As of March 31, 2019 or for the quarter then ended, and where
applicable, per Class A unit:
- GAAP net income attributable to
Oaktree Capital Group, LLC (“OCG”) Class A unitholders was $47.3
million ($0.66 per unit), down from $52.7 million ($0.78) for the
first quarter of 2018, primarily reflecting lower operating
profits, partially offset by higher returns on our fund
investments.
- Distributable earnings were
$233.9 million ($1.46 per unit), up from $194.0 million ($1.18) for
the first quarter of 2018, driven by higher incentive income.
- Assets under management were
$118.6 billion, down 1% for the quarter and down 2% over the last
12 months. Gross capital raised was $1.6 billion and $12.3 billion
for the quarter and last 12 months, respectively. Uncalled capital
commitments (“dry powder”) were $18.3 billion, of which $12.6
billion were not yet generating management fees (“shadow
AUM”).
- Management fee-generating assets
under management were $100.3 billion, up 2% for the quarter and
down 2% over the last 12 months.
- A distribution was declared of
$1.05 per unit, bringing aggregate distributions relating to the
last 12 months to $3.05.
Oaktree Capital Group, LLC (NYSE: OAK) today reported its
unaudited financial results for the first quarter ended March 31,
2019.
Jay Wintrob, Chief Executive Officer, said, “Oaktree had a
strong start to 2019, delivering solid financial and investment
performance in the first quarter. Distributable earnings grew $40
million, or 21%, over the same period one year ago, and our
closed-end funds generated gross returns of 9% over the last twelve
months. On March 13th, we announced that Brookfield will acquire
62% of our business. We believe partnering with Brookfield will be
a powerful combination of two complementary, world-class asset
management businesses. We will work together to offer exceptional
solutions to our clients, leverage our combined strengths and
generate strong returns across all points in the economic
cycle.”
Class A Unit Distribution
A distribution of $1.05 per Class A unit attributable to the
first quarter of 2019 will be paid on May 10, 2019 to Class A
unitholders of record at the close of business on May 6, 2019.
Preferred Unit Distributions
A distribution was declared of $0.414063 per Series A preferred
unit, which will be paid on June 15, 2019 to Series A preferred
unitholders of record at the close of business on June 1, 2019.
A distribution was declared of $0.409375 per Series B preferred
unit, which will be paid on June 15, 2019 to Series B preferred
unitholders of record at the close of business on June 1, 2019.
Agreement and Plan of Merger
On March 13, 2019, OCG and Brookfield Asset Management Inc.
(“Brookfield”) announced their entry into a definitive merger
agreement pursuant to which Brookfield will acquire approximately
62% of OCG’s business in a stock and cash transaction. Following
the transaction, the remaining 38% of the business will continue to
be owned by Oaktree Capital Group Holdings, L.P. (“OCGH”), whose
unitholders consist primarily of OCG’s founders and certain other
members of management and current and former employees. As part of
the transaction, Brookfield will acquire all outstanding OCG
Class A units for, at the election of OCG Class A
unitholders, either $49.00 in cash or 1.0770 Class A shares of
Brookfield per OCG Class A unit (subject to pro-ration to
ensure that no more than fifty percent (50%) of the aggregate
merger consideration is paid in the form of cash or stock), in each
case, without interest and subject to any applicable withholding
taxes. In addition, the founders, senior management, and current
and former employee-unitholders of OCGH will sell to Brookfield 20%
of their OCGH units for the same consideration as the Oaktree Class
A unitholders. The OCG board of directors, acting on the
recommendation of a special committee composed
of non-executive, independent directors, has unanimously
recommended that OCG unitholders approve the transaction. The
transaction is anticipated to close by the end of 2019, subject to
the approval of OCG Class A and Class B unitholders representing a
majority of the voting interests of such units, voting together as
a single class, and other customary closing conditions including
certain regulatory approvals.
Upon closing of the transaction, OCG and Brookfield will
continue to operate their respective businesses independently,
partnering to leverage their strengths – with each remaining under
its current brand and led by its existing management and investment
teams. Howard Marks will continue as Co-Chairman of Oaktree, Bruce
Karsh as Co-Chairman and Chief Investment Officer, and Jay Wintrob
as Chief Executive Officer. Howard Marks and Bruce Karsh will
continue to have operating control of Oaktree as an independent
entity for the foreseeable future. In addition, Howard Marks will
join Brookfield's board of directors.
About Oaktree
Oaktree is a leader among global investment managers
specializing in alternative investments, with $119 billion in
assets under management as of March 31, 2019. The firm emphasizes
an opportunistic, value-oriented and risk-controlled approach to
investments in credit, private equity, real assets and listed
equities. The firm has over 950 employees and offices in 18 cities
worldwide. For additional information, please visit Oaktree’s
website at www.oaktreecapital.com.
The table below presents (a) GAAP results, (b) non-GAAP results
for both the Operating Group and per Class A unit, and (c)
assets under management and accrued incentives (fund level) data.
Please refer to the Glossary for definitions.
As of or for the Three Months Ended March 31,
2019 2018 GAAP Results:
(in thousands, except per
unitdata or as otherwise indicated)
Revenues $ 266,415 $ 337,321 Net income-Class A 47,254
52,732 Net income per Class A unit 0.66 0.78
Non-GAAP
Results: (1) Distributable earnings revenues 602,694
477,264 Distributable earnings 233,892 193,973 Distributable
earnings per Class A unit 1.46 1.18 Fee revenues 190,101
202,947 Fee-related earnings 39,597 58,487 Fee-related earnings per
Class A unit 0.24 0.36
Weighted Average Units: OCGH
85,474 88,270 Class A 71,632 67,918 Total units 157,106 156,188
Operating Metrics: Assets under management (in
millions): Assets under management $ 118,609 $ 121,394 Management
fee-generating assets under management 100,264 102,043
Incentive-creating assets under management 34,413 33,035 Uncalled
capital commitments 18,310 19,556 Accrued incentives (fund level):
Incentives created (fund level) 87,992 111,185 Incentives created
(fund level), net of associated incentive income compensation
expense 44,228 52,298 Accrued incentives (fund level) 1,424,904
1,795,967 Accrued incentives (fund level), net of associated
incentive income compensation expense 678,517 868,035
Note: Oaktree discloses in this earnings release certain revenue
and financial measures, including measures that are calculated and
presented on a basis other than generally accepted accounting
principles in the United States (“non-GAAP”). Examples of such
non-GAAP measures are identified in the table above. Such non-GAAP
measures should be considered in addition to, and not as a
substitute for or superior to, net income, net income per Class A
unit or other financial measures calculated in accordance with
GAAP. Reconciliations of these non-GAAP financial measures to the
most directly comparable GAAP financial measures are presented at
Exhibit A. All non-GAAP measures and all interim results presented
in this release are unaudited.
(1) Beginning with the first quarter of 2019, the
Company has determined that distributable earnings is the primary
financial measure used by management to make operating decisions
and assess the performance of our business. In connection with this
determination, the definition of distributable earnings was
modified to include the deduction for preferred unit distributions
and exclude costs related to the Brookfield transaction. For
comparability, prior periods have been recast for this change, as
applicable.
GAAP Results
Oaktree consolidates entities in which it has a direct or
indirect controlling financial interest. Investment vehicles in
which we have a significant investment, such as collateralized loan
obligation vehicles (“CLOs”) and certain Oaktree funds, are
consolidated under GAAP. When a CLO or fund is consolidated, the
assets, liabilities, revenues, expenses and cash flows of the
consolidated funds are reflected on a gross basis, and the majority
of the economic interests in those consolidated funds, which are
held by third-party investors, are reflected as debt obligations of
CLOs or non-controlling interests. All of the revenues earned by us
as investment manager of the consolidated funds are eliminated in
consolidation. However, because the eliminated amounts are earned
from and funded by third-party investors, the consolidation of a
fund does not impact net income or loss attributable to OCG.
Total revenues decreased $70.9 million, or 21.0%, to $266.4
million for the first quarter of 2019, from $337.3 million for the
first quarter of 2018, reflecting lower management fees and
incentive income.
Total expenses decreased $13.5 million, or 5.4%, to $237.5
million for the first quarter of 2019, from $251.0 million for the
first quarter of 2018, primarily reflecting lower incentive income
compensation expense, partially offset by higher compensation and
benefits and general and administrative expenses.
Total other income increased $102.5 million, to $160.0 million
for the first quarter of 2019, from income of $57.5 million for the
first quarter of 2018. The increase primarily reflected variations
in returns on our fund investments between periods.
Net income attributable to OCG Class A unitholders decreased
$5.4 million, or 10.2%, to $47.3 million for the first quarter of
2019, from $52.7 million for the first quarter of 2018, primarily
reflecting lower operating profits, partially offset by higher
returns on our fund investments.
Operating Metrics
Assets Under Management
Assets under management were $118.6 billion as of March 31,
2019, $119.6 billion as of December 31, 2018 and $121.4 billion as
of March 31, 2018. The $1.0 billion decrease since December 31,
2018 primarily reflected $3.3 billion of net outflows from open-end
funds and $2.6 billion of distributions to closed-end fund
investors and uncalled capital commitments, partially offset by
$3.1 billion in market-value gains and $1.9 billion attributable to
DoubleLine.
The $2.8 billion decrease in AUM since March 31, 2018 primarily
reflected $7.6 billion of distributions to closed-end fund
investors and uncalled commitments, $5.6 billion of net outflows
from open-end funds, and $1.3 billion of unfavorable
foreign-currency translation, partially offset by $7.1 billion of
capital commitments to closed-end funds, $2.6 billion in
market-value gains and $2.2 billion attributable to DoubleLine.
Commitments to closed-end funds included $1.4 billion for Oaktree
Power Opportunities Fund V (“Power V”), $1.3 billion for Oaktree
Special Situations Fund II, $1.1 billion for CLOs, $1.1 billion for
Oaktree Transportation Infrastructure Fund (“TIF”), $0.8 billion
for our Middle Market Direct Lending strategy, $0.6 billion for our
Real Estate Debt strategy and $0.6 billion for our Emerging Markets
Debt strategy. Distributions to closed-end fund investors included
$3.6 billion from Credit funds, $1.6 billion from Real Asset funds
and $1.4 billion from Private Equity funds.
Management Fee-generating Assets Under
Management
Management fee-generating AUM, a forward-looking metric, was
$100.3 billion as of March 31, 2019, $98.1 billion as of December
31, 2018 and $102.0 billion as of March 31, 2018. The $2.2 billion
increase since December 31, 2018 primarily reflected $2.5 billion
in market-value gains, $1.9 billion attributable to DoubleLine,
$1.3 billion from the start of the investment period for Power V in
April 2019 and $0.6 billion from capital drawn by funds that pay
fees based on drawn capital, NAV or cost basis, partially offset by
$3.3 billion of net outflows from open-end funds and $0.5 billion
attributable to closed-end funds in liquidation.
The $1.7 billion decrease in management fee-generating AUM since
March 31, 2018 primarily reflected $5.6 billion of net outflows
from open-end funds, $4.4 billion attributable to closed-end funds
in liquidation, $1.2 billion in unfavorable foreign-currency
translation and $0.5 billion of distributions by closed-end funds
that pay fees based on NAV. These decreases were partially offset
by $3.1 billion from capital drawn by closed-end funds that pay
fees based on drawn capital, NAV or cost basis, an aggregate $3.0
billion from the start of the investment period for TIF in December
2018, Power V in April 2019 and new CLOs, $2.2 billion attributable
to DoubleLine, $1.5 billion in market-value gains, and $0.6 billion
of net inflows to evergreen funds.
Incentive-creating Assets Under
Management
Incentive-creating AUM was $34.4 billion as of March 31, 2019,
$34.6 billion as of December 31, 2018 and $33.0 billion as of March
31, 2018. The $0.2 billion decrease since December 31, 2018
reflected $1.6 billion in distributions, partially offset by an
aggregate $1.4 billion primarily attributable to drawdowns,
contributions and market-value gains. The $1.4 billion increase
since March 31, 2018 reflected an aggregate $7.8 billion in
drawdowns, contributions and market-value gains, partially offset
by an aggregate decline of $6.4 billion primarily attributable to
distributions.
Of the $34.4 billion in incentive-creating AUM as of March 31,
2019, $21.3 billion (or 62%) was generating incentives at the fund
level, as compared with $19.9 billion (60%) of the $33.0 billion of
incentive-creating AUM as of March 31, 2018.
Accrued Incentives (Fund Level) and
Incentives Created (Fund Level)
Accrued incentives (fund level) were $1,424.9 million as of
March 31, 2019, $1,722.1 million as of December 31, 2018 and
$1,796.0 million as of March 31, 2018. The first quarter of 2019
reflected $88.0 million of incentives created (fund level) and
$385.2 million of incentive income recognized.
Accrued incentives (fund level), net of incentive income
compensation expense (“net accrued incentives”), were $678.5
million as of March 31, 2019, $811.8 million as of December 31,
2018, and $868.0 million as of March 31, 2018. The portion of net
accrued incentives represented by funds that were currently paying
incentives as of March 31, 2019, December 31, 2018 and March 31,
2018 was $201.5 million (or 30%), $237.0 million (29%) and $197.3
million (23%), respectively, with the remainder arising from funds
that as of that date were not at the stage of their cash
distribution waterfall where Oaktree was entitled to receive
incentives, other than certain tax-related distributions.
Uncalled Capital Commitments
Uncalled capital commitments were $18.3 billion as of March 31,
2019, $19.5 billion as of December 31, 2018, and $19.6 billion as
of March 31, 2018. Invested capital during the quarter and 12
months ended March 31, 2019 aggregated $2.3 billion and $10.2
billion, respectively, as compared with $2.2 billion and $7.7
billion for the comparable prior-year periods.
Non-GAAP Results
Distributable Earnings Revenues
Distributable earnings revenues increased $125.4 million, or
26.3%, to $602.7 million for the first quarter of 2019, from $477.3
million for the first quarter of 2018, as further described
below.
Management Fees
Management fees decreased $12.8 million, or 6.3%, to $190.1
million for the first quarter of 2019, from $202.9 million for the
first quarter of 2018. The decrease reflected an aggregate decline
of $30.9 million primarily attributable to closed-end funds in
liquidation and open-end funds, partially offset by an aggregate
increase of $18.1 million principally from closed-end funds that
pay management fees based on drawn capital, NAV or cost basis.
Incentive Income
Incentive income increased $149.6 million, or 63.5%, to $385.2
million for the first quarter of 2019, from $235.6 million for the
first quarter of 2018. The first quarter of 2019 included regular
and tax-related incentive income of $83.4 million and $301.8
million, respectively, as compared to $131.9 million and $103.7
million in the first quarter of 2018, respectively.
Realized Investment Income Proceeds
Realized investment income proceeds decreased $11.4 million, or
29.4%, to $27.4 million for the first quarter of 2019, from $38.8
million for the first quarter of 2018, primarily reflecting lower
proceeds from our Private Equity investments.
Adjusted Expenses
Compensation and Benefits
Compensation and benefits expense increased $8.4 million, or
8.0%, to $113.2 million for the first quarter of 2019, from $104.8
million for the first quarter of 2018, primarily reflecting an
unfavorable change in phantom equity expense stemming largely from
each period’s change in the Class A unit trading price, as well as
higher expenses related to employee benefits.
Incentive Income Compensation
Incentive income compensation expense increased $77.3 million,
or 59.3%, to $207.7 million for the first quarter of 2019, from
$130.4 million for the first quarter of 2018, reflecting the growth
in incentive income.
General and Administrative
General and administrative expense decreased $2.5 million, or
6.7%, to $34.9 million for the first quarter of 2019, from $37.4
million for the first quarter of 2018, primarily reflecting lower
placement fees associated with fundraising activities.
Depreciation and Amortization
Depreciation and amortization expense increased $0.1 million, or
4.3%, to $2.4 million for the first quarter of 2019, from $2.3
million for the first quarter of 2018.
Interest Expense, Net
Interest expense, net decreased $2.5 million, or 73.5%, to $0.9
million for the first quarter of 2019, from $3.4 million for the
first quarter of 2018. The decrease was primarily driven by higher
interest income.
Preferred Unit Distributions
The first quarter of 2019 included Series A and Series B
preferred unit distributions of $6.8 million in the aggregate, as
compared with $0 for the first quarter of 2018, reflecting the
issuances of our Series A and Series B preferred units in the
second and third quarters of 2018, respectively.
Distributable Earnings
Distributable earnings increased $39.9 million, or 20.6%, to
$233.9 million for the first quarter of 2019, from $194.0 million
for the first quarter of 2018. The increase reflected $72.4 million
in higher net incentive income, partially offset by $18.9 million
in lower fee-related earnings and $11.4 million in lower realized
investment income proceeds. The portion of distributable earnings
attributable to our Class A units was $1.46 and $1.18 per unit for
the first quarters of 2019 and 2018, respectively, reflecting
distributable earnings per Operating Group unit of $1.49 and $1.24,
respectively, less costs borne by Class A unitholders for
professional fees and other expenses, cash taxes attributable to
the Intermediate Holding Companies, and amounts payable pursuant to
the tax receivable agreement.
Fee-related Earnings
Fee-related earnings decreased $18.9 million, or 32.3%, to $39.6
million for the first quarter of 2019, from $58.5 million for the
first quarter of 2018, primarily reflecting $12.8 million in lower
management fees and $8.4 million in higher compensation and
benefits expense, partially offset by $2.5 million in lower general
and administrative expense.
The effective tax rates applicable to fee-related earnings for
the first quarters of 2019 and 2018 were 6% and 4%, respectively,
resulting from full-year effective tax rates of 6% for both
periods. The rate used for interim fiscal periods is based on the
estimated full-year effective tax rate, which is subject to change
as the year progresses. In general, the annual effective tax rate
increases as annual fee-related earnings increase, and vice
versa.
Capital and Liquidity
As of March 31, 2019, Oaktree and its operating subsidiaries had
$1.0 billion of cash and U.S. Treasury and other securities, and
$746 million of outstanding debt, which included no borrowings
outstanding against its $500 million revolving credit facility. As
of March 31, 2019, Oaktree’s investments in funds and companies on
a non-GAAP basis had a carrying value of $1.7 billion, with the 20%
investment in DoubleLine carried at $33 million based on cost, as
adjusted under the equity method of accounting. Net accrued
incentives (fund level) represented an additional $679 million as
of that date.
Forward-Looking Statements and Information
This release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act, which reflect the current
views of OCG, with respect to, among other things, its future
results of operations and financial performance. In some cases, you
can identify forward-looking statements and information by words
such as “anticipate,” “approximately,” “believe,” “continue,”
“could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,”
“potential,” “predict,” “seek,” “should,” “will” and “would” or the
negative version of these words or other comparable or similar
words. These statements identify prospective information. Important
factors could cause actual results to differ, possibly materially,
from those indicated in these statements. Forward-looking
statements are based on OCG’s beliefs, assumptions and expectations
of its future performance, taking into account all information
currently available to it. Such forward-looking statements and
information are subject to risks and uncertainties and assumptions
relating to OCG’s operations, financial results, financial
condition, business prospects, growth strategy and liquidity.
In addition to factors previously disclosed in Brookfield’s and
OCG’s reports filed with securities regulators in Canada and the
United States and those identified elsewhere in this release, the
following factors, among others, could cause actual results to
differ materially from forward-looking statements and information
or historical performance: the occurrence of any event, change or
other circumstances that could give rise to the right of one or
both of Brookfield and OCG to terminate the definitive merger
agreement between Brookfield and OCG; the outcome of any legal
proceedings that may be instituted against Brookfield, OCG or their
respective unitholders, shareholders or directors; the ability to
obtain regulatory approvals and meet other closing conditions to
the merger, including the risk that regulatory approvals required
for the merger are not obtained or are obtained subject to
conditions that are not anticipated or that are material and
adverse to Brookfield’s or OCG’s business; a delay in closing the
merger; the ability to obtain approval by OCG’s unitholders on the
expected terms and schedule; business disruptions from the proposed
merger that will harm Brookfield’s or OCG’s business, including
current plans and operations; potential adverse reactions or
changes to business relationships resulting from the announcement
or completion of the merger; certain restrictions during the
pendency of the merger that may impact Brookfield’s or OCG’s
ability to pursue certain business opportunities or strategic
transactions; the ability of Brookfield or OCG to retain and hire
key personnel; uncertainty as to the long-term value of the Class A
shares of Brookfield following the merger; the continued
availability of capital and financing following the merger; the
business, economic and political conditions in the markets in which
Brookfield and OCG operate; changes in OCG’s or Brookfield’s
anticipated revenue and income, which are inherently volatile;
changes in the value of OCG’s or Brookfield’s investments; the pace
of OCG’s or Brookfield’s raising of new funds; changes in assets
under management; the timing and receipt of, and impact of taxes
on, carried interest; distributions from and liquidation of OCG’s
existing funds; the amount and timing of distributions on OCG’s
preferred units and Class A units; changes in OCG’s operating or
other expenses; the degree to which OCG or Brookfield encounters
competition; and general political, economic and market
conditions.
Any forward-looking statements and information speak only as of
the date of this release or as of the date they were made, and
except as required by law, neither Brookfield nor OCG undertakes
any obligation to update forward-looking statements and
information. For a more detailed discussion of these factors, also
see the information under the caption “Business Environment and
Risks” in Brookfield’s most recent report on Form 40-F for the year
ended December 31, 2018, and under the captions “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in OCG’s most recent report on Form 10-K for
the year ended December 31, 2018, and in each case any material
updates to these factors contained in any of Brookfield’s or OCG’s
future filings.
As for the forward-looking statements and information that
relate to future financial results and other projections, actual
results will be different due to the inherent uncertainties of
estimates, forecasts and projections and may be better or worse
than projected and such differences could be material. Given these
uncertainties, you should not place any reliance on these
forward-looking statements and information.
This release and its contents do not constitute and should not
be construed as (a) a recommendation to buy, (b) an offer to buy or
solicitation of an offer to buy, (c) an offer to sell or (d) advice
in relation to, any securities of OCG or securities of any Oaktree
investment fund.
Important Additional Information and Where to Find It
In connection with the proposed merger, Brookfield will file
with the SEC a registration statement on Form F-4 that will include
the consent solicitation statement of OCG and a prospectus of
Brookfield, as well as other relevant documents regarding the
proposed transaction. A definitive consent solicitation
statement/prospectus will also be sent to OCG’s unitholders. This
release does not constitute an offer to sell or the solicitation of
an offer to buy any securities or a solicitation of any vote or
approval, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction.
INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE
CONSENT SOLICITATION STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN
IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE
DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
A free copy of the consent solicitation statement/prospectus, as
well as other filings containing information about OCG and
Brookfield, may be obtained at the SEC’s Internet site
(http://www.sec.gov). You will also be able to obtain these
documents, free of charge, from OCG by accessing OCG’s website at
ir.oaktreecapital.com or from Brookfield by accessing Brookfield’s
website at bam.Brookfield.com/reports-and-filings. Copies of the
consent solicitation statement/prospectus can also be obtained,
free of charge, by directing a request to Oaktree Investor
Relations at Unitholders – Investor Relations, Oaktree Capital
Management, L.P., 333 South Grand Ave., 28th Floor, Los Angeles, CA
90071, by calling (213) 830-6483 or by sending an e-mail to
investorrelations@oaktreecapital.com or to Brookfield Investor
Relations by calling (416) 359-8647 or by sending an e-mail to
enquiries@brookfield.com.
OCG and certain of its directors and executive officers may be
deemed to be participants in the solicitation of proxies from OCG
unitholders in respect of the transaction described in the consent
solicitation statement/prospectus. Information regarding OCG’s
directors and executive officers is contained in OCG’s Annual
Report on Form 10-K for the year ended December 31, 2018, which is
filed with the SEC. Additional information regarding the interests
of those participants and other persons who may be deemed
participants in the transaction may be obtained by reading the
consent solicitation statement/prospectus regarding the proposed
merger when it becomes available. Free copies of this document may
be obtained as described in the preceding paragraph.
Investor Relations Website
Investors and others should note that Oaktree uses the
Unitholders – Investor Relations section of its corporate website
to announce material information to investors and the marketplace.
While not all of the information that Oaktree posts on its
corporate website is of a material nature, some information could
be deemed to be material. Accordingly, Oaktree encourages
investors, the media, and others interested in Oaktree to review
the information that it shares on its corporate website at the
Unitholders – Investor Relations section of the Oaktree website,
ir.oaktreecapital.com. Information contained on, or available
through, our website is not incorporated by reference into this
document.
GAAP Consolidated Statements of
Operations
Three Months Ended March 31,
2019 2018 (in thousands, except per
unit data) Revenues: Management fees $ 169,934 $ 185,415
Incentive income 96,481 151,906 Total revenues
266,415 337,321 Expenses: Compensation and benefits
(114,523 ) (108,754 ) Equity-based compensation (14,329 ) (14,621 )
Incentive income compensation (52,300 ) (84,815 ) Total
compensation and benefits expense (181,152 ) (208,190 ) General and
administrative (47,603 ) (32,964 ) Depreciation and amortization
(6,564 ) (6,402 ) Consolidated fund expenses (2,155 ) (3,480 )
Total expenses (237,474 ) (251,036 ) Other income (loss): Interest
expense (45,765 ) (40,579 ) Interest and dividend income 92,252
62,619 Net realized gain (loss) on consolidated funds’ investments
(5,819 ) 14,599 Net change in unrealized appreciation
(depreciation) on consolidated funds’ investments 57,117 (14,386 )
Investment income 62,150 34,563 Other income (expense), net 22
697 Total other income (loss) 159,957 57,513
Income before income taxes 188,898 143,798 Income taxes
(4,498 ) (6,397 ) Net income 184,400 137,401 Less: Net income
attributable to non-controlling interests in consolidated funds
(64,202 ) (10,725 ) Net income attributable to non-controlling
interests in consolidated subsidiaries (66,115 ) (73,944 ) Net
income attributable to OCG 54,083 52,732 Net income attributable to
preferred unitholders (6,829 ) — Net income attributable to
OCG Class A unitholders $ 47,254 $ 52,732
Distributions declared per Class A unit $ 0.75 $ 0.76
Net income per Class A unit (basic and diluted): Net income per
Class A unit $ 0.66 $ 0.78 Weighted average number of
Class A units outstanding 71,632 67,918
Operating Metrics
We monitor certain operating metrics that are either common to
the alternative asset management industry or that we believe
provide important data regarding our business. As described below,
these operating metrics include AUM, management fee-generating AUM,
incentive-creating AUM, incentives created (fund level), accrued
incentives (fund level) and uncalled capital commitments.
Assets Under Management As of March 31,
December 31, March 31, 2019
2018 2018 (in millions) Assets Under
Management: Closed-end funds $ 55,083 $ 57,106 $ 55,682
Open-end funds 28,420 29,781 33,703 Evergreen funds 9,140 8,558
8,227 DoubleLine (1) 25,966 24,115 23,782
Total $ 118,609 $ 119,560 $ 121,394
Three Months Ended Twelve Months Ended March
31, March 31, 2019 2018 2019
2018 (in millions) Change in Assets Under
Management: Beginning balance $ 119,560 $ 123,930 $ 121,394 $
121,232 Closed-end funds: Capital commitments/other (2) 269 653
7,078 2,031 Distributions for a realization event / other (3)
(1,788 ) (2,182 ) (6,556 ) (10,262 ) Change in uncalled capital
commitments for funds entering or in liquidation (4) (799 ) (306 )
(1,046 ) (319 ) Foreign-currency translation (147 ) 219 (767 )
1,106 Change in market value (5) 623 431 1,204 3,105 Change in
applicable leverage (181 ) (4 ) (512 ) 173 Open-end funds:
Contributions 1,042 891 4,165 4,623 Redemptions (4,388 ) (2,635 )
(9,739 ) (8,399 ) Foreign-currency translation (19 ) 181 (562 ) 874
Change in market value (5) 2,004 (175 ) 853 1,480 Evergreen funds:
Contributions or new capital commitments (6) 260 363 1,096 1,089
Acquisition (BDCs) — — — 2,110 Redemptions or distributions (7)
(116 ) (161 ) (751 ) (786 ) Foreign-currency translation — (3 ) 2
(2 ) Change in market value (5) 438 112 566 476 DoubleLine: Net
change in DoubleLine 1,851 80 2,184 2,863
Ending balance $ 118,609 $ 121,394 $ 118,609
$ 121,394
(1)
DoubleLine AUM reflects our pro-rata
portion (based on our 20% ownership stake) of DoubleLine’s total
AUM.
(2)
These amounts include capital commitments,
as well as the aggregate par value of collateral assets and
principal cash related to new CLO formations.
(3)
These amounts include distributions for a
realization event, tax-related distributions, reductions in the par
value of collateral assets and principal cash resulting from the
repayment of debt as return of principal by CLOs, and recallable
distributions at the end of the investment period.
(4)
The change in uncalled capital commitments
generally reflects declines attributable to funds entering their
liquidation periods, as well as capital contributions to funds in
their liquidation periods for deferred purchase obligations or
other reasons.
(5)
The change in market value reflects the
change in NAV of our funds, less management fees and other fund
expenses, as well as changes in the aggregate par value of
collateral assets and principal cash held by CLOs and other levered
funds.
(6)
These amounts include contributions and
capital commitments, and for our publicly-traded BDCs, issuances of
equity or debt capital.
(7)
These amounts include redemptions and
distributions, and for our publicly-traded BDCs, dividends,
repurchases of equity capital or repayment of debt.
Management Fee-generating AUM As of
March 31, December 31, March 31,
2019 2018 2018 Management Fee-generating
AUM: (in millions) Closed-end funds: Senior Loans $
8,179 $ 8,383 $ 8,104 Other closed-end funds 29,792 28,552 29,734
Open-end funds 28,152 29,503 33,448 Evergreen funds 8,175 7,555
6,975 DoubleLine 25,966 24,115 23,782 Total $
100,264 $ 98,108 $ 102,043
Three Months EndedMarch
31,
Twelve Months EndedMarch
31,
2019 2018 2019 2018 Change in
Management Fee-generating AUM: (in millions)
Beginning balance $ 98,108 $ 104,287 $ 102,043 $ 100,248 Closed-end
funds: Capital commitments to funds that pay fees based on
committed capital / other (1) 1,268 — 3,015 952 Capital drawn by
funds that pay fees based on drawn capital, NAV or cost basis 579
559 3,093 1,895 Change attributable to funds in liquidation (2)
(501 ) (1,595 ) (3,599 ) (5,401 ) Change in uncalled capital
commitments for funds entering or in liquidation that pay fees
based on committed capital (3) — — (766 ) — Distributions by funds
that pay fees based on NAV / other (4) (92 ) (193 ) (451 ) (954 )
Foreign-currency translation (120 ) 174 (646 ) 932 Change in market
value (5) 76 53 (20 ) 182 Change in applicable leverage (174 ) (5 )
(493 ) 171 Open-end funds: Contributions 1,042 890 4,056 4,575
Redemptions (4,362 ) (2,635 ) (9,686 ) (8,398 ) Foreign-currency
translation (19 ) 181 (562 ) 874 Change in market value 1,988 (176
) 896 1,467 Evergreen funds: Contributions or capital drawn by
funds that pay fees based on drawn capital or NAV (6) 250 470 1,250
931 Acquisition (BDCs) — — — 2,110 Redemptions or distributions (7)
(98 ) (147 ) (652 ) (829 ) Change in market value (5) 468 100 602
425 DoubleLine: Net change in DoubleLine 1,851 80
2,184 2,863 Ending balance $ 100,264 $ 102,043
$ 100,264 $ 102,043 (1)
These amounts include capital commitments to funds that pay fees
based on committed capital, as well as the aggregate par value of
collateral assets and principal cash related to new CLO formations.
(2) These amounts include the change for funds that pay fees based
on the lesser of funded capital or cost basis during the
liquidation period, as well as recallable distributions at the end
of the investment period. For most closed-end funds, management
fees are charged during the liquidation period on the lesser of (a)
total funded capital or (b) the cost basis of assets remaining in
the fund, with the cost basis of assets generally calculated by
excluding cash balances. Thus, changes in fee basis during the
liquidation period are not dependent on distributions made from the
fund; rather, they are tied to the cost basis of the fund’s
investments, which typically declines as the fund sells assets. (3)
The change in uncalled capital commitments reflects declines
attributable to funds entering their liquidation periods, as well
as capital contributions to funds in their liquidation periods for
deferred purchase obligations or other reasons. (4) These amounts
include distributions by funds that pay fees based on NAV, as well
as reductions in the par value of collateral assets and principal
cash resulting from the repayment of debt as return of principal by
CLOs. (5) The change in market value reflects certain funds that
pay management fees based on NAV and leverage, as applicable, as
well as changes in the aggregate par value of collateral assets and
principal cash held by CLOs and other levered funds. (6) These
amounts include contributions and capital commitments, and for our
publicly-traded BDCs, issuances of equity or debt capital. (7)
These amounts include redemptions and distributions, and for our
publicly-traded BDCs, dividends, repurchases of equity capital or
repayment of debt.
As of March 31,
December 31, March 31, 2019
2018 2018 Reconciliation of AUM to Management
Fee-generating AUM: (in millions) Assets under
management $ 118,609 $ 119,560 $ 121,394 Difference between assets
under management and committed capital or the lesser of funded
capital or cost basis for applicable closed-end funds (1) (1,826 )
(2,899 ) (2,195 ) Undrawn capital commitments to closed-end funds
that have not yet commenced their investment periods (8,532 )
(9,772 ) (8,463 ) Undrawn capital commitments to funds for which
management fees are based on drawn capital, NAV or cost basis
(4,075 ) (4,459 ) (3,954 )
Oaktree’s general partner investments in
management fee-generating funds
(1,535 ) (1,642 ) (2,059 ) Funds that pay no management fees (2)
(2,377 ) (2,680 ) (2,680 ) Management fee-generating assets under
management $ 100,264 $ 98,108 $ 102,043
(1) This difference is not applicable to closed-end
funds that pay management fees based on NAV or leverage. (2) This
includes funds that are no longer paying management fees,
co-investments that pay no management fees, certain accounts that
pay administrative fees intended to offset Oaktree’s costs related
to the accounts and CLOs in the warehouse stage that pay no
management fees.
The period-end weighted average annual management fee rates
applicable to the closed-end, open-end and evergreen management
fee-generating AUM balances above are set forth below.
As of March 31, December 31,
March 31, Weighted Average Annual Management Fee
Rates: 2019 2018 2018 Closed-end funds:
Senior Loans 0.49 % 0.49 % 0.50 % Other closed-end funds 1.43 1.43
1.47 Open-end funds 0.45 0.44 0.45 Evergreen funds (1) 1.17 1.17
1.20 All Oaktree funds (2) 0.93 0.90 0.91 (1)
Fee rates reflect the applicable asset-based management fee rates,
exclusive of quarterly incentive fees on investment income that are
included in management fees. (2) Excludes DoubleLine funds.
Incentive-creating AUM
As of March 31, December 31,
March 31,
2019 2018 2018 Incentive-creating AUM:
(in millions) Closed-end funds $ 27,174 $ 27,809 $ 26,732
Evergreen funds 6,633 6,215 5,688 DoubleLine 606 605
615 Total $ 34,413 $ 34,629 $ 33,035
Accrued Incentives (Fund Level) and
Incentives Created (Fund Level)
As of or for the Three Months Ended March 31,
2019 2018 Accrued Incentives (Fund
Level): (in thousands) Beginning balance $ 1,722,120
$ 1,920,339 Incentives created (fund level):
Closed-end funds 59,559 97,306 Evergreen funds 26,382 13,879
DoubleLine 2,051 — Total incentives created (fund
level) 87,992 111,185 Less: incentive income
recognized by us (385,208 ) (235,557 ) Ending balance $ 1,424,904
$ 1,795,967 Accrued incentives (fund level), net of
associated incentive income compensation expense $ 678,517 $
868,035
Non-GAAP Results
Our business is comprised of one segment, our investment
management business, which consists of the investment management
services that we provide to our clients. Management makes operating
decisions and assesses the performance of our business based on
financial data that are presented without the consolidation of our
funds. The data most important to management in assessing our
performance are distributable earnings and fee-related earnings,
each for both the Operating Group and per Class A unit.
Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures are presented at
Exhibit A.
Distributable Earnings
The following schedules set forth the components of
distributable earnings:
Distributable
Earnings Revenues
Three Months Ended March 31, 2019
2018 (in thousands) Revenues: Management fees
$ 190,101 $ 202,947 Incentive income 385,208 235,557 Realized
investment income proceeds 27,385 38,760 Total distributable
earnings revenues $ 602,694 $ 477,264
Adjusted
Expenses
Three Months Ended March 31, 2019
2018 (in thousands) Expenses: Compensation and
benefits $ (113,195 ) $ (104,770 ) Incentive income compensation
(207,701 ) (130,442 ) General and administrative (34,940 ) (37,437
) Depreciation and amortization (2,369 ) (2,253 ) Total adjusted
expenses $ (358,205 ) $ (274,902 )
Distributable
Earnings
Three Months Ended March 31, 2019
2018 (in thousands) Interest expense,
net of interest income (1) $ (909 ) $ (3,410 ) Preferred unit
distributions (6,829 ) — Operating Group income taxes (529 ) (2,746
) Other income (expense), net (2,330 ) (2,233 ) Distributable
earnings (2) $ 233,892 $ 193,973 (1)
Interest income was $5.3 million and $2.4 million for the
three months ended March 31, 2019 and 2018, respectively. (2)
Reflects the sum of total distributable earnings revenues, adjusted
expenses, net interest expense, preferred unit distributions,
Operating Group income taxes and other income (expense).
Distribution Calculation
The calculation of distributions is set forth below:
Three Months Ended March 31, 2019
2018 (in thousands, except per unit
data) Distributable earnings $ 233,892 $ 193,973
Distribution Calculation: Operating Group distribution with
respect to the period $ 177,221 $ 165,045 Distribution per
Operating Group unit $ 1.11 $ 1.05 Adjustments per Class A unit:
Distributable earnings-Class A income taxes — (0.02 ) Tax
receivable agreement (0.06 ) (0.06 ) Non-Operating Group expenses —
(0.01 ) Distribution per Class A unit (1) $ 1.05 $
0.96 (1) With respect to the quarter
ended March 31, 2019, a distribution was announced on April 25,
2019 and is payable on May 10, 2019.
Units Outstanding
Three Months Ended March 31, 2019
2018 (in thousands) Weighted Average
Units: OCGH 85,474 88,270 Class A 71,632 67,918 Total units
157,106 156,188
Units Eligible for Fiscal Period
Distribution: OCGH 86,719 86,007 Class A 72,940 71,179 Total
units 159,659 157,186
Additional Detail
Management
Fees
Three Months Ended March 31, 2019
2018 (in thousands) Management fees:
Closed-end funds $ 113,050 $ 121,706 Open-end funds 32,752 38,112
Evergreen funds 29,239 24,916 DoubleLine 15,060 18,213 Total
management fees $ 190,101 $ 202,947
Realized Investment
Income Proceeds
Three Months Ended March 31, 2019
2018 (in thousands) Oaktree funds: Credit $
16,548 $ 15,672 Private Equity 280 10,960 Real Assets 3,918 5,782
Listed Equities 4,282 5,551 Non-Oaktree 2,357 795 Total realized
investment income proceeds $ 27,385 $ 38,760
Investment
Income
Three Months Ended March 31, 2019
2018 (in thousands) Oaktree funds: Credit $
38,889 $ 14,884 Private Equity 4 (812 ) Real Assets 8,270 4,950
Listed Equities 10,633 (7,412 ) Non-Oaktree 5,416 1,042
Total investment income $ 63,212 $ 12,652
GAAP Statement of Financial Condition
(Unaudited)
As of March 31, 2019 Oaktree and
Operating Consolidated Subsidiaries
Funds Eliminations Consolidated (in
thousands) Assets: Cash and cash-equivalents $ 500,208 $
— $ — $ 500,208 U.S. Treasury and other securities 457,703 — —
457,703 Corporate investments 1,732,421 — (575,212 ) 1,157,209
Deferred tax assets 229,264 — — 229,264 Operating lease assets
109,281 — — 109,281 Receivables and other assets 899,483 — (3,550 )
895,933 Assets of consolidated funds — 7,205,598
— 7,205,598 Total assets $ 3,928,360 $
7,205,598 $ (578,762 ) $ 10,555,196
Liabilities and Capital:
Liabilities: Accounts payable and accrued expenses $ 368,650 $ — $
663 $ 369,313 Due to affiliates 189,634 — — 189,634 Debt
obligations 746,078 — — 746,078 Operating lease liabilities 139,210
— — 139,210 Liabilities of consolidated funds —
5,614,737 (29,548 ) 5,585,189 Total liabilities
1,443,572 5,614,737 (28,885 ) 7,029,424
Non-controlling redeemable interests in consolidated funds — —
1,040,984 1,040,984 Capital: Capital attributable to OCG preferred
unitholders 400,584 — — 400,584 Capital attributable to OCG Class A
unitholders 994,745 251,678 (251,678 ) 994,745 Non-controlling
interest in consolidated subsidiaries 1,089,459 298,199 (298,199 )
1,089,459 Non-controlling interest in consolidated funds —
1,040,984 (1,040,984 ) — Total capital
2,484,788 1,590,861 (1,590,861 ) 2,484,788
Total liabilities and capital $ 3,928,360 $ 7,205,598 $ (578,762 )
$ 10,555,196
Corporate Investments
As of March 31, December 31,
March 31, 2019 2018 2018 (in
thousands) Oaktree funds: Credit $ 1,004,646 $ 983,547 $
922,287 Private Equity 239,285 237,913 245,450 Real Assets 307,128
357,382 148,215 Listed Equities 83,524 94,736 126,777 Non-Oaktree
80,446 86,907 75,451 Total corporate
investments – Non-GAAP 1,715,029 1,760,485 1,518,180 Adjustments
(1) 17,392 10,745 29,945 Total corporate
investments – Oaktree and operating subsidiaries 1,732,421
1,771,230 1,548,125 Eliminations (575,212 ) (561,466 ) (545,924 )
Total corporate investments – Consolidated $ 1,157,209 $
1,209,764 $ 1,002,201 (1) This
adjusts CLO investments carried at amortized cost to fair value for
GAAP reporting.
Fund Data
Information regarding our closed-end, open-end and evergreen
funds, together with benchmark data where applicable, is set forth
below. For our closed-end and evergreen funds, no benchmarks are
presented in the tables as there are no known comparable benchmarks
for these funds’ investment philosophy, strategy and
implementation.
Closed-end
Funds
As of March 31, 2019 Investment
Period Total Committed Capital %
Invested (1)
%
Drawn (2)
Fund Net Income Since Inception Distri-
butions Since Inception
Net Asset Value Manage-
ment Fee-gener-
ating AUM
Incentive Income Recog-
nized (Non-GAAP)
Accrued Incentives (Fund Level) (3)
Unreturned Drawn Capital Plus Accrued Preferred Return
(4) IRR Since Inception (5)
Multiple of Drawn Capital (6) Start Date
End Date
Gross
Net
Credit
(in millions) Distressed Debt Oaktree Opportunities
Fund Xb (7)(13) TBD — $8,872 26% 13% $(10) $— $1,144 $1,136 $— $—
$1,198 nm nm 1.0x Oaktree Opportunities Fund X (7) Jan. 2016 Jan.
2019 3,603 86 86 1,133 385 3,829 2,959 72 147 3,207 25.5% 15.8% 1.4
Oaktree Opportunities Fund IX Jan. 2014 Jan. 2017 5,066 nm 100 835
2,178 3,723 3,601 — — 4,992 5.9 3.5 1.2 Oaktree Opportunities Fund
VIIIb Aug. 2011 Aug. 2014 2,692 nm 100 933 2,401 1,224 1,340 52 —
1,629 8.7 5.9 1.5 Special Account B Nov. 2009 Nov. 2012 1,031 nm
100 611 1,605 116 112 16 2 17 13.5 11.1 1.6 Oaktree Opportunities
Fund VIII Oct. 2009 Oct. 2012 4,507 nm 100 2,534 6,561 480 478 319
175 — 12.8 9.0 1.7 OCM Opportunities Fund VIIb May 2008 May 2011
10,940 nm 90 9,041 18,533 352 125 1,696 61 — 21.8 16.6 2.0 OCM
Opportunities Fund VII Mar. 2007 Mar. 2010 3,598 nm 100 1,488 4,907
179 — 87 — 369 10.2 7.4 1.5 Legacy funds (8) Various Various 12,748
nm 100 10,773 23,500 22 — 1,625 1 — 23.6 18.5 1.8 21.9% 16.0%
Private/Alternative Credit Oaktree European Capital
Solutions Fund (7)(9)(10) Dec. 2015 Dec. 2018 €703 88% 74% €71 €246
€342 €392 €5 €5 €308 14.5% 9.8% 1.2x Oaktree European Dislocation
Fund (10) Oct. 2013 Oct. 2016 €294 nm 62 €39 €203 €18 €17 €3 €3 €—
19.0 13.3 1.3 Special Account E (10) Oct. 2013 Apr. 2015 €379 nm 69
€64 €321 €4 €3 €9 €1 €— 14.3 11.0 1.3 15.1% 10.8% Oaktree
Mezzanine Fund IV (9) Oct. 2014 Oct. 2019 $852 85% 83% $138 $306
$536 $555 $6 $13 $511 11.5% 8.4% 1.2x Oaktree Mezzanine Fund III
(11) Dec. 2009 Dec. 2014 1,592 nm 89 480 1,805 98 72 30 20 13 15.4
10.4 / 9.4
1.4 OCM Mezzanine Fund II Jun. 2005 Jun. 2010 1,251 nm 88 494 1,692
53 — — — 135 10.9 7.4 1.6 OCM Mezzanine Fund (12) Oct. 2001 Oct.
2006 808 nm 96 302 1,075 — — 38 — — 15.4
10.8 / 10.5
1.5 13.0% 8.8%
Emerging Markets Debt Special Account H TBD —
$351 23% 23% $(2) $— $78 $75 $— $— $83 nm nm 1.0x Oaktree Emerging
Markets Opportunities Fund II (13) TBD — 259 20% 20 (2) — 51 49 — —
55 nm nm 1.0 Oaktree Emerging Market Opportunities Fund Sep. 2013
Sep. 2017 384 nm 78 120 340 78 71 9 12 37 15.5% 10.5% 1.5 Special
Account F Jan. 2014 Sep. 2017 253 nm 96 79 273 47 46 7 8 19 15.2
10.8 1.4 14.9% 10.1%
Private
Equity
Corporate Private Equity Oaktree European Principal Fund IV
(7)(10)(13) Jul. 2017 Jul. 2022 €1,119 96% 84% €230 €110 €1,061
€1,096 €— €45 €817 nm nm 1.3x Oaktree European Principal Fund III
(10) Nov. 2011 Nov. 2016 €3,164 nm 87 €2,551 €2,260 €3,040 €2,581
€154 €343 €1,659 18.1% 12.5% 2.1 OCM European Principal
Opportunities Fund II (10) Dec. 2007 Dec. 2012 €1,759 nm 100 €209
€1,865 €75 €— €29 €— €787 6.8 2.3 1.3 OCM European Principal
Opportunities Fund Mar. 2006 Mar. 2009 $495 nm 96 $454 $927 $— $—
$87 $— $— 11.7 8.9 2.1 13.3% 8.8%
As of March 31, 2019 Investment Period
Total Committed Capital %
Invested (1)
%
Drawn (2)
Fund Net Income Since Inception Distri-
butions Since Inception
Net Asset Value Manage-
ment Fee-gener-
ating AUM
Incentive Income Recog-
nized (Non-GAAP)
Accrued Incentives (Fund Level) (3)
Unreturned Drawn Capital Plus Accrued Preferred Return
(4) IRR Since
Inception (5)
Multiple of Drawn Capital (6) Start
Date End Date Gross Net (in
millions) Oaktree Power Opportunities Fund V Apr. 2019
Apr. 2024 $1,400 10% 9% $(5) $— $125 $1,390 $— $— $132 nm nm 1.0x
Oaktree Power Opportunities Fund IV Nov. 2015 Nov. 2020 1,106 93 92
98 2 1,116 1,078 — — 1,179 8.6% 4.9% 1.2 Oaktree Power
Opportunities Fund III Apr. 2010 Apr. 2015 1,062 nm 69 541 970 308
322 43 60 — 21.4 14.0 1.9 Legacy funds (8) Various Various 1,470 nm
63 1,688 2,615 (3) — 123 — — 35.1 27.4 2.8 34.3% 25.9%
Special
Situations Oaktree Special Situations Fund II (7) TBD — $1,336
12% 2% $(6) $3 $20 $145 $— $— $24 nm nm 1.0x Oaktree Special
Situations Fund (7) Nov. 2015 Nov. 2018 1,377 100 83 145 175 1,114
1,082 — 19 1,102 16.6% 8.5% 1.2x Other funds: Oaktree Principal
Fund V Feb. 2009 Feb. 2015 $2,827 nm 91% $419 $1,760 $1,245 $1,258
$50 $— $2,221 6.7% 2.7% 1.3x Special Account C Dec. 2008 Feb. 2014
505 nm 91 152 423 189 235 21 — 284 8.7 5.3 1.5 OCM Principal
Opportunities Fund IV Oct. 2006 Oct. 2011 3,328 nm 100 2,932 6,166
94 — 554 17 — 12.3 8.9 2.0 Legacy funds (8) Various Various 3,701
nm 100 2,718 6,404 15 — 407 — — 14.4 11.1 1.8 12.9% 9.1%
Real
Assets
Real Estate Oaktree Real Estate Opportunities Fund VII
(13)(14) Jan. 2016 Jan. 2020 $2,921 85% 47% $559 $248 $1,693 $2,775
$— $108 $1,233 nm nm 1.5x Oaktree Real Estate Opportunities Fund VI
Aug. 2012 Aug. 2016 2,677 nm 100 1,449 2,714 1,413 1,120 90 190 947
14.9% 10.0% 1.7 Oaktree Real Estate Opportunities Fund V Mar. 2011
Mar. 2015 1,283 nm 100 973 2,094 162 101 154 31 — 17.0 12.5 1.9
Special Account D Nov. 2009 Nov. 2012 256 nm 100 207 435 36 — 17 4
— 14.7 12.7 1.8 Oaktree Real Estate Opportunities Fund IV Dec. 2007
Dec. 2011 450 nm 100 391 787 54 — 63 11 — 15.7 10.7 2.0 Legacy
funds (8) Various Various 2,341 nm 99 2,010 4,326 — — 232 — — 15.2
11.9 1.9 15.6% 11.9% Oaktree Real Estate Debt Fund II
(9)(13) Mar. 2017 Mar. 2020 $2,087 66% 39% $61 $60 $814 $1,341 $—
$9 $781 nm nm 1.1x Oaktree Real Estate Debt Fund Sep. 2013 Oct.
2016 1,112 nm 83 200 733 391 426 12 16 259 19.2% 14.3% 1.3 Oaktree
PPIP Fund (15) Dec. 2009 Dec. 2012 2,322 nm 48 457 1,570 — — 47 — —
28.2 n/a 1.4 Special Account G (Real Estate Income) (9)(13)
Oct. 2016 Oct. 2020 $615 99% 99% $123 $86 $646 $574 $— $24 $594 nm
nm 1.2x
Infrastructure Oaktree Transportation
Infrastructure Fund Dec. 2018 Dec. 2023 $1,097 19% 19% $(8) $— $206
$837 $— $— $— nm nm 1.0x Highstar Capital IV (16) Nov. 2010 Nov.
2016 2,000 nm 100 (21) 1,008 981 1,264 — — 1,803 4.2% 0.2% 1.1
29,158
(10)
1,374
(10)
Other (17) 8,712 10 Total (18) $37,870 $1,384 (1)
For our incentive-creating closed-end funds in their
investment periods, this percentage equals invested capital divided
by committed capital. Invested capital for this purpose is the sum
of capital drawn from fund investors plus net borrowings
outstanding under a fund-level credit facility (if any), where such
borrowings were made in lieu of drawing capital from fund
investors. (2) Represents capital drawn from fund investors, net of
distributions to such investors of uninvested capital, divided by
committed capital. The aggregate change in drawn capital for the
three months ended March 31, 2019 was $0.7 billion. (3) Accrued
incentives (fund level) exclude non-GAAP incentive income
previously recognized. (4) Unreturned drawn capital plus accrued
preferred return reflects the amount the fund needs to distribute
to its investors as a return of capital and a preferred return (as
applicable) before Oaktree is entitled to receive incentive income
(other than tax distributions) from the fund. (5) The internal rate
of return (“IRR”) is the annualized implied discount rate
calculated from a series of cash flows. It is the return that
equates the present value of all capital invested in an investment
to the present value of all returns of capital, or the discount
rate that will provide a net present value of all cash flows equal
to zero. Fund-level IRRs are calculated based upon the actual
timing of cash contributions/distributions to investors and the
residual value of such investor’s capital accounts at the end of
the applicable period being measured. Gross IRRs reflect returns
before allocation of management fees, expenses and any incentive
allocation to the fund’s general partner. To the extent material,
gross returns include certain transaction, advisory, directors or
other ancillary fees (“fee income”) paid directly to us in
connection with our funds’ activities (we credit all such fee
income back to the respective fund(s) so that our funds’ investors
share pro rata in the fee income’s economic benefit). Net IRRs
reflect returns to non-affiliated investors after allocation of
management fees, expenses and any incentive allocation to the
fund’s general partner. (6) Multiple of drawn capital is calculated
as drawn capital plus gross income and, if applicable, fee income
before fees and expenses divided by drawn capital. (7) Fund data
include the performance of the main fund and any associated
fund-of-one accounts, except the gross and net IRRs presented
reflect only the performance of the main fund. Certain fund-of-one
accounts pay management fees based on cost basis, rather than
committed capital. (8) Legacy funds represent certain predecessor
funds within the relevant strategy or product that have
substantially or completely liquidated their assets, including
funds managed by certain Oaktree investment professionals while
employed at the Trust Company of the West prior to Oaktree’s
founding in 1995. When these employees joined Oaktree upon, or
shortly after, its founding, they continued to manage the fund
through the end of its term pursuant to a sub-advisory relationship
between the Trust Company of the West and Oaktree. (9) Management
fees during the investment period are calculated on drawn capital
or cost basis, rather than committed capital. As a result, as of
March 31, 2019 management fee-generating AUM included only that
portion of committed capital that had been drawn. (10) Aggregate
IRRs or totals are based on the conversion of cash flows or
amounts, respectively, from euros to USD using the March 31, 2019
spot rate of $1.12. (11) The fund’s partnership interests are
divided into Class A and Class B interests, with the Class A
interests having priority with respect to the distribution of
current income and disposition proceeds. The net IRR for Class A
interests was 10.4% and Class B interests was 9.4%. The combined
net IRR for Class A and Class B interests was 10.0%. (12) The
fund’s partnership interests are divided into Class A and Class B
interests, with the Class A interests having priority with respect
to the distribution of current income and disposition proceeds. The
net IRR for Class A interests was 10.8% and Class B interests was
10.5%. The combined net IRR for the Class A and Class B interests
was 10.6%. (13) The IRR is not considered meaningful (“nm”) as the
period from the initial capital contribution through March 31, 2019
was less than 36 months. (14) A portion of this fund pays
management fees based on drawn, rather than committed, capital.
(15) Due to differences in the allocation of income and expenses to
this fund’s two primary limited partners, the U.S. Treasury and
Oaktree PPIP Private Fund, a combined net IRR is not presented. Of
the $2,322 million in capital commitments, $1,161 million related
to the Oaktree PPIP Private Fund, whose gross and net IRR were
24.7% and 18.6%, respectively. (16) The fund follows the
American-style distribution waterfall, whereby the general partner
may receive an incentive allocation as soon as it has returned the
drawn capital and paid a preferred return on the fund’s realized
investments (i.e., on a deal-by-deal basis). However, such cash
distributions of incentives may be subject to repayment, or
clawback. As of March 31, 2019, Oaktree had not recognized any
incentive income from this fund. The accrued incentives (fund
level) for this fund represents Oaktree’s effective 8% of the
potential incentives generated by this fund in accordance with the
terms of the Highstar acquisition. (17) This includes our
closed-end Senior Loan funds, CLOs, a non-Oaktree fund and certain
separate accounts and co-investments. (18) The total excludes one
closed-end fund with management fee-generating AUM of $101 million
as of March 31, 2019, which has been included as part of the
Strategic Credit strategy within the evergreen funds table.
Open-end
Funds
Manage-
ment Fee-gener-
ating AUM
as of
Mar. 31, 2019
Twelve Months Ended
March 31, 2019
Since Inception through March 31, 2019 Strategy
Inception Rates of Return (1) Annualized Rates
of Return (1) Sharpe Ratio Oaktree
Rele-
vant Bench-
mark
Oaktree Rele-
vant Bench-
mark
Oaktree Gross Rele-
vant Bench-
mark
Gross Net Gross Net
(in millions)
Credit
High Yield Bonds U.S. High Yield Bonds 1986 $ 12,060 4.9 %
4.4 % 5.8 % 9.0 % 8.5 % 8.2 % 0.78 0.56 Global High Yield Bonds
2010 3,323 4.7 4.2 5.7 6.7 6.2 6.6 1.04 1.04 European High Yield
Bonds 1999 436 6.8 6.3 4.6 7.9 7.4 6.2 0.72 0.46
Convertibles U.S. Convertibles 1987 927 4.4 3.9 7.8 9.2 8.6
8.3 0.49 0.39 Non-U.S. Convertibles 1994 652 0.2 (0.3 ) 0.9 7.9 7.3
5.3 0.75 0.38 High Income Convertibles 1989 1,041 4.7 4.1 5.9 11.0
10.2 8.0 1.05 0.60
Senior Loans U.S. Senior Loans
2008 641 3.6 3.1 3.3 5.8 5.3 5.1 1.07 0.65 European Senior Loans
2009 1,094 2.2 1.6 1.7 7.0 6.5 7.6 1.61 1.61
Multi-Strategy Credit Multi-Strategy Credit (2) Various
2,585 nm nm nm nm nm nm nm nm
Listed
Equities
Emerging Markets Equities Emerging Markets Equities 2011
5,393 (4.9 ) (5.6 ) (7.4 ) 2.7 1.9 1.4 0.12 0.05
Total
$ 28,152 (1) Returns represent time-weighted
rates of return, including reinvestment of income, net of
commissions and transaction costs. The returns for Relevant
Benchmarks are presented on a gross basis. (2) Includes Global
Credit Fund and individual accounts across various strategies with
different investment mandates. As such, a combined performance
measure is not considered meaningful (“nm”).
Evergreen
Funds
As of March 31, 2019 Twelve Months
Ended March 31, 2019 Since Inception through March
31, 2019 AUM Manage-
ment
Fee-gener-
ating AUM
Accrued Incen-
tives (Fund Level)
Strategy Inception Rates of Return (1)
Annualized Rates
of Return (1)
Gross Net Gross Net
(in millions)
Credit
Private/Alternative Credit Strategic Credit (2) 2012 $ 5,581
$ 5,244 $ 11 7.7 % 5.8 % 9.1 % 6.7 %
Distressed Debt
Value Opportunities 2007 1,051 978 8 12.8 8.9 10.0 6.2
Emerging Markets Debt Emerging Markets Debt (3) 2015 1,181
692 — 4.0 2.3 12.8 9.8
Listed
Equities
Value/Other Equities Value Equities (4) 2012 535 510
6 11.4 8.0 19.4 14.1 7,424 25
Other (5)
852 12
Restructured funds
— 4
Total (2)
$ 8,276 $ 41 (1) Returns represent
time-weighted rates of return. (2) Includes our publicly-traded
BDCs and one closed-end fund with $81 million and $101 million of
AUM and management fee-generating AUM, respectively. The rates of
return reflect the performance of a composite of certain evergreen
accounts and exclude our publicly-traded BDCs. (3) Includes the
Emerging Markets Debt Total Return and Emerging Markets
Opportunities strategies. The rates of return reflect the
performance of a composite of accounts for the Emerging Markets
Debt Total Return strategy, including a single account with a
December 2014 inception date. (4) Includes performance of a
proprietary fund with an initial capital commitment of $25 million
since its inception in May 2012. (5) Includes certain Real Estate
and Multi-Strategy Credit accounts.
GLOSSARY
Accrued incentives (fund level) represents the incentive
income that would be paid to us if the funds were liquidated at
their reported values as of the date of the financial statements.
Incentives created (fund level) refers to the gross amount of
potential incentives generated by the funds during the period, and
includes our pro-rata portion of performance fees attributable to
our minority interest in DoubleLine earned in the period. We refer
to the amount of accrued incentives recognized as revenue by us as
incentive income. Amounts recognized by us as incentive income are
no longer included in accrued incentives (fund level), the term we
use for remaining fund-level accruals. Incentives created (fund
level), incentive income and accrued incentives (fund level) are
presented gross, without deduction for direct compensation expense
that is owed to our investment professionals associated with the
particular fund when we earn the incentive income. We call that
charge “incentive income compensation expense.” Incentive income
compensation expense varies by the investment strategy and vintage
of the particular fund, among many factors.
Assets under management (“AUM”) generally refers to the
assets we manage and equals the NAV of the assets we manage, the
leverage on which management fees are charged, the undrawn capital
that we are entitled to call from investors in our funds pursuant
to their capital commitments, and our pro-rata portion of AUM
managed by DoubleLine in which we hold a minority ownership
interest. For our CLOs, AUM represents the aggregate par value of
collateral assets and principal cash, for our publicly-traded BDCs,
gross assets (including assets acquired with leverage), net of
cash, and for DoubleLine funds, NAV. Our AUM includes amounts for
which we charge no management fees.
- Management fee-generating assets
under management (“management fee-generating AUM”) is a
forward-looking metric and generally reflects the beginning AUM on
which we will earn management fees in the following quarter, as
well as our pro-rata portion of the fee basis of DoubleLine’s AUM.
Our closed-end funds typically pay management fees based on
committed capital, drawn capital or cost basis during the
investment period, without regard to changes in NAV, and during the
liquidation period on the lesser of (a) total funded capital
or (b) the cost basis of assets remaining in the fund. The
annual management fee rate generally remains unchanged from the
investment period through the liquidation period. Our open-end and
evergreen funds typically pay management fees based on their NAV,
our CLOs pay management fees based on the aggregate par value of
collateral assets and principal cash, as defined in the applicable
CLO indentures, our publicly-traded BDCs pay management fees based
on gross assets (including assets acquired with leverage), net of
cash, and DoubleLine funds typically pay management fees based on
NAV. As compared with AUM, management fee-generating AUM generally
excludes the following:
- Differences between AUM and either
committed capital or cost basis for most closed-end funds, other
than for closed-end funds that pay management fees based on NAV and
leverage, as applicable;
- Undrawn capital commitments to
closed-end funds that have not yet commenced their investment
periods;
- Undrawn capital commitments to funds
for which management fees are based on drawn capital, NAV or cost
basis;
- Oaktree’s general partner investments
in management fee-generating funds; and
- Funds that pay no management fees.
- Incentive-creating assets under
management (“incentive-creating AUM”) refers to the AUM that
may eventually produce incentive income. It generally represents
the NAV of our funds for which we are entitled to receive an
incentive allocation, excluding CLOs and investments made by us and
our employees and directors (which are not subject to an incentive
allocation), gross assets (including assets acquired with
leverage), net of cash, for our publicly-traded BDCs, and our
pro-rata portion of DoubleLine’s incentive-creating AUM. All funds
for which we are entitled to receive an incentive allocation are
included in incentive-creating AUM, regardless of whether or not
they are currently above their preferred return or high-water mark
and therefore generating incentives. Incentive-creating AUM does
not include undrawn capital commitments.
Class A units refer to the common units of OCG designated
as Class A units.
Consolidated funds refers to the funds and CLOs that
Oaktree is required to consolidate as of the respective reporting
date.
Distributable earnings (“DE”) is a non-GAAP performance
measure of profitability for our investment management business. DE
reflects our realized earnings, after deducting preferred unit
distributions, at the Operating Group level without the effects of
the consolidated funds for the purpose of, among other things,
assisting in the determination of equity distributions from the
Operating Group. However, the declaration, payment and
determination of the amount of equity distributions, if any, is at
the sole discretion of our board of directors, which may change our
distribution policy at any time. DE revenues include the portion of
the earnings from management fees and performance fees attributable
to our 20% ownership interest in DoubleLine, which are reflected as
investment income in our GAAP statements of operations. DE excludes
(a) unrealized incentive income and the associated incentive income
compensation expense, (b) unrealized gains and losses resulting
from foreign-currency transactions and hedging activities, and (c)
excludes investment income or loss, which is largely non-cash in
nature, and includes the portion of income or loss on distributions
received from funds and companies. DE also excludes (a) non-cash
equity-based compensation expense, (b) acquisition-related
items, including amortization of intangibles, changes in the
contingent consideration liability and costs related to the
Brookfield transaction, (c) income taxes and other income or
expense applicable to OCG or its Intermediate Holding Companies,
and (d) non-controlling interests. In addition, any make-whole
premium charges related to the repayment of debt are, for DE
purposes, amortized through the original maturity date of the
repaid debt.
Distributable earnings-Class A, or distributable earnings per
Class A unit, is a non-GAAP performance measure calculated to
provide Class A unitholders with a measure that shows the portion
of DE attributable to their ownership. Distributable earnings-Class
A represents DE, including the effect of (a) the OCGH
non-controlling interest, (b) expenses such as current income
tax expense applicable to OCG or its Intermediate Holding
Companies, and (c) amounts payable under a tax receivable
agreement. The income tax expense included in distributable
earnings-Class A represents the implied current provision for
income taxes calculated using an approach similar to that which is
used in calculating the income tax provision for GAAP.
Fee-related earnings (“FRE”) is a non-GAAP performance
measure that we use to monitor the baseline earnings of our
business. FRE is a component of DE and is comprised of management
fees (“fee revenues”) less operating expenses other than incentive
income compensation expense and non-cash equity-based compensation
expense. FRE is considered baseline because it excludes all
non-management fee revenue sources and applies all cash
compensation and benefits other than incentive income compensation
expense, as well as all general and administrative expenses, to
management fees, even though those expenses also support the
generation of incentive and realized investment income proceeds.
FRE is presented before income taxes.
Fee-related earnings-Class A, or fee-related earnings per
Class A unit, is a non-GAAP performance measure calculated to
provide Class A unitholders with a measure that shows the portion
of FRE attributable to their ownership. Fee-related earnings-Class
A represents FRE including the effect of (a) the OCGH
non-controlling interest, (b) other income or expenses, such
as income tax expense, applicable to OCG or its Intermediate
Holding Companies and (c) any Operating Group income taxes
attributable to OCG. Fee-related earnings-Class A income taxes is
calculated excluding any incentive income or investment income
(loss).
Incentive income is generally recognized for our
closed-end funds only after the fund has distributed all
contributed capital plus an annual preferred return (commonly
referred to as the European-style waterfall) and, for our evergreen
funds, on an annual basis up to 20% of the year’s profits, subject
to a high-water mark or hurdle rate. For non-GAAP reporting,
incentive income also includes the portion of the performance fees
attributable to our minority equity interest in DoubleLine earned
in the period.
Intermediate Holding Companies collectively refers to the
subsidiaries wholly owned by us.
Invested capital reflects deployed capital, whether
involving drawn or recycled equity capital, or borrowings from
fund-level credit facilities. This metric is used in connection
with incentive-creating closed-end funds and certain evergreen
funds.
Management fees are recognized over the period in which
our investment advisory services are performed and for non-GAAP
reporting include the portion of the earnings from management fees
attributable to our minority equity interest in DoubleLine.
Net asset value (“NAV”) refers to the value of all the
assets of a fund (including cash and accrued interest and
dividends) less all liabilities of the fund (including accrued
expenses and any reserves established by us, in our discretion, for
contingent liabilities) without reduction for accrued incentives
(fund level) because they are reflected in the partners’ capital of
the fund.
Oaktree, OCG, we, us, our or the Company refers to
Oaktree Capital Group, LLC and, where applicable, its subsidiaries
and affiliates.
Oaktree Operating Group (“Operating Group”) refers
collectively to the entities in which we have a minority economic
interest and indirect control that either (i) act as or control the
general partners and investment advisers of our funds or (ii) hold
interests in other entities or investments generating income for
us.
Preferred units or preferred unitholders refer to the
Series A and Series B preferred units of OCG or Series A and Series
B preferred unitholders, respectively, unless otherwise
specified.
Relevant Benchmark refers, with respect to:
- our U.S. High Yield Bond product, to
the FTSE US High-Yield Cash-Pay Capped Index;
- our Global High Yield Bond product, to
an Oaktree custom global high yield index that represents 60% ICE
BofAML High Yield Master II Constrained Index and 40% ICE BofAML
Global Non-Financial High Yield European Issuers 3% Constrained,
ex-Russia Index – USD Hedged from inception through December 31,
2012, and the ICE BofAML Non-Financial Developed Markets High Yield
Constrained Index – USD Hedged thereafter;
- our European High Yield Bond product,
to the ICE BofAML Global Non-Financial High Yield European Issuers
excluding Russia 3% Constrained Index (USD Hedged);
- our U.S. Senior Loan product (with the
exception of the closed-end funds), to the Credit Suisse Leveraged
Loan Index;
- our European Senior Loan product, to
the Credit Suisse Western European Leveraged Loan Index (EUR
Hedged);
- our U.S. Convertible Securities
product, to an Oaktree custom convertible index that represents the
Credit Suisse Convertible Securities Index from inception through
December 31, 1999, the Goldman Sachs/Bloomberg Convertible 100
Index from January 1, 2000 through June 30, 2004, and the
ICE BofAML All U.S. Convertibles Index thereafter;
- our non-U.S. Convertible Securities
product, to an Oaktree custom non-U.S. convertible index that
represents the JACI Global ex-U.S. (Local) Index from inception
through December 31, 2014 and the Thomson Reuters Global Focus
ex-U.S. (USD hedged) Index thereafter;
- our High Income Convertible Securities
product, to the FTSE US High-Yield Market Index; and
- our Emerging Markets Equities product,
to the Morgan Stanley Capital International Emerging Markets Index
(Net).
Sharpe Ratio refers to a metric used to calculate
risk-adjusted return. The Sharpe Ratio is the ratio of excess
return to volatility, with excess return defined as the return
above that of a riskless asset (based on the three-month U.S.
Treasury bill, or for our European Senior Loan product, the Euro
Overnight Index Average) divided by the standard deviation of such
return. A higher Sharpe Ratio indicates a return that is higher
than would be expected for the level of risk compared to the
risk-free rate.
Uncalled capital commitments represent undrawn capital
commitments by partners (including Oaktree as general partner) of
our closed-end funds through their investment periods and certain
evergreen funds. If a fund distributes capital during its
investment period, that capital is typically subject to possible
recall, in which case it is included in uncalled capital
commitments.
EXHIBIT
A
Use of Non-GAAP Financial Information
Oaktree discloses certain non-GAAP financial measures in this
earnings release. Reconciliations of these non-GAAP financial
measures to the most directly comparable financial measures
calculated and presented in accordance with GAAP are presented
below. Management makes operating decisions and assesses the
performance of Oaktree’s business based on these non-GAAP financial
measures. These non-GAAP financial measures should be considered in
addition to, and not as a substitute for or superior to, net
income, net income per Class A unit or other financial measures
presented in accordance with GAAP.
Reconciliation of GAAP to Non-GAAP Results
The following table reconciles net income attributable to
Oaktree Capital Group, LLC Class A unitholders to distributable
earnings and fee-related earnings.
Three Months Ended March 31, 2019
2018 (in thousands) Net income attributable to
OCG Class A unitholders $ 47,254 $ 52,732 Incentive income (1)
286,676 83,581 Incentive income compensation (1) (155,401 ) (45,627
) Investment income (67,899 ) (23,139 ) Realized investment income
proceeds (2) 27,385 38,760 Equity-based compensation (3) 14,329
14,621 Foreign-currency hedging (4) (1,373 ) (2,122 )
Acquisition-related items (5) 16,821 1,574 Other expense, net (6)
(2,745 ) (2,745 ) Income taxes 3,969 3,651 Non-Operating Group
(income) expenses (7) (52 ) (20 ) Non-controlling interests (7)
64,928 72,707 Distributable earnings (8) 233,892
193,973 Incentive income (385,208 ) (235,557 ) Incentive income
compensation 207,701 130,442 Realized investment income proceeds
(27,385 ) (38,760 ) Interest expense, net of interest income 909
3,410 Preferred unit distributions 6,829 — Other expense, net 2,330
2,233 Operating Group income taxes 529 2,746
Fee-related earnings (8) $ 39,597 $ 58,487 (1)
This adjustment relates to unrealized incentive
income which is excluded from distributable earnings revenues and
incentive income compensation expense. (2) This adjustment reflects
the portion of distributions received from funds characterized as
realized investment income or loss. In general, the income or loss
component of a distribution from a fund is calculated by
multiplying the amount of the distribution by the ratio of our
investment’s undistributed income or loss to our remaining
investment balance. In addition, if the distribution is made during
the investment period, it is generally not reflected in
distributable earnings until after the investment period ends. (3)
This adjustment adds back the effect of equity-based compensation
expense, which is excluded from distributable earnings because it
is a non-cash charge that does not affect our financial position.
(4) This adjustment removes the effect of unrealized gains and
losses related to foreign-currency hedging activities. (5) This
adjustment adds back the effect of acquisition-related items
associated with the amortization of intangibles, changes in the
contingent consideration liability and costs related to the
Brookfield transaction, which are excluded from distributable
earnings. (6) For distributable earnings, the $22 million
make-whole premium charge that was included in net income
attributable to OCG Class A unitholders in the fourth quarter of
2017 in connection with the early repayment of our 2019 Notes is
amortized through the original maturity date of December 2019. (7)
Because distributable earnings is calculated at the Operating Group
level, this adjustment adds back the effect of items applicable to
OCG, its Intermediate Holding Companies or non-controlling
interests. (8) Per Class A unit amounts are calculated to evaluate
the portion of distributable earnings and fee-related earnings
attributable to Class A unitholders. Reconciliations of
distributable earnings to distributable earnings per Class A unit
and fee-related earnings to fee-related earnings per Class A unit
are presented below.
Three Months Ended March 31, 2019
2018 (in thousands, except per unit data)
Distributable earnings $ 233,892 $ 193,973 OCGH non-controlling
interest (127,249 ) (109,624 ) Non-Operating Group income (expense)
52 20 Distributable earnings-Class A income taxes 1,699 (333 ) Tax
receivable agreement (3,825 ) (3,858 ) Distributable earnings-Class
A $ 104,569 $ 80,178 Distributable earnings per Class
A unit $ 1.46 $ 1.18 Weighted average number of Class
A units outstanding 71,632 67,918
Three
Months Ended March 31, 2019 2018 (in
thousands, except per unit data) Fee-related earnings $
39,597 $ 58,487 OCGH non-controlling interest (21,543 ) (33,054 )
Non-Operating Group expense (195 ) (207 ) Fee-related
earnings-Class A income taxes (999 ) (957 ) Fee-related
earnings-Class A $ 16,860 $ 24,269 Fee-related
earnings per unit $ 0.24 $ 0.36 Weighted average
number of total units outstanding 71,632 67,918
The following table reconciles GAAP revenues to distributable
earnings revenues and fee-related earnings revenues.
Three Months Ended March 31, 2019
2018 (in thousands) GAAP revenues $ 266,415 $
337,321 Consolidated funds (1) 5,107 (611 ) Management fees (2)
15,060 18,213 Incentive income (3) 288,727 83,581 Realized
investment income proceeds 27,385 38,760
Distributable earnings revenues 602,694 477,264 Incentive income
(385,208 ) (235,557 ) Realized investment income proceeds (27,385 )
(38,760 ) Fee revenues $ 190,101 $ 202,947 (1)
This adjustment represents amounts attributable to
the consolidated funds that were eliminated in consolidation, the
reclassification of gains and losses related to foreign-currency
hedging activities from general and administrative expense to
revenues, the elimination of non-controlling interests from
adjusted revenues, and certain compensation and administrative
related expense reimbursements netted with expenses. (2) This
adjustment reclassifies the portion of the earnings from the
management fees attributable to our 20% ownership interest in
DoubleLine, which is included in consolidated investment income in
our GAAP statements of operations to revenues. (3) This adjustment
relates to unrealized incentive income which is excluded from
distributable earnings revenues and reclassifies the portion of the
earnings from the performance fees attributable to our 20%
ownership interest in DoubleLine, which is included in consolidated
investment income in our GAAP statements of operations to revenues.
The following tables reconcile GAAP consolidated financial data
to non-GAAP data:
As of or for the Three Months Ended March 31,
2019 Distributable Consolidated
Adjustments Earnings (in thousands) Management
fees (1) $ 169,934 $ 20,167 $ 190,101 Incentive income (1) 96,481
288,727 385,208 Realized investment income proceeds (2) — 27,385
27,385 Total expenses (3) (237,474 ) (120,731 ) (358,205 ) Interest
expense, net (4) (45,765 ) 44,856 (909 ) Investment income (2)
62,150 (62,150 ) — Other income (expense), net (5) 22 (2,352 )
(2,330 ) Other income of consolidated funds (6) 143,550 (143,550 )
— Income taxes (4,498 ) 3,969 (529 ) Net income attributable to
non-controlling interests in consolidated funds (64,202 ) 64,202 —
Net income attributable to non-controlling interests in
consolidated subsidiaries (66,115 ) 66,115 — Net income
attributable to preferred unitholders (6,829 ) — (6,829 )
Net income attributable to OCG Class A unitholders / Distributable
earnings $ 47,254 $ 186,638 $ 233,892
(1) The adjustment (a) adds back amounts earned from
the consolidated funds, (b) reclassifies DoubleLine investment
income of $15,060 to management fees and $2,051 to incentive
income, (c) for management fees, reclassifies $1,078 of net gains
related to foreign-currency hedging activities from general and
administrative expense and $2,469 of expense reimbursements
grossed-up for GAAP reporting, but netted with expenses for
distributable earnings, and (d) $286,676 related to incentive
income. (2) Distributable earnings excludes investment income or
loss and includes the portion of income or loss on distributions
received from funds and companies. (3) The expense adjustment
consists of (a) equity-based compensation expense of $14,329, (b)
consolidated fund expenses of $3,700, (c) expenses incurred by the
Intermediate Holding Companies of $195, (d) incentive income
compensation expense related to unrealized incentive income of
$155,401, (e) $3,891 of acquisition-related items, (f) $12,930
related to the Brookfield transaction, (g) $2,844 of net gains
related to foreign-currency hedging activities, and (h) $2,469 of
reimbursements grossed-up as revenues for GAAP reporting, but
netted with expenses for distributable earnings. (4) The interest
expense adjustment removes interest expense of the consolidated
funds and reclassifies interest income from other income of
consolidated funds. (5) The adjustment to other income (expense),
net represents adjustments related to (a) the reclassification of
$393 in net gains related to foreign-currency hedging activities
from general and administrative expense and the amortization of
make-whole premium expenses. (6) The adjustment to other income of
consolidated funds removes interest, dividend and other investment
income attributable to third-party investors in our consolidated
funds, and reclassifies interest income to interest expense, net.
As of or for the Three Months Ended March
31, 2018 Distributable Consolidated
Adjustments Earnings (in thousands) Management
fees (1) $ 185,415 $ 17,532 $ 202,947 Incentive income (1) 151,906
83,651 235,557 Realized investment income proceeds (2) — 38,760
38,760 Total expenses (3) (251,036 ) (23,866 ) (274,902 ) Interest
expense, net (4) (40,579 ) 37,169 (3,410 ) Investment income (2)
34,563 (34,563 ) — Other income (expense), net (5) 697 (2,930 )
(2,233 ) Other income of consolidated funds (6) 62,832 (62,832 ) —
Income taxes (6,397 ) 3,651 (2,746 ) Net income attributable to
non-controlling interests in consolidated funds (10,725 ) 10,725 —
Net income attributable to non-controlling interests in
consolidated subsidiaries (73,944 ) 73,944 — Net
income attributable to OCG Class A unitholders / Distributable
earnings $ 52,732 $ 141,241 $ 193,973
(1) The adjustment (a) adds back amounts earned from
the consolidated funds, (b) reclassifies DoubleLine investment
income of $18,213 to management fees, (c) for management fees,
reclassifies $1,820 of net losses related to foreign-currency
hedging activities from general and administrative expense and
$4,205 of expense reimbursements grossed-up for GAAP reporting, but
netted with expenses for distributable earnings, and (d) $83,581
related to incentive income. (2) Distributable earnings excludes
investment income or loss and includes the portion of income or
loss on distributions received from funds and companies. (3) The
expense adjustment consists of (a) equity-based compensation
expense of $14,621, (b) consolidated fund expenses of $1,271, (c)
expenses incurred by the Intermediate Holding Companies of $207,
(d) incentive income compensation expense related to unrealized
incentive income of $45,627, (e) acquisition-related items of
$1,574, (f) $117 of net gains related to foreign-currency hedging
activities and (g) $4,205 of reimbursements grossed-up as revenues
for GAAP reporting, but netted with expenses for distributable
earnings. (4) The interest expense adjustment removes interest
expense of the consolidated funds and reclassifies interest income
from other income of consolidated funds. (5) The adjustment to
other income (expense), net represents adjustments related to the
reclassification of $185 in net losses related to foreign-currency
hedging activities from general and administrative expense and the
amortization of make-whole premium expenses. (6) The adjustment to
other income of consolidated funds removes interest, dividend and
other investment income attributable to third-party investors in
our consolidated funds, and reclassifies interest income to
interest expense, net.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190425005281/en/
Investor Relations:
Oaktree Capital Group, LLCAndrea D. Williams(213)
830-6483investorrelations@oaktreecapital.com
Press Relations:
Sard Verbinnen & CoJohn Christiansen(415)
618-8750jchristiansen@sardverb.com
Sard Verbinnen & CoAlyssa Linn(310)
201-2040alinn@sardverb.com
Oaktree Capital (NYSE:OAK)
過去 株価チャート
から 12 2024 まで 1 2025
Oaktree Capital (NYSE:OAK)
過去 株価チャート
から 1 2024 まで 1 2025
