Ares Management Corporation

Good morning, everyone. Welcome to Aries Management Corporation's fourth quarter and year-end 2024 earnings conference call. At this time, all participants are in a listen-only mode. As a reminder, this conference call is being recorded on Wednesday, February 5, 2025. I will now turn the call over to Mr. Greg Mason, Co-Head of Public Markets, Investor Relations for Aries Management. Please go ahead, sir.

Good morning, and thank you for joining us today for our fourth quarter and year-end 2024 conference call. I'm joined today by Michael Arrighetti, our Chief Executive Officer, and Jared Phillips, our Chief Financial Officer. We also have a number of executives with us today who will be available during Q&A. 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 filing. 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 ARIES or any ARIES 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 fourth quarter earnings presentation available on the investor resources section of our website for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. Note that we plan to file our Form 10-K later this month. This morning, we announced that we declared a higher level of quarterly dividends starting with our first quarter common dividend of $1.12 per share on the company's Class A and non-voting common stock, representing an increase of 20% over our dividend for the same quarter a year ago. The dividend will be paid on March 31st, 2025 to holders of record on March 17th. Jared will provide additional color on the drivers of this increase later in the call. Now, I'll turn the call over to Mike, who will start with some fourth quarter and year-end business highlights and our outlook for 2025.

Great. Thank you, Greg, and good morning, everyone. I hope you're all doing well. I'd like to start off with some really exciting news regarding enhancements to our executive management team. This morning, we announced that Tip DeVere and Blair Jacobson will be taking on newly created positions as co-presidents, effective immediately. In these new roles, Kip and Blair will be responsible for helping drive firm-wide strategic and operational initiatives and support critical investor and counterparty relationships. In addition, a key responsibility in their new role is to help develop the next generation of leaders across the platform. I've had the good fortune of being friends with Kip and Blair for over 30 years. I've had the pleasure of working with them over the past 20 as they've helped build and lead a tremendous credit franchise here at Aries, with Kip leading the global credit group and Blair co-heading the European credit business. Their experience and capabilities will be incredibly valuable as they expand their impact even further across the firm. This will also be a big benefit to me, as they'll take significant operational responsibilities off my plate, which will enable me to spend more time on our most important and impactful strategic priorities. To be clear, this move is about expanding our executive management team to more effectively lead our business, which has grown tremendously over the past several years. I want to congratulate Kip and Blair on their promotions, and I look forward to working with them in their new roles for many years to come. And now, let me begin with some high-level comments on the year. 2024 was a very good year for Aries, both financially and strategically. We celebrated the 10-year anniversary of our IPO and the 20-year anniversary of the IPO of our publicly traded BDC, Aries Capital, which is the largest of its kind in the industry. We held investor days for both companies, where we laid out our vision and strategy for continued success. We also made substantial organic and inorganic investments to bolster our growth outlook for the years ahead. ARIES set many new financial records last year, including AUM, fee-paying AUM, annual fundraising and deployment, management fees, FRE, and realized income. On a full-year basis, management fees and FRE increased 15% and 17% respectively, driven by FPAUM growth and improved FRE margins. We expect our strong growth to continue. We operate in vast addressable markets. And although we're one of the largest alternative managers, we believe that we're still in the early innings of our global expansion. We believe that retail and institutional investors remain meaningfully under allocated to the private assets that we source and invest in. We also expect the trend of increasing alternative allocations going to fewer scaled managers will continue to drive further inflows to the largest industry players, such as ourselves. To sustain our long-term growth potential, it's imperative that we continue deepening our ability to source differentiated, high-quality assets with attractive return profiles that we believe will enable us to maintain our long-term performance through cycles. To that end, we continue to invest in our origination capabilities around the globe, adding more than 100 investment professionals last year. We now have one of the largest teams in the industry, with over 1,100 Aries investment professionals sourcing thousands of investments across the risk-return spectrum in our 35-plus global offices. Adding new strategies in new markets, as evidenced by the GCP international acquisition, will only further expand and enhance our capabilities. Despite a more subdued transaction environment in 2024, we were very active using our relationships, incumbency advantages, and breadth of strategies to invest a record $106.7 billion, up more than 50% over 2023. Throughout the year, we saw our investing activities increase each quarter, finishing with over $32 billion invested during the fourth quarter. Our Q4 investment activity represented a 34% increase from the prior year period, driven by meaningful increases in U.S. private credit, real estate debt and equity, and secondary solutions. With respect to the year ahead, the current market environment is dynamic, and we're optimistic that a gradual improvement in the overall transaction environment will translate into growing net investment activity in 2025, subject to normal market seasonality. We believe that there's a meaningful amount of pent-up demand to transact, driven by the need for PE exits. As an illustration, there's over $3 trillion of unrealized value across 28,000 unsold companies in global buyout portfolios, and more than 40% of these investments are four years or older. There are also other market forces that we expect should help unlock transaction activity, including increased business confidence, the potential for less regulation, more active financing markets, improving asset values, narrowing bid-ask spreads, the return of strategic buyers, and hopefully a more constructive IPO market. We believe that our business is well-positioned with market-leading platforms in several of the fastest-growing private market segments. As we demonstrated over the last two years, we can be a supportive provider of liquidity to our many clients, even if new transaction volumes don't accelerate. In addition, once the GCP international acquisition closes, we'll have enhanced our capabilities to invest in real assets for the new economy, particularly in vertically integrated industrial real estate and digital infrastructure. The growth in the primary markets for these assets is also driving a need for greater secondary solutions. We're entering 2025 in an even stronger position to take advantage of a more active market with a record $133 billion of dry powder and the strongest array of investment strategies in our firm's history. The $81 billion of AUM raised, but that is not yet paying fees, provides us with approximately 30% embedded gross base management fee growth upon deployment. And when you combine this with our visibility around our European-style performance income, we believe that we have high visibility on our long-term growth. Our ability to generate differentiated performance across an expanding array of investment solutions through various distribution channels continues to drive our fundraising capability. In the fourth quarter, we raised a quarterly record of $28.3 billion in new capital commitments, and we set a full-year fundraising record of $92.7 billion in 2024. This full-year amount exceeded our previous annual fundraising record by more than $15 billion and showcases the depth and diversity of our fundraising platform. This fundraising momentum helped our assets under management grow by 16% year over year to over $484 billion. Importantly, this greater depth and diversification is raising our fundraising floor. In 2024, nearly 65% of our total fundraising was outside of our campaign funds, and this comprised 20% from wealth, 16% from institutional SMAs, 7% from our insurance affiliate, Aspita, and the remaining 22% from a mix of institutional open-end funds, public entities, CLOs, and other vehicles. Now I'd like to provide a few highlights from our strong Q4 fundraising results. During the fourth quarter, A6 accepted LP equity commitments of 2.8 billion euros, which brought total LP commitments for this fund to 17 billion euros. We believe that A6 is the largest institutional private credit fund ever raised globally based on LP equity commitments. This represents a more than 50% increase from the predecessor fund, and A6 received broad support from over 250 global investors, including 85 that are new to the Ares platform. Including related vehicles and anticipated leverage, the total available investment capital for the Ares European Direct Lending Strategy is expected to be approximately €30 billion. When combined with SDL3, which had its final close last quarter of approximately $34 billion in total investment capital, including related vehicles and anticipated fund leverage, we've generated approximately $65 billion of institutional drawdown capital in our direct lending strategies over the past 24 months. We're also seeing very strong demand for our open-ended European Direct Lending Fund in the Wealth Channel. After raising nearly $1.5 billion in equity commitments in 2024 and crossing its one-year anniversary last month, the fund now has AUM exceeding $2.2 billion. Continuing credit, we raised more than $15.7 billion of equity and debt across our non-traded BDC and public BDC for the full year, and we issued a record 12 CLOs totaling nearly $7 billion. Our recently launched third opportunistic credit fund began taking in capital in the fourth quarter, and we expect a significant amount of additional capital to be raised by the end of Q1. We also held a billion-dollar first close for our second sports, media, and entertainment fund, and we expect to raise significant capital in this strategy across multiple vehicles this year. Within our real assets group, the improving real estate market sentiment has already begun to materialize in our fundraising. During the fourth quarter, we continued to see strong investor demand for our real estate debt strategies, which raised $2.4 billion in the quarter. And we're in the market with the latest vintages of both our European and U.S. value-add real estate campaign funds. With respect to ARIES' sixth infrastructure debt fund in the market, we expect to reach nearly $1.5 billion in total capital shortly, and we continue to see increasing demand from investors. We also expect a final close in our second climate infrastructure fund in the first half of 2025. For the year, we raised $11.5 billion across our real assets business, and we're optimistic about the continued recovery in these markets throughout the course of 2025. In secondaries, strong fundraising across private equity, infrastructure, and credit drove the group's AUM up nearly 18% year-over-year. During the fourth quarter, our new private equity structured solutions fund raised over $500 million in its initial closing, and we raised an additional $630 million in our third infrastructure secondaries fund, including related vehicles. APMF continues to see strong fundraising momentum and exceeded $2 billion in total AUM at the end of the year. Institutional investor equity commitments and related capital totaled over $56 billion in 2024 with strong support across our platform. While we saw another strong year for credit, we were pleased to see year-over-year increase in commitments in both real assets and secondaries. We continue to deepen our relationships with our current investors who accounted for 85% of our institutional channel fundraising. We also welcome more than 300 new institutional investors to the platform in 2024. Now turning to the wealth channel, we continue to see significant opportunities to expand our business. Last year, demand for our products exceeded our ambitious expectations for the year. For the full year, we raised over $10 billion in equity and over $18 billion of total AUM, including fund leverage. Each quarter brought increased momentum, and this culminated in our highest quarterly inflows in Q4, raising $3.1 billion in equity and $6.9 billion in total AUM, including leverage. Our inflows approximately tripled year over year, and we estimate our market share increased to nearly 10%, placing us as a top free manager among our listed peers, according to third-party industry data. Our momentum has continued in January with over $1 billion in equity inflows. Industry-wide, alternative capital raised in the wealth channel doubled last year, yet we believe that we're still in the early stages of growth. High net worth individuals and investable assets experienced strong growth last year, in large part due to overweight public market exposure. However, their average allocation to alternatives remains at just 3% to 4%. And we believe that this allocation will continue to increase through education, product innovation, and expanding distribution segments like model portfolios and 401K plans. We also expect the mass affluent market and new geographies such as Japan, Canada, and Latin America to play a key role in growing the addressable universe for wealth. The competitive landscape is intensifying, but we're confident in our competitive moat, which is supported by our products, platform, performance track record, distribution scale, and key relationships. Our near-term priorities in the channel include expanding our existing funds across our current partnerships, establishing new strategic partnerships across the RIA, family office, and IBD channels, and further broadening our distribution footprint internationally. In 2025, our objective is to add each of our wealth products to new key distribution platforms, including wire houses and global private banks. Notably, in the RIA and single-family office channel, we raised $1.3 billion last year, representing 2.8 times growth from the year prior, and we expect this momentum to continue throughout 2025. Our international business remains a significant and sustainable driver of growth, with 36% of last year's capital flows coming from Europe and Asia, as compared to just 7% in 2023. In the first half of 2025, we anticipate taking in monthly subscriptions for our newest semi-liquid solution, a core infrastructure vehicle, and a sports media and entertainment vehicle, which would be intended to broaden investor access to this significant and growing market opportunity. We plan to continue delivering a suite of purpose-built solutions that showcase the best of ARIES' private market capabilities. We now have over $39 billion in AUM across eight semi-liquid products, and we are well on our way to the $100 billion target that we outlined at our investor day last year. Including our publicly traded and other vehicles in the retail channel, we're already approaching $100 billion of AUM. We also achieved a significant milestone for our affiliated insurance platform. Aspita recently announced raising over $2.3 billion in equity commitments, with more than 75% coming from third-party investors. Aspita has over $20 billion in total assets, and we believe that it has the capital required to reach $50 billion in assets by the end of 2028, which is the target that we outlined at our investor day. In 2024, Aspita's primary fixed annuity volumes nearly doubled to more than $3.8 billion, significantly outpacing the 7% growth in fixed annuity sales for the industry. Including reinsurance flows, Aspita originated over $6 billion in new premiums for the year. With strong business momentum, a robust capital base, and reinvested earnings, Aspita is well positioned to meet the growing demand for retirement products and related reinsurance solutions. Turning to our fundraising goals for the year ahead, we expect another good fundraising year in 2025. While we would not have our two largest campaign funds in the market, we expect fundraising could be only modestly lower than our record in 2024. We expect to have 19 institutional commingled funds plus another 18 continuously offered institutional and retail products actively raising capital throughout the year, excluding new funds from the GCP international acquisition. Regarding GCP international, we expect that the transaction will close in the current quarter, and we remain on track with our previously communicated financial plans for the transaction. Once we close, we believe that we will be in a favorable fundraising position with several funds in Japan, the U.S., and Europe coming to market. For example, this year we expect to launch the fifth vintage of the logistics development fund in Japan, which raised approximately $2.7 billion converted to current exchange rates in the previous vintage, and the second U.S. self-storage fund, which raised $1.5 billion in the previous vintage. In addition, GCP's data center business is seeing significant momentum, and we expect the first closings for its first Japanese data center development vehicle and the first European data center development vehicle to occur during the first half of this year, as both are experiencing strong demand. We anticipate the total final equity commitments across these two funds to be approximately $4 billion at current exchange rates. I'm excited about the great people we're adding to our team and the combined power of our two platforms. And lastly, before I turn the call over to Jared, I just wanted to acknowledge the devastating wildfires that impacted the Los Angeles community, including the loss and disruption for many of our employees and families in our LA office. We're providing significant support and resources to our ARIES team members who've been most significantly impacted. We're supporting local relief efforts through an employee giving campaign with matching contributions, and we're providing long-term support for the region through the ARIES Charitable Foundation. Our thoughts are with our colleagues and the people of L.A., and we'll continue to support those affected as the situation evolves. And now I'm going to turn the call over to Jared for his comments on our financial results and outlook. Jared, over to you.

Thanks, Mike. Good morning, everyone. As Mike stated, 2024 was a very good year for ARIES. We generated record levels of gross fundraising and deployment, which led to continued double-digit growth in our key metrics of AUM, dry powder, fee-related earnings, realized income, and many others. We also enhanced our future growth prospects by expanding our investment strategies and capabilities, both organically through targeted staffing additions to our origination teams and inorganically with the pending acquisition of GCP International and completed acquisition of Walden Street Mexico. We entered 2025 with a great deal of optimism about the continued success of our business. we are entering an economic and market environment that we expect will be more active and one that we believe will be more conducive to deployment activity for more of our investment strategies. Turning to our quarterly results, our management fees were a record $781 million. Fourth quarter fee-related performance revenues totaled $162 million, in line with our quarterly targeted range. For the full year, FRPR increased 28% versus the prior period, as we saw increased contributions from our alternative credit and secondaries products. In 2025, we expect additional growth in AUM from our direct lending, alternative credit, and secondaries funds to generate higher overall FRPR, yet growth could be modest as we factor in a full-year run rate of lower base interest rates in our direct lending FMAs. We are currently not estimating any FRPR from our real estate group in 2025, but 2026 could be in play assuming a continued recovery in the real estate market. Fee-related earnings for the full year increased 17% over the prior period, with record FRE in Q4 at $396 million. For the quarter, both compensation and G&A expenses came in slightly below our initial expectations, resulting in FRE margins of 40.9%. which was ahead of our 40% target from last quarter's call. Supplemental distribution expenses associated with our wealth management products totaled $13.6 million. Although our full-year FRE margin increased by 60 basis points to 41.5%, the increase in supplemental distribution fees from $16.7 million in 2023 to $51.2 million in 2024 created a drag on our year-over-year margin growth. However, these fees are associated with our significant momentum raising long-dated perpetual capital in the wealth channel that will generate meaningful base management fees and part one fees in the years to come. With $39 billion in AUM across our wealth management products and increasing fundraising momentum into 2025, we expect total management fees from these funds to increase more than 65% year over year to a range of $500 to $550 million. While we expect distribution expenses to increase this year given our momentum, these expenses are expected to become less impactful to our results against a growing level of management fees from wealth products in 2025 and beyond. Our realization activity increased in the fourth quarter with net realized performance income totaling $89.3 million. For the full year, we realized $148.9 million of net performance income, of which $94.5 million, or 63%, came from our European-style funds. Even with the realizations recognized during the year, our net accrued performance income on an unconsolidated basis rose by approximately $86 million, or 10%, to $1 billion at year end, with approximately $856 million, or 85%, in European-style funds. We continue to be very excited about a meaningful ramp in our net realized performance income as our growing amount of European-style funds reach their maturity and as initial vintages of certain U.S. credit campaign funds enter their waterfall payments. As we've outlined in the past, we look at our European-style net realized performance income across a two-year window, where we have a higher degree of visibility of realized income in these funds. The amount that we could receive over both the longer term and the next two years is essentially unchanged from the applicable amounts we outlined at our Investor Day presentation last year. For 2025, we continue to expect our European-style net realized performance income to more than double to a range of $225 million to $275 million, and we expect to considerably grow these amounts again in 2026. We plan to keep you updated as we progress throughout the year. Realized income for the fourth quarter totaled a record $476 million, and for the full year, it exceeded $1.4 billion, a 16% increase from 2023. For the full year 2024, our effective tax rate on our realized income was 11.7%. Our tax rate was higher in the fourth quarter due to a greater amount of net realized performance income, which generally has fewer deductions associated with it than our FRE. For 2025, we anticipated an effective tax rate on our realized income to be in the range of 11 to 15%. As of year end, our AUM totaled over $484 billion, up over 15% compared to the previous year, and was driven almost entirely by organic growth. Our fee pay and AUM totaled nearly $293 billion a year end, an increase of nearly 12% from year end 2023. As you can see in the presentation that accompanies our earnings release, our portfolios continue to perform very well. For the full year, we experienced double-digit returns in our U.S. and Europe direct lending strategies, as well as in our alternative credit, opportunistic credit, and APAC credit strategies. Credit quality underlying our U.S. and European direct lending portfolios remains strong and stable. In our U.S. direct lending portfolio, our companies generated year-over-year EBITDA growth 10.6%, and interest coverage continues to improve. ARCC reported non-accruals this morning of 1.7%, which remains well below our long-term average of 2.8% since the GFC. In real estate, the recovery of many asset class values is clearly underway. Our North American real estate equity composite had the fourth consecutive quarter of positive performance and ended the year up nearly 8% on a gross basis. Our European real estate equity composite posted the second quarter in a row of positive performance. Our infrastructure debt composite returns also continue to perform very well, up 11.7% on a gross basis for the full year. Within private equity, our most recent vintage fund, ACOF 6, is a top quartile fund in its vintage, and it generated a strong time-weighted gross return of 18.9% in 2024. Our ACOF composite portfolio companies experienced nearly 14% year-over-year organic growth in EBITDA in the fourth quarter. As I outlined at the beginning of my remarks, we're well-positioned for strong growth in 2025 that is in line with the financial targets we highlighted at our investor day. This does not account for any impact from the GCP international acquisition, which we anticipate will be an exciting addition to the long-term growth of our business. Finally, at the beginning of each year, we aim to set a fixed quarterly dividend for the coming year. Based on the significant visibility we have towards our FRE growth, we've elected to increase our dividend to $1.12, up 20% from last year. High-quality AUM across the business underpins our stable and growing FRE base, which continues to support our dividend. Our confidence in our European-style net realized performance income also enhances our ability to grow our annual dividend 20% plus each year. I'll now turn the call back over to Mike for his concluding remarks.

Great. Thanks, Jared. We're excited about the opportunities ahead for 2025. We're entering the year with a record amount of dry powder and an enhanced set of capabilities and solutions to address the diverse needs of our global client base. We expect transaction activity to expand year over year, and the new administration could provide some tailwinds for deployment, especially if an improved regulatory and antitrust environment enables more business growth and M&A activity in the market. Our growth is underpinned by generating differentiated fund performance for our investors, which is driven by our broad direct origination capability, people, institutional processes, and our strong culture. And to that end, I'm just so proud and grateful for the hard work and dedication of our employees around the globe. I'm also deeply appreciative of our investors' continuing support for our company. And with that, operator, I think we can now open up the line for questions.

Certainly, thank you, Mr. Arrighetti. Ladies and gentlemen, at this time, if you would like to ask a question, please press star 1 on your touchtone telephone. If you would like to withdraw your question, please press star 2. We ask that you please limit your questions to one initial question and then one follow-up question. We'll go first this morning to Craig Siegenthaler of Bank of America.

Good morning, Mike, Jared, and Kip and Blair. If you're on the call, congrats on the promotions.

They're here and thank you.

So I have a long-term expense question. GA expenses rose by more than 20% in 2024. And I know there's some noise in there like Crescent Point and 4Q23 that actually helped the comp, but also you had a new New York City lease coming in this year. So we wanted your high-level thoughts on the go forward core growth rate of gna and also how are supplemental distribution fees in the wealth channel a factor and then you're also closing gcp i think this quarter as you said so what will be the near-term lift from that thank you sure thanks craig uh i would say that uh

First off, going through the story of G&A this year, supplemental distribution fees are really the major driver of the changes year over year as those increase pretty dramatically up to about $50 million for the full year or about 50 basis points of what we raised. during the year of that $10.8 billion that we raised in that channel. Now, we do expect to continue to raise more in that channel and for those amounts to increase. So I would expect that those expenses would increase as well. However, the one thing I'd point out is as we open new channels of distribution, we're less reliant on those channels that charge these upfront or rev share fees. So if you look at that 50 basis points, For the full year, it was actually only 43 basis points of the capital raised in the fourth quarter. So we will still see some growth in that, and that's growth that's highly correlated to fundraising. We also have marketing events and other sales events from the institutional channel, which you'll also see correlated more to our fundraising than you will towards anything else. The remaining part of that is the occupancy expenses that you mentioned, which are probably the largest driver of our G&A expenses. As you noted, we did just bring online a couple new floors here in New York due to the expansion of our headcount. We also have our new headquarters in Los Angeles, and we're still carrying some of our old headquarters, so that will eventually roll off towards either the end of next year or early in 2027. meaning that you'll see LA expenses go down while New York will increase over the next that five-year period those expenses along with expenses like technology and items that nature are much more correlated to our headcount so as you see our headcount grow you will see that that GNA expense grow now as we've been able to show scale we would look to revenues growing at a higher percentage than our both headcount and therefore those GNA expenses. And then maybe the last point to bring in is the GCP acquisition, which will bring in some new expenses in GNA. However, we talked about it in our call when we announced the acquisition that their margins were relatively similar to the margins that we see in our current real estate business. excluding the impact of data centers, which right now is we mapped out at about $20 million FRE drag as we wait for funds to launch out of that space, which we expect will be in the near term, but we'll carry that essentially expense load until you start to see those data centers launched off the platform.

Thank you, Jared. Just my follow-up from Mike. Mike, given your change in responsibilities now with the elevation of KIPP and Blair, it sounds like you're going to be more focused. So, curious, what are the two or three biggest strategic initiatives that you plan to focus on now?

Sure. Thanks, Greg. So, let me maybe rephrase your question in two ways. I am not changing my responsibilities. KIPP has been my friend and partner for 35 years. Blair, same, almost 30 years. I view this as an expansion of the management capacity and strategic capacity of the enterprise. And I think we're really blessed and privileged that we have such a deep bench of people that we can do things like this while we're all still young and energized and focused. So really, I've asked Kip and Blair to work with me on the highest impact growth opportunities, which right now are get the integration of GCP right and position it for growth. As we've talked about, there's a significant opportunity to bring together our infrastructure and real assets platform to capitalize on the opportunity in digital infra and new economy real estate. We have the opportunity, given our leadership position in corporate credit, to continue to expand our market share in real estate and infrastructure lending. And obviously, Kip and Blair have a significant amount of experience and credibility in the private credit market to lend their expertise as we continue to scale into those market opportunities. As you know, Craig, we have a differentiated approach to insurance, but our insurance system capability continues to grow. Our insurance partnerships continue to grow. I think there's a big opportunity to continue to look at ways to exploit our credit capabilities alongside Espida. And, you know, as we said in the prepared remarks, we have about 255 partners here at Aries out of, you know, 3,200 employees. This is a very, very deep bench, and one of the things that we've always been focused on, and I just think about my own journey here, is we are constantly working on mentoring and developing the next generation of leaders, and I can't think of two better people to help me do that than Blair and Kip. So I've always been focused, Craig, and I'm not changing my priorities, but I think given the amount of opportunity that we have around the globe, it's now time to kind of fill those seats and just expand our capacity.

Thanks, Mike.

Thank you. We go next now to Kyle Voigt of KBW.

Hey, good morning. Thanks for taking the question. Maybe I can just get an update regarding M&A appetite with the GCP deal now set to close in the first quarter. Just wondering if we get an update on how you feel about the state of your pro forma business mix, where you sit strategically from an asset class and geographical perspective. And do you still feel like there's potential gaps to fill in the product offering or internationally?

Yeah, thanks for the question. As we've said in the past, with each successive acquisition that we've made, I think the bar for making acquisitions gets higher and higher. And that's really just a function of broadening out of our capability set and the organizational capacity that we have to launch and support organic growth initiatives. We have laid out as a strategic objective for the company to have full capital structure capabilities, meaning everything from control equity through traded debt securities in each of corporate real estate and infrastructure and in each of the U.S., Europe and Asia. So if you were to kind of fill out that game board, there are very few capabilities of consequence in the global alternative space that we don't already have here. So I don't want to say that we're not going to do M&A because it's been a really nice driver of growth here. It's represented probably 20% to 25% of our growth. And as you've seen with things like Black Creek and the growth in wealth, or the recent acceleration of growth in the secondaries platform, I think we have a really good playbook for accretive acquisitions and then strategic acceleration of revenue synergies post-acquisition. So, we're constantly looking and thinking, and we're being both opportunistic and reactive to what the market shows us. But we have lots of organic growth ahead of us, and I think the near-term focus is going to be to exploit those opportunities versus M&A.

I appreciate that. And just for my follow-up, just a question on the sequential growth in credit fee-paying AUM. I know you've noted on prior calls that growth to net deployment ratio and expecting that to improve. I think you noted maybe an expected gradual improvement in the environment. I guess anything that you can give us in terms of helping us out with the pipeline that you're seeing, how that's going to progress in terms of that growth to net deployment ratio. into the first half of the year and how you expect it to unfold through 2025 versus where you're at in 4Q?

Yeah, it's still early. Obviously, we had a very strong deployment quarter in Q4. You know, January is seasonally slow. I think we've talked about this before. We generally see lower deployment in Q1 and Q3 and stronger deployment in Q2 and Q4 just based on the rhythms of the business. But the private credit portfolios generally across the board, I would say, are increasing in activity. I think that's just, again, a function of the market backdrop, particularly in the U.S. markets. I think that there's a lot of pent-up demand to transact. And even though we believe that rates are going to be higher for longer, I think we now have stability in rates that's bringing capital off the sidelines in private credit and real estate in a way that we didn't see, particularly in the first half of last year. I do want to reiterate what we said in the prepared remarks, which is that we are uniquely positioned. When you look at our deployment relative to the transaction volumes in the market, if you look at our year-over-year deployment, we were up close to 60%, $107 billion compared to $68 billion. Global M&A volumes are only up 10%. And so I think it speaks volumes to, A, the diversity of the strategies that we have and the solutions that we can bring into the different markets, but it also speaks to the value of the incumbent relationships that exist within the portfolio. And as we've talked about before, depending on the period that we're looking at in our private credit book, roughly two-thirds of our deployment last year was coming from incumbent sponsor relationships, and roughly half was coming from incumbent portfolio company relationships. So while we obviously are beneficiaries when the M&A activity picks up, I do want to highlight that deployment to keep pace with our FRE growth is not dependent on M&A, and in some circumstances, slower transaction volumes actually increases the attractiveness of some of the liquidity solutions that we're able to provide.

That's great. Thank you.

Thank you. We go next now to Steven Chubach of Wolf Research.

Hi, good morning, and thanks for taking my questions. So maybe just to start off with a question on fundraising, the momentum was quite strong to close out the year. Given the tough fundraising comp in 24, much lower expected contribution from flagships in 25, the modest year-on-year decline, was it merely better than we were anticipating that you alluded to, Mike? So I was hoping you could drill down into drivers of their non-flagship fundraising in 25 and what contribution you're contemplating from flagships this year that's supporting that more resilient fundraising outcome.

Yeah, again, it's early, but as we said, we have 18 or so commingled funds that are in the market in 2025 and a similar number in open-ended and perpetual continuous offer funds. So as we tried to articulate in the prepared remarks, what we would call the floor for fundraising continues to elevate. And while the campaign funds are still a meaningful contributor to our fundraising growth, we now have so many other levers to pull that are more consistent in the way that capital flows into the platform. When you look at some of the meaningful, quote-unquote, flagship campaign funds, we're in the market with our opportunistic credit fund, which has very significant momentum. We are in the market with our second sports media and entertainment vehicle, which we talked about. We are very active on a number of our core real estate equity and debt strategies, and given the – thawing out of that market. We're seeing good momentum there. We're in the market with our infrastructure debt strategies and so on and so forth. So, while we don't have the magnitude of campaign funds like in European direct lending or U.S. direct lending, we do have a significant number of funds that are represented across across the platform. And then as you saw, places like insurance and wealth are continuing to accelerate above the trend growth. And so I would expect those to continue to be meaningful contributors as well. So I can't say in January exactly where we'll be, but as we said in the prepared remarks, I think that we will likely be modestly lower than we were this year just because it was such a significant, significant year. But I still think it's going to be an incredibly strong year for us.

It's a really helpful color. And for my follow-up, I did want to ask on the Espita-Tiro partnership. So Tiro, on its recent earnings call, discussed the partnership. They cited opportunities for co-developing investment offerings potentially in both insurance and private assets. And just curious how you think this partnership could evolve over time, whether this can also serve as a potential stepping stone to eventually break into the 401k space.

Sure. So, reiterating what Rob said on the call, we could not be more excited about the partnership. I think there's a long relationship between our two firms. I think there's a deep mutual respect. T. Rowe is just one of the great financial services companies in the market, and we're thrilled to be their partner. The team at Oak Hill are longstanding partners and counterparties of ours and close friends, and so we're thrilled to be deepening that relationship as well. The way that I would describe it in still early days is we are obviously in a position to leverage the fixed income capabilities at T-Row to the benefit of Aspita. There are things that Oak Hill does within the private market space that complement some of the capabilities that we have here that will add value to Aspita as well as some of our third-party insurance clients. I think that T. Rowe gets to demonstrate its capability and capacity to create insurance solutions, which I think is accretive to their business long-term. And then, as you mentioned, it's still early days in figuring out exactly how and on what timeframe alts will find their way into the 401K market. But, you know, there are early discussions just around product development and, you know, a path forward to work together on various, you know, retirement product. And obviously that would be super exciting if it came to fruition.

That's great. And thanks so much for taking my questions. Sure.

We'll go next now to Alex Bloestein of Goldman Sachs.

Hey, good morning. Thank you for the question as well. Mike, I was hoping we could start with a point you made earlier regarding institutional investors continuing to expand their allocations to private credit. Obviously, it's been an important theme for years. But as you think about the evolution into the investment-grade private credit part of the market, can you talk a little bit about the changes you're seeing in that LP base? Are you seeing... you know, other type of insurance companies that are looking at the space. Historically, it's been largely life securities. If you've seen more movement on the P&C side, other types of institutions as well, where those allocations could ultimately go. I mean, right now, they're still quite low. And then, ultimately, ARIES has origination capabilities to satisfy that need.

Sure. So, we do have the capability to manage, you know, high-grade fixed income exposures for our clients. That largely takes place within our alternative credit group. We are now finding that as we continue to expand our vertical integration within our real estate and infrastructure businesses that we're able to create high-grade exposures for our clients there as well. To this point, given the risk-return profile of those assets, it is predominantly insurance-focused. We have had some success on bank partnerships within that space. We have seen some modest demand from some of the large global sovereigns for those exposures. But those are largely just swapping out of traded high-grade fixed income into non-traded high-grade fixed income to try to pick up some excess So, while it's a huge TAM, I view that slightly differently than some of the organic expansion that we're seeing across the sub-investment-grade portion of the private credit market.

I got you. Great. And then another one related to GCP with the deal getting closer to completion here, I guess, in the first quarter. Can you guys just level set and remind us what their 2024 full year management fee base is, how you guys expect that to grow over the next couple of years? And once the deal closes, what kind of products, particularly in the retail side, should we be thinking about you guys expanding into? Thanks.

Sure. What we had gone over in the call after we made the announcement was we expected that 2025's full year or the first 12 months after closing, so not the full year of 2025, but the first 12 months after closing, would be about $200 million of FRE, not inclusive of of synergies and costs. So there's probably about $10 million of synergies that may take longer than those 12 months to recognize, and there's probably about $10 million of costs as part of the integration that we may see as one-time costs going into there. And then we modeled out that we thought it would be about $245 million in 2026. The overall AUM is about $44 billion. of AUM and the lion's share of that is coming out of Japan. It's almost half of it is in Japan with the remainder spread across the globe. The main retail product that they have there is in Japan with the JREIT product that they have. That does do periodic capital raising depending on the the current NAV and traded price, and that did do quite a bit of capital raising from 2013 to 2023. 2024, with the interest rate environment not being as conducive, it didn't have as many raises. But we would expect that in the future that will continue to raise, but that is a closed-end product, not an open-end like some of our non-tradeds. Overall, we mapped out that we thought that their growth profile, including the data center opportunity, would match the targets that we laid out at our investor day. And overall, it's not really large enough to shift our targets one way or another that we laid out at investor day in terms of our growth.

One thing I would just add on top of that, as we talked about in the prepared remarks, is we will hit the ground running post-closing with a number of capital raises that are already in flight. When you look at the data center pipeline and the funds that we're raising in Japan and the U.K., that's going to approach about $4 billion. And then when you look at the self-storage and Japan real estate business, that's probably likely another $4 billion on top of that currency adjusted. So I think there's a high confidence just based on the fundraising pipeline and deployment there that that trajectory from 25 and 26 is intact.

Great. All right. That's very helpful. Thank you for taking the question.

Thank you. We'll go next now to Mike Brown with Wells Fargo.

Great. Good morning. Thanks for taking my questions. So in light of the news with co-presidents Kip and Blair, I wanted to ask about Blair's side of the credit business and focus on the Europe direct lending side. I wanted to just hear about how's the health of the market there and Does the Trump administration impact some of the growth potential for the region? And how does that impact perhaps the deployment opportunities there? And just overall, how is the competitive landscape in Europe currently?

Yeah, sure. And thanks for the question. A couple things to unpack there. First, on the macro side, 2024 actually turned out better than we thought. You know, coming into the year, there were concerns around inflation, high rates, potential recession. And as the year progressed, obviously, high rates did their job, inflation came down, rates came down, the economies kept moving forward. And with respect to the portfolio itself, we don't have many loans to very GDP-sensitive sectors. We tend to favor sectors that are more resilient and have strong organic growth attached. So overall portfolio is doing well. Now, your second question around politics, that's obviously quite topical as well. It's early days with respect to the Trump administration, but from our analysis, again, we don't have a lot of exposures to sectors that are exposed to significant trade flows. Therefore, it's hard to draw a straight line from potential tariffs to our portfolio companies, which, again, tend to be of a size where they're more locally focused on individual European markets, in countries. I think the other thing that's been talked about is potential impacts on defense spend, but again, that's not a significant end market that we're focused on. So overall, I think from an economic perspective, portfolio is doing well, and we are also seeing, and Mike alludes to this as well, pickups in investment activity given the European dry powder available, given European private equity assets that need to be realized, and certainly cost of capital is important, so slightly lower rates is helping. And that's, again, why deployment picked up throughout last year and looks good coming into 25.

Okay, great. Thank you. And then maybe just wanted to ask on the banks. as they become more formidable competitors again, how should we think about that interplay between the broadly syndicated loan market and the private credit market? And, you know, any color on how we should think about some of the competitive landscape for indirect lending, how that can impact spreads and leverage multiples, deal structures, et cetera. Thank you.

Yeah, sure. And we've always said, and I want to make sure that we say maybe louder this time, the banks are more important partners of ours than they are competitors. And I think that the narrative of fierce competition between direct lending and banks is overblown. If you look at how we fund ourselves and how banks access these markets, there's a great... symbiotic relationship between their lending operations and their client franchises and our capital base and our origination and portfolio management capabilities. When the banks are risk-on, meaning having a greater willingness to originate and distribute into the capital markets and the CLO machine is turned on, you will see at the upper end of the private credit market, large market, predominantly sponsor unit tranches, there is competition between the banks and some of the larger direct lenders. In that instance, as you saw last year, our CLO machine turns on in earnest when one of the I think, best-performing CLO managers in the market. Last year, as the syndicated loan market was starting to thaw and activity picked up, you saw record CLO issuance for us. At least in that part of the market, I feel like we're hedged. Where we are meaningfully differentiated in our private credit platform, and I don't know that we talk about this enough, is that we cover the entire spectrum of sizes, sponsors, non-sponsors, direct-to-industry coverage, corporates, real assets, asset-backed, et cetera. And so there are platforms that we compete against that are significantly more exposed to competition at the upper end of the market. as it should be in that part of the market. If you're competing against the liquid loan or high yield market, you will be more prone to pricing relative to those markets. That's one of the reasons why we have been so focused on building competitive edge competitive edge in the core middle market part of the business, where we can not only continue to grow and expand those relationships, but we think that there's a more consistent excess return and pricing opportunity. The other thing that I think it's also important to think about is this idea that less bank regulation is forthcoming and that somehow the banks are going to wake up and become meaningful competitors. I think there's a misunderstanding as to why banks aren't in these businesses. If you look at the creation of the private credit markets, it's largely been a function of consolidation in the banks over the last 30 years, very well-entrenched regulatory capital frameworks within the banking and insurance markets. and a move to scale, just to name a few, in the liquid markets, it's very, very difficult for that to unwind and to see banks being meaningful competitors in the core parts of the market that we play in. As an example, last week, we announced that we purchased a $1.3 billion loan portfolio from ABN Amro. It was predominantly a digital assets, digital infrastructure portfolio. That was just an example of how we're working together with them to bring capital to support their business and for them to optimize their balance sheet and grow their customer franchise. Interestingly, post-election, we probably saw more SRT, CRT, and bank portfolio activity in Q4 than we had seen in any quarter prior. I would expect that to continue. That's a long answer, but the simple answer is, as the banks get more active, that's usually good for our CLO and liquid franchise. It means that M&A activity is picking up, and our experience has been that's a net benefit to the platform, given the way that we're structured.

Okay, great. Yeah, very comprehensive answer. Thank you, Mike.

Thank you. We'll go next now to Bill Katz with TD Cowen.

Okay, thank you very much. Congrats, guys, on the promotions. Just coming back to OHA, I'd like to come at this at a slightly different angle. Does this give you an opportunity to rethink the mass affluent marketplace without compromising fee rates? I know when the KKR and the capital group initiative came out there was a lot of skepticism about what the economics might look like and i know you fiercely um want to protect that that base management fee but just give you an opportunity to potentially expand the the wealth management opportunity without that compromise

You know, it's too early to tell, Bill. I would say I think what I said last quarter, which is our view on any partnership, whether it's between us and a traditional manager or us and a bank or us and someone in wealth, it has to be customer-led and client-led. We need to convince ourselves, putting the fees aside, the first question has to be, does this create an investment outcome or a product for the client? that adds value to them. The idea of just taking alternative assets and traditional assets, mushing them together and offering the package, people can do that today. There's open architecture in the markets that if somebody wants to access Aerie's private product, they can do it through our traded products, they can do it through our non-traded products, they can do it through investing in the management company, and so on and so forth. In our view, if we are going to introduce a product through partnership, it has to create something in the market that is truly differentiated, first and foremost, and then we'll worry about the economics of the product. And then, two, I also want to remind everybody, and we talked about it in prepared remarks, that the binding constraint to growth and profitability in our business is to be able to create differentiated assets to then deliver differentiated performance to our clients. And there's not an infinite amount of differentiated product in the world. And so, I think, you know, Good business builders will focus on making sure that they're satisfying client need, but also making sure that their capital base is optimized for the investable opportunity. And that's the way that we've built areas and will continue to focus on it. I do think that there's a lot of complementarity to their business and our business, going back to T. Rowe and OHA. They have distribution capability in parts of the market that we don't, and we have distribution in certain parts of the market that they don't. So, there's a real potential synergy there. And I think that as the partnership grows and strengthens, we'll obviously explore those things, but definitely still too early to tell.

Okay, thank you. And then one quick one for Jared. Just thinking through the ins and outs for the FRE margin outlook, how should we be thinking about compensation? And the reason I'm asking is, if you have the European waterfall sort of poised to sort of accelerate rather dramatically, is there an opportunity to sort of reroute some of the compensation against that? I know you sort of provide a net number relative to the comp you're paying either on sort of the base business or even against FRP or looking ahead. Thanks.

Sure, and thanks, Bill. I do think it does give you more flexibility, but the key to it is, much like how we've used our Part 1 fees and our more recurring FRPR in the past, You have to wait until it's established and kind of paying and part of what people expect from their compensation. So it's not a right on day one as you harvest it, it's going to create this meaningful change. It does, again, provide flexibility, and especially as those amounts grow and there's unallocated amounts that you're able to then use to supplement the It is helpful, but it's more something I'd say after year one or two of the full kick-in of the waterfall where it starts to grant you more and more flexibility because of the high level of predictability of those European waterfalls and the growth of those year over year.

Great. Thank you very much.

Thank you. We'll go next now to Ken Worthington of J.P. Morgan.

Hi, good morning. Thanks for the question. Just one for me. In credit, so fundraising and deployment continue to be quite strong. fee-paying AUM growth less so. Can you talk about gross deployment versus net deployment and the trends there, ultimately what the refinance market looked like in 4Q relative to earlier in the year, and how competitive did Aries choose to be in the refinance market versus what you saw in the BSL market again this quarter?

Yeah. Obviously, the last couple of years have been difficult, I would say, from a gross-to-net standpoint, just because, as I mentioned earlier, the M&A market has been incredibly slow and global volumes have been have been down. And I feel really good about our ability to defend positions within the existing portfolios and find ways to bring liquidity into the market in non-control transactions to maintain some pretty high levels of quality deployment. But if you look at the gross to net in 2024 versus prior periods, it was one of our lower you know, lower deployment periods in the last four years. I would expect that 2025 will be a meaningful improvement, and that's going to be largely a function of the M&A volumes turning back on, a more meaningful deployment opportunity within real estate, which was very slow for a number of years. And then, just what I would call the weight of money that is in the ground today in the private equity and institutional real assets market that needs to get resolved. There's a lot of things happening in the market backdrop that we expect will crank up the transaction volumes this year, and that should begin to see the gross-to-net return to normal levels.

Was 4Q all that different than 1Q?

If you look at 4Q gross to net across the platform, it was 42%. If you look at Q1, it was 22%. You did see a move. If you look at it across the entire year, it was 37%. versus 46% in 2023. So, yeah, there's still significant deployment opportunity, but it was definitely a four-year low in terms of the gross to net. Perfect. Thank you very much.

Sure. Thank you. Thank you. We go next now to Brennan Hawken of UBS.

Hey, good morning. Thanks for taking my question. Most of my questions have been asked and answered, so I'll just keep to one. Last quarter you spoke to an expectation for improving FRE margin in 2025. You spoke a little earlier on GNA, which is helpful, but how should we think about the potential magnitude for that and what are the primary factors driving it? Thanks.

Hey, Brennan, thanks. I'd say that it's not too different than what we talked about in our investor day. We expect that zero to 150 basis points expansion. Of course, in the past, we have gone above that. When we go above that, it generally is a result of a very active macro backdrop, which allows for deployment to go up higher than maybe we would expect. So the pace of deployment really dictates the speed at which margin expands in many cases. Because I just remind everybody as a credit-predominated business, we're paid on deployment, meaning that we are paying people prior to us earning fees from some of the effort that will be put in. So as dollars are put into the ground and put to work, that enables us to expand our margin at a faster rate. So really a lot of it comes from how fast will we be able to have that net deployment number increase, and that's what drives a lot of that expansion process. Further, as we start to see things like AREIT and AIREIT return to positive fundraising on the common side, they've been net flat with the common and the 1031 exchange for the year. So as we see that move back to positive and we've seen a lot of positive signs, that will be something that continues to drive positive economics into the real estate business and allow us to expand margins there as well. And overall, we talked a lot this year about our distribution fees. Now that we raised the $10.8 billion in AUM in that retail space, that we had that $50 million distribution fees, now we'll get a full year of AUM. revenue off of those as opposed to just that partial year that you get throughout. So really that was a flat to net negative to our margin for the year. Next year we'll get the benefit of now having a full year of that in the ground. Of course, there'll be more that we raise. and there will be more expense there. But it begins to create long-term tailwinds to that margin expansion. So there's a number of different areas. And like I highlighted earlier, we continue to seek scale, and we continue to look to do more with what we have. And as we build out more product, more fundraising capability, and more origination capability with what we have in the ground today, that enables us to show scale and grow those expenses at a slower rate than we grow our revenues.

Thanks for walking through that, Jared.

We'll go next now to Ben Budish of Barclays.

Hi, good morning, and thanks for taking my questions. Maybe one last sort of follow-up, you know, the last few questions have sort of been around the FRE outlook. Just curious, anything you can share with us in terms of how we might think about management fee growth in 2025? You've talked about the sort of gross-to-net dynamics. I'm curious, is there anything to do with the sort of deployment out of perpetual versus drawdown vehicles, that sort of thing? We've obviously got your longer-term FRE guide, and clearly there's a kind of wide range depending on the pace of deployment. It just seems like folks are wondering, how do we think about the top line growth, which will clearly be the driver of FRA margin expansion?

Sure. You have to think of it in a few different ways. The drawdown funds, as you mentioned, that's really where the deployment is driving your expansion of management fees, and that's where you look at that gross to net. in terms of what happens in your retail product well that's fundraising driven because the minute that you raise that dollar it begins to pay fees however you do have to model out the fact that there is an expense with that or in the case of some of our european dollars there's been fee waivers in the past so out of our european platform as we move out of the fee waivers you'll see benefit from that and then you'll see the benefit of fundraising dollars come to your top line or your management fees Then when you look at our equity-style funds, those are also driven more on your fundraising. However, a large number of those have a benefit where you get paid on committed, but your management fee essentially doubles. It might go from 75 basis points to 150 basis points upon deployment. So you get some benefit of deploying what you had raised in prior years, plus you get the benefit of raising new dollars in the current year. So across the board, you do have to factor in both that deployment, like you mentioned, but also the fundraising on the equity side and the fundraising on the retail side to make sure you're kind of matching it to that. All of those, we come up with what we believe we'll think will happen for the year. And ultimately, if we're able to beat that or exceed those amounts, then that will drive further management fee growth above what we projected.

Understood. Appreciate all that. Maybe one last nitty-gritty modeling detail. Jared, you talked about the range of tax rate outcomes for the year, depending on the pace of realizations. I'm just curious, as the platform gets bigger, as the European waterfall-style realizations start to come in, your after-tax net income is getting bigger and bigger, I'm curious, how should we think about the tax rate as you'll start to be at the ... At some point, you'll be at the corporate alternative minimum tax rate, I believe. And should we start to expect the overall rate to go up? How do we think about that in the context of the timing of realizations? And I realize this is probably somewhat farther out, because I think that applies after several years of over a billion in after-tax income, but just curious about how we might think about those pieces.

And I think that that is why you saw our range go from 11% to 15%. Last year coming into the year, we mapped out 12% to 15%. We came in a little bit underneath that amount. Looking at this year, AMT is something that we're aware of. It would require certain things under GAAP to occur that would be relatively large changes, mainly based on your unrealized portfolio. So to your point, you're probably still a year or two away from AMT. reaching that 15% AMT tax. And you are correct that as we see more realizations, typically that drives our tax rate higher. However, with the GCP acquisition, as we close that, that will create a lot of taxable goodwill, which that will amortize over 15 years, and that will essentially drive your tax rate down. So that's why that range is 11 to 15. 15 really represents that AMT. But like I said, we thought it would be 12 to 15 this year. It came in slightly lower. That should give you an idea of just what a regular year might look like.

All right, very helpful. Thanks so much.

Thank you. We'll go next now to Michael Cypress at Morgan Stanley.

Oh, great. Thanks for taking the question. Just with the GCP transaction, you guys are going to be in the market with a number of development vehicles for data centers. So just curious how you're thinking about the investment opportunity with data centers there, just given post the DeepSeq development that suggests that AI models may be a bit less capital energy intensive. Just curious how you're thinking about that and How are your views on evolving around CapEx across the industry?

Yeah, look, I think the markets are still trying to digest what deep-seek actually means, and there's maybe conflicting views as to what exactly the cost and investment to train those models actually was. From my perspective at a very high level, The move has always been to lower cost and increased efficiency in the data center business and the cost of compute. And what we have seen with technological advancement and greater efficiency, we will typically see increased demand. And so my long-term view is that the demand for compute will continue, which will not change the the opportunity to build data centers with good counterparties in good locations. And maybe to that point, if you look at the market today, the significant preponderance of data centers are still going to just support cloud computing with the large cloud companies. And obviously, the AI transition is important. Most of the sites and plans for development that we have are catered towards data centers and cloud migration with what I would call upside for AI, meaning that the client can elect to have that optionality in the way that we built the data center for them. I think the good news is, at least in terms of our business, the sites that we are developing with GCP are generally in major metropolitan areas, so London, Tokyo, Osaka, Sao Paulo, where there is real benefit from the proximity to the end user. Latency considerations are obviously also important. So we're not speculatively building data centers, and I think most people – that are similarly situated will tell you that if you are building high-quality data centers in the right places with the right customers, there's still a very significant opportunity to generate meaningful return. And the pipeline that we have, and we talked about this when we announced the transaction, we have the land, it's entitled, it's powered, and we are under LOI for the leasing and the financing, so the near-term pipeline that we've underwritten in our view is not at risk, And then lastly, I would just highlight the magnitude of the opportunity relative to the amount of capital is so significant that even if you saw a pushing out of that pipeline, it's still undercapitalized relative to the amount of money that is in the market on the debt and equity side to fund it. Estimates, depending on the source, would tell you that's a $4 to $7 trillion annual opportunity. And so needless to say that if we and other peers want to participate in that growth, we don't need to see $4 to $7 trillion of capital activity to have it be a meaningful growth lever for us. So there's a lot to unpack, obviously, in all of that, but I think at least our core investment thesis remains intact, and we're still extremely enthusiastic about the opportunity.

Great, thank you. And then just for a follow-up question on private wealth, I was hoping maybe we could just dig in a little bit around the traction you're seeing overseas, if you could maybe elaborate a bit on the success and maybe talk about some of the differences in the approach distribution that's needed to drive success overseas versus in the U.S.

Yeah, look, we were pleased. You know, over 35% of our capital raise was coming from our European and APAC investments. positioning. The general difference is really just in terms of market structure. If you think about the U.S. market, the wire houses play a pretty significant part in the growth opportunity there, at least the scale opportunity, and then the RIAs are rapidly catching up and probably growing faster right now than the wire houses, albeit on a smaller number. When you start to move towards Europe and Asia, the market structure is just fundamentally different. There's more bank partnerships, more wealth partnerships, just because the wires are not as prevalent. So you have to build, you know, We have to build meaningful infrastructure to service the client base differently. I do think that's been a big differentiator for us when you look at the percentage of capital that we're raising. And then also, just to highlight, when you look at the success that we've had with our European direct lending product, I think it was kind of the perfect marriage of capability on the investing side and capability on the fundraising side. And we cracked a code that I think very few people have been able to crack.

Great. Thanks so much. Thank you. And ladies and gentlemen, that is all the time we have for questions today. So that will bring us to the conclusion of today's call. If you missed any part of today's call, an archived replay of this conference call will be available through March 5th, 2025 to domestic callers by calling 1-800-839-2475 and to international callers by dialing 402-220-7220. An archived replay will also be available on a webcast link located on the homepage of the Investor Resources section of our website. Again, ladies and gentlemen, thank you for joining us today, and we wish you all a great remainder of your day. Goodbye.