | (50,788) |  |  | (32,521) |  |  |
Total segment realized net investment income (expense) | $ | 4,221 |  |  | $ | 2,604 |  |  | $ | (3,283) |  |  | $ | 4,109 |  |  |
The following table reconciles the Company’s consolidated revenues to segment revenue:
| Three months ended June 30, |  | Six months ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Total consolidated revenue | $ | 1,093,286 |  |  | $ | 601,430 |  |  | $ | 1,906,648 |  |  | $ | 1,316,429 |  |  |
Performance (income) loss—unrealized | (288,220) |  |  | 24,149 |  |  | (415,933) |  |  | (109,383) |  |  |
Management fees of Consolidated Funds eliminated in consolidation | 12,005 |  |  | 11,362 |  |  | 23,606 |  |  | 22,841 |  |  |
Performance income of Consolidated Funds eliminated in consolidation | 3,946 |  |  | — |  |  | 7,491 |  |  | 34 |  |  |
Administrative, transaction and other fees of Consolidated Funds eliminated in consolidation | 2,135 |  |  | 4,315 |  |  | 6,978 |  |  | 9,084 |  |  |
Administrative fees(1) | (16,888) |  |  | (15,373) |  |  | (30,538) |  |  | (34,848) |  |  |
OMG revenue | (7,848) |  |  | (6,417) |  |  | (12,488) |  |  | (12,293) |  |  |
Principal investment (income) loss, net of eliminations | (6,888) |  |  | 4,387 |  |  | (29,646) |  |  | (3,939) |  |  |
Net revenue of non-controlling interests in consolidated subsidiaries | (6,421) |  |  | (11,982) |  |  | (17,330) |  |  | (22,575) |  |  |
Total consolidation adjustments and reconciling items | (308,179) |  |  | 10,441 |  |  | (467,860) |  |  | (151,079) |  |  |
Total segment revenue | $ | 785,107 |  |  | $ | 611,871 |  |  | $ | 1,438,788 |  |  | $ | 1,165,350 |  |  |
(1)Represents administrative fees from expense reimbursements that are presented within administrative, transaction and other fees within the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting. The following table reconciles the Company’s consolidated expenses to segment expenses:
| Three months ended June 30, |  | Six months ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Total consolidated expenses | $ | 837,738 |  |  | $ | 552,868 |  |  | $ | 1,466,374 |  |  | $ | 1,164,552 |  |  |
Performance related compensation-unrealized | (215,496) |  |  | 8,549 |  |  | (300,646) |  |  | (82,649) |  |  |
Expenses of Consolidated Funds added in consolidation | (25,395) |  |  | (24,865) |  |  | (45,036) |  |  | (40,942) |  |  |
Expenses of Consolidated Funds eliminated in consolidation | 12,171 |  |  | 11,638 |  |  | 24,303 |  |  | 23,202 |  |  |
Administrative fees(1) | (16,890) |  |  | (15,958) |  |  | (30,167) |  |  | (34,848) |  |  |
OMG expenses | (135,478) |  |  | (106,566) |  |  | (266,617) |  |  | (203,017) |  |  |
Acquisition and merger-related expense | (2,757) |  |  | (1,152) |  |  | (7,712) |  |  | (10,194) |  |  |
Equity compensation expense | (62,282) |  |  | (49,559) |  |  | (131,359) |  |  | (103,161) |  |  |
Acquisition-related compensation expense(2) | (600) |  |  | (59,491) |  |  | (1,242) |  |  | (107,492) |  |  |
Placement fee adjustment | 3,744 |  |  | 1,425 |  |  | 6,976 |  |  | 2,118 |  |  |
Depreciation and amortization expense | (42,991) |  |  | (40,330) |  |  | (88,650) |  |  | (78,456) |  |  |
Expense of non-controlling interests in consolidated subsidiaries | (1,959) |  |  | (10,771) |  |  | (11,151) |  |  | (21,384) |  |  |
Total consolidation adjustments and reconciling items | (487,933) |  |  | (287,080) |  |  | (851,301) |  |  | (656,823) |  |  |
Total segment expenses | $ | 349,805 |  |  | $ | 265,788 |  |  | $ | 615,073 |  |  | $ | 507,729 |  |  |
(1)Represents administrative fees from expense reimbursements that are presented within administrative, transaction and other fees within the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting. (2)Represents contingent obligations resulting from the acquisition of Landmark Partners, LLC (the “Landmark Acquisition”), the Black Creek Acquisition and the Infrastructure Debt Acquisition that are recorded as compensation expense and are presented within compensation and benefits within the Company’s Condensed Consolidated Statements of Operations. The following table reconciles the Company’s consolidated other income to segment realized net investment income:
| Three months ended June 30, |  | Six months ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Total consolidated other income | $ | 126,421 |  |  | $ | 18,504 |  |  | $ | 182,817 |  |  | $ | 76,498 |  |  |
Investment (income) loss—unrealized | (43,939) |  |  | 2,084 |  |  | (72,924) |  |  | 9,938 |  |  |
Interest and other investment (income) loss—unrealized | 4,310 |  |  | (6,029) |  |  | 4,518 |  |  | (12,061) |  |  |
Other income from Consolidated Funds added in consolidation, net | (146,934) |  |  | (27,570) |  |  | (209,851) |  |  | (94,418) |  |  |
Other expense from Consolidated Funds eliminated in consolidation, net | (10,492) |  |  | (4,215) |  |  | (14,943) |  |  | (11,733) |  |  |
OMG other expense | 1,153 |  |  | 1,091 |  |  | 1,804 |  |  | 5,684 |  |  |
Principal investment income | 65,242 |  |  | 13,493 |  |  | 100,699 |  |  | 27,983 |  |  |
Other expense, net | 212 |  |  | 13 |  |  | 303 |  |  | 1,994 |  |  |
Other loss of non-controlling interests in consolidated subsidiaries | 8,248 |  |  | 5,233 |  |  | 4,294 |  |  | 224 |  |  |
Total consolidation adjustments and reconciling items | (122,200) |  |  | (15,900) |  |  | (186,100) |  |  | (72,389) |  |  |
Total segment realized net investment income (expense) | $ | 4,221 |  |  | $ | 2,604 |  |  | $ | (3,283) |  |  | $ | 4,109 |  |  |
The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to segment results of RI and FRE:
| Three months ended June 30, |  | Six months ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Income before taxes | $ | 381,969 |  |  | $ | 67,066 |  |  | $ | 623,091 |  |  | $ | 228,375 |  |  |
Adjustments: |  |  |  |  |  |  |  |  |
Depreciation and amortization expense | 42,991 |  |  | 40,330 |  |  | 88,650 |  |  | 78,456 |  |  |
Equity compensation expense | 62,284 |  |  | 50,144 |  |  | 130,988 |  |  | 103,161 |  |  |
Acquisition-related compensation expense(1) | 600 |  |  | 59,491 |  |  | 1,242 |  |  | 107,492 |  |  |
Acquisition and merger-related expense | 2,757 |  |  | 1,152 |  |  | 7,712 |  |  | 10,194 |  |  |
Placement fee adjustment | (3,744) |  |  | (1,425) |  |  | (6,976) |  |  | (2,118) |  |  |
OMG expense, net | 128,783 |  |  | 101,241 |  |  | 255,933 |  |  | 196,409 |  |  |
Other expense, net | 212 |  |  | 12 |  |  | 303 |  |  | 1,993 |  |  |
(Income) loss before taxes of non-controlling interests in consolidated subsidiaries | 3,786 |  |  | 4,022 |  |  | (1,885) |  |  | (967) |  |  |
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations | (67,762) |  |  | 14,999 |  |  | (94,933) |  |  | (32,408) |  |  |
Total performance (income) loss—unrealized | (288,220) |  |  | 24,149 |  |  | (415,933) |  |  | (109,383) |  |  |
Total performance related compensation—unrealized | 215,496 |  |  | (8,549) |  |  | 300,646 |  |  | 82,649 |  |  |
Total investment income—unrealized | (39,629) |  |  | (3,945) |  |  | (68,406) |  |  | (2,123) |  |  |
Realized income | 439,523 |  |  | 348,687 |  |  | 820,432 |  |  | 661,730 |  |  |
Total performance income—realized | (140,635) |  |  | (70,094) |  |  | (171,771) |  |  | (113,962) |  |  |
Total performance related compensation—realized | 99,109 |  |  | 44,058 |  |  | 122,968 |  |  | 72,633 |  |  |
Total investment (income) loss—realized | (4,221) |  |  | (2,604) |  |  | 3,283 |  |  | (4,109) |  |  |
Fee related earnings | $ | 393,776 |  |  | $ | 320,047 |  |  | $ | 774,912 |  |  | $ | 616,292 |  |  |
(1)Represents contingent obligations resulting from the Landmark Acquisition, the Black Creek Acquisition and the Infrastructure Debt Acquisition that are recorded as compensation expense and are presented within compensation and benefits within the Company’s Condensed Consolidated Statements of Operations.

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