Banks Are Well-Equipped to Handle 'Horrendous' Virus Crisis, Tony Ressler Says

Ares, just like the 1,500 or so companies that we follow on a daily or weekly or monthly basis, is looking at what everyone is looking at, which is how do we restart the economy, when can we restart the economy intelligently and thoughtfully. Whether that's 30 days or 60 days or more, we all appreciate and frankly are benefiting and will benefit from an extraordinary amount of federal intervention. But at the end of the day, it's about when can we restart the economy appropriately and thoughtfully, and we don't know quite yet. We know that we will require an all-clear; we don't know the definition of that all-clear. But the good news, and there is some good news out there, is that banks generally are better capitalized than they were in 2008, most companies are better capitalized than they were in 2008, and most are trying to figure out ways to be as liquid as possible to get through what is most certainly going to be a horrendous 30 days or 60 days or 90 days of this economic shutdown. We're in an extraordinary moment in time that companies and landlords and tenants are trying to figure out how to access liquidity any way possible. And we do have the good fortune that the federal government has the capacity to inject 2 to 6 trillion dollars of capital into this marketplace. But as you've described, as many others have described, trying to figure out whether it's called a timeout, whether it's called a 30 or 60 or 90-day transition, but the objective of course is to look at light at the end of the tunnel to see how we can restart this economy thoughtfully. And that's the kind of messaging I do believe we're trying to help every company and every landlord and every real estate owner we do business with, which is to try to be as liquid as possible, helping them be as liquid as possible, Tony, and to plan for the reopening when appropriate.

Listen, we're trying to make sure every company and real estate owner imaginable has access to liquidity so that they can stay current if possible. But please understand, our job as Ares Management is to be trying to help each and every borrower to prepare for what is in fact uncharted territory that they've not seen before. There are no safe havens in the true sense of the word, so everyone is trying to figure out how to be liquid and how to conserve or protect whatever liquidity they have. At Ares Management, yes, we've been somewhat fortunate. We have some extraordinary access to liquidity. Just yesterday we announced a sale of 4.9% of the stock of our business to a very large Japanese bank, SMBC. We happen to have been in those discussions for over 12 months to do so, but we were looking for a joint venture partner to help us distribute product in the Japanese market, a marketplace in fact starved for, if you will, safe higher-yielding assets. So for us, it was business as usual over the past 12 months, and then we got into this remarkable period and went forward with the transaction that was great for us and we think great for SMBC. So adding equity capital at this moment in time, and frankly a decent price for us and for SMBC, is a method by which one could better position themselves by being more liquid. Yes, we could play offense if and when appropriate, but now is the time to circle the wagons to be sure that you have an appropriate amount of liquidity no matter what company or what type of real estate you own or manage.

I do. I actually clearly have an extraordinary amount of liquidity for our business. I actually also believe having 25 or 30 billion of dry powder to invest in our portfolio companies so that we can, as every significant asset manager hopefully would acknowledge, the job now is to both play offense and defense to help the portfolio companies that you have exposure to, help them weather the storm, and if and when appropriate, of course, make loans where the risk-reward is enormously attractive. The world we live in, virtually every company, certainly every company that has access, is looking for some form of additional liquidity and some form of rescue loan, if you will, that helps them navigate what are fairly remarkable choppy waters. But that's what the next 30, 60, 90 days are all about. And yes, it absolutely could go longer in terms of a recession. We see that, we see the economic slowdown, that's not new information. But being positioned to reopen your business in conjunction with a reopened economy is what today is about. Total planning.

It's a tough question, as you could imagine. Our primary focus has to be taking care of our employees, both full-time and part-time, being a good member of our community. But basketball right now is a little bit last on that list, at least for me. You know, if you think about what the league is looking at, it's of course protecting the safety of our players, fans, employees versus people wanting their lives to go back to whatever the next normal really is. It's just too soon to have an answer or to have clarity on that. But there is no doubt there will be basketball at some point in the future. I just don't know if it's one, sure, myself.

We are keeping everyone exactly as they were before this uncharted territory began. We are keeping all of our full-time and part-time employees paid as if the concerts and basketball games had occurred. We made that clear to our entire employee base.