Debt Investor Presentation - March 2018 - Ares Capital ...

 
Debt Investor Presentation - March 2018 - Ares Capital ...
Contact:
       Debt Investor Presentation                                John Stilmar, Investor Relations
                                                                 jstilmar@aresmgmt.com
       March 2018                                                (678) 539 - 1983

Ares Capital Corporation - Not for Publication or Distribution
Debt Investor Presentation - March 2018 - Ares Capital ...
Disclaimer
    IMPORTANT NOTICE:

    Statements included herein may constitute “forward-looking statements,” which may relate to future events or the future performance or financial condition of Ares Capital Corporation
    (“ARCC”), its investment adviser Ares Capital Management LLC (“ACM”), a subsidiary of Ares Management, L.P. (“Ares Management”), or of Ares Management. These statements are not
    guarantees of future results or financial condition and involve a number of risks and uncertainties. Actual results and cond itions may differ materially from those in the forward-looking
    statements as a result of a number of factors, including those described from time to time in the filings of ARCC and Ares Ma nagement with the Securities and Exchange Commission (“SEC”).

    The information contained in this presentation is summary information that is intended to be considered in the context of the SEC filings of ARCC and Ares Management and other public
    announcements that ARCC or Ares Management may make, by press release or otherwise, from time to time. Neither ARCC nor Ares Management undertakes any duty or obligation to publicly
    update or revise the forward-looking statements or other information contained in this presentation. These materials contain information about ARCC, ACM and Ares Management, and certain
    of their respective personnel and affiliates, information about their respective historical performance and general information about the market. You should not view information related to the
    past performance of ARCC, ACM or Ares Management or information about the market, as indicative of future results, the achiev ement of which cannot be assured.

    Nothing in these materials should be construed as a recommendation to invest in any securities that may be issued by ARCC or Ares Management or as legal, accounting or tax advice. None of
    ARCC, ACM, Ares Management or any affiliate of ARCC, ACM or Ares Management makes any representation or warranty, express or implied, as to the accuracy or completeness of the
    information contained herein and nothing contained herein shall be relied upon as a promise or representation whether as to the past or future performance. Certain information set forth
    herein includes estimates and projections and involves significant elements of subjective judgment and analysis. Further, su ch information, unless otherwise stated, is before giving effect to
    management and incentive fees and deductions for taxes. No representations are made as to the accuracy of such estimates or projections or that all assumptions relating to such estimates or
    projections have been considered or stated or that such estimates or projections will be realized.

    These materials may contain confidential and proprietary information, and their distribution or the divulgence of any of thei r contents to any person, other than the person to whom they were
    originally delivered and such person’s advisers, without the prior consent of ARCC, ACM or Ares Management, as applicable, is prohibited. You are advised that United States securities laws
    restrict any person who has material, non-public information about a company from purchasing or selling securities of such company (and options, warrants and rights relating thereto) and
    from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such p erson is likely to purchase or sell such securities. You agree not
    to purchase or sell such securities in violation of any such laws.

    These materials are not intended as an offer to sell, or the solicitation of an offer to purchase, any security, the offer an d/or sale of which can only be made by definitive offering
    documentation. Any offer or solicitation with respect to any securities that may be issued by ARCC, Ares Management or any of their affiliates will be made only by means of definitive offering
    memoranda or prospectus, which will be provided to prospective investors and will contain material information that is not se t forth herein, including risk factors relating to any such
    investment.

    S&P Disclaimer Notice
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    form is prohibited except with the prior written permission of the related third party. Third party content providers do not guarantee the accuracy, completeness, timeliness or availability of
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    suitability of securities or the suitability of securities for investment purposes, and should not be relied on as investment advice.

REF: DLUS-00067
Ares Capital Corporation - Not for Publication or Distribution                                          2
Market Leading Lender to the Middle Market
          Ares Capital is a leading specialty finance company that is focused on providing debt and equity financing solutions to
          U.S. middle market companies

                                                                                                           Well Positioned with
            Attractive Industry &                           Significant Competitive                                                                       Active, BBB Rated Index
                                                                                                            Strong Investment
            Corporate Structure                                   Advantages                                                                                   Eligible Issuer
                                                                                                               Performance

      •    Middle market has exhibited                  •    Largest BDC with significant              •   Highly diversified portfolio               •    BBB Rating with stable
           strong growth, creating                           direct origination platform                                                                   outlook by S&P and Fitch (2)
           demand for financing                                                                        •   Strong long term credit
                                                        •    Consistent and experienced                                                               •    Completed 16 debt capital
                                                                                                           performance
      •    Bank consolidation and                            team                                                                                          markets transactions / $5.7
           regulations have created the                                                                •   Strong asset coverage as                        billion of financings (3)
           non-bank lending opportunity                 •    Disciplined underwriting
                                                             process supports highly                       well as low leverage ratio                 •    Lowered spreads on all
      •    The BDC structure has                             selective approach                        •   Deep sources of liquidity                       issuances for similar tenor
           compelling advantages                                                                           from the portfolio and                          and structure since inception
                                                        •    Incumbency with existing
      •    All industry BDC debt that has                    borrowers provides attractive                 alternative financing options              •    Demonstrated access to
           matured has been repaid at                        future investing opportunities                                                                liquidity - 34 debt and equity
           par (1)                                                                                                                                         transactions/~$10 billion
                                                        •    Deep asset management
                                                                                                                                                           since inception (3)
                                                             capabilities seeks to enhance
                                                             investment performance
Past performance is not a guarantee of future results.
1) Information based on Ares’ knowledge.
2) Fitch rating established in November 2009. S&P rating established in July 2007. All of ARCC’s unsecured and convertible notes are rated by S&P and Fitch with the
      exception of our 2047 retail notes, which are rated by Moody’s. Our 2047 retail notes were assumed as part of the Allied Capital Acquisition on April 1, 2010.
      Moody’s rated these notes Ba1 with a positive outlook as of June 21, 2017.
3) Since inception in October of 2004 through February 1, 2018.
  Ares Capital Corporation - Not for Publication or Distribution                                       3
Industry Drivers & BDC Structure

Ares Capital Corporation - Not for Publication or Distribution
ARCC Serves Strong and Vibrant Middle Market Companies
                                                                          Defining the U.S. Middle Market
                                                 Nearly
     Annual Revenue                                                               3rd Largest                         Nearly 33%                      1/3
     $10M–$1B                                200,000                             Global Economy                   of Private Sector GDP          of All U.S. Jobs
                                              Businesses

                $
                                                                           Strong Industry Fundamentals
                                                                                                           7%
    10%
     8%                                                                                                    6%
     6%                                                                                                    5%
     4%                                                                                                    4%
     2%
                                                                                                           3%
     0%
    -2%                                                                                                    2%
    -4%                                                                                                    1%
    -6%                                                                                                    0%
                2012          2013          2014          2015          2016           2017                     2012    2013      2014      2015        2016        2017
                                                                                                                               Growth in Workforce Size
                             Middle Market Indicator                  S&P 500

              Middle Market Revenue Growth vs. S&P 500                                                            Middle Market Hiring Remains Strong

For illustrative purposes only. Source: National Center for the Middle Market as of December 31, 2017.
Ares Capital Corporation - Not for Publication or Distribution                                         5
Supply Constraints Create an Attractive Market Opportunity
      We believe supply constraints in the middle market have resulted in attractive risk adjusted returns
      for direct lenders

                                                                                                         Banks' Share of the U.S. Leveraged Loan Market
       Total Number of U.S. Banks Continues to Decline (1)
                                                                                                                     Continues to Shrink (2)

    11,000                                                                                         100%
                                                                                                     90%
    10,000                                                                                                        29%
                                                                                                     80%
                                                                                                     70%                         55%
      9,000
                                                                                                     60%                                         82%
                                                                                                                                                            88%        91%
      8,000                                                                                          50%
                                                                                                     40%
      7,000                                                                                                       71%
                                                                                                     30%
                                                                                                     20%                         45%
      6,000
                                                                                                     10%                                         18%
                                                                                                                                                            12%         9%
      5,000                                                                                           0%
                2005
                2006
                2007
                2008
                2009
                1998
                1999
                2000
                2001
                2002
                2003
                2004

                2010
                2011
                2012
                2013
                2014
                2015
                2016
                2017

                                                                                                                 1994            2000            2006       2012       2017

                                                                                                              Foreign/Domestic Banks               Non-Bank Companies/Funds

(1) Source: Federal Deposit Insurance Corp Quarterly Banking Profile Q4-17.
(2) Source: S&P LCD Leveraged Lending Review Q4-17. Amounts are based on administrative, syndication and documentation agent as well as arranger roles.
Ares Capital Corporation - Not for Publication or Distribution                                     6
BDC Structure Offers Benefits to Creditors
       We believe creditors benefit from the leverage restrictions and diversification requirements of the
       BDC/RIC structure

                 BDCs are closed-end investment companies                                       The BDC/RIC structure provides limitation on
                            regulated by the SEC                                               leverage and requires portfolio diversification

    • Created to encourage investment in small and middle                              • Portfolio must be well diversified
      market companies
                                                                                              • No single investment can account for more than 25%
                                                                                                of total assets
    • As of December 31, 2017 there were 53 public active
      BDCs with a total market cap of $33.5 billion (1)                                       • At least 50% of total assets must be comprised of
                                                                                                individual holdings of less than 5% of total assets
    • Make debt and equity investments with ability to invest                                   each
      across a company’s capital structure
                                                                                       • Required to maintain low leverage with asset coverage ratio
    • Must generally invest at least 70% of assets in U.S. private                       of at least 200% (maximum debt to equity of approximately
      companies or U.S. public companies with market                                     1:1) in order to borrow or pay dividends
      capitalization under $250 million                                                       • Proposed legislation could raise allowable leverage
                                                                                                to 2:1 D:E, which is still significantly less than bank
                                                                                                and finance co. peers
                                                                                       • Required to pay 90% of taxable income as dividends to
                                                                                         shareholders or pay taxes on that income
                                                                                              • Portfolio must generate sufficient cash flows to pay
                                                                                                interest as well as dividends to equity investors
                                                                                                junior to debt holders

                                                                 Ares Capital Corporation is the Largest BDC

1) Source: SNL Financial
Ares Capital Corporation - Not for Publication or Distribution                         7
ARCC’s Competitive Advantages

Ares Capital Corporation - Not for Publication or Distribution
ARCC’s Proven Business Model and Processes
   ARCC’s time-tested strategy and business model have driven strong performance and returns for
   shareholders

                                                                 Active, Index Eligible Issuer
                                                                      with BBB Rating

Ares Capital Corporation - Not for Publication or Distribution                      9
Direct Origination & Scale Provide Distinct Competitive Advantages

                                              Broad and Deep U.S. Origination Coverage with Experienced Team

                                                              77 portfolio                             Direct Origination and Scale Improve Asset Selectivity, Credit
                                                                                                       Quality and Control
                                                              companies
                                                                                                       • Over 100 investment professionals in six U.S. offices
                                                                                                       • Drives asset selectivity and enhances returns
                                                                                                       • Improves due diligence, access and influence over terms
                                                                                                       • Focus on lead investing and controlling the tranche
                                                                                                       • Active investor post-closing with board seats or observation
                                                                                                         rights on 47%of the portfolio (2)
                                                                                                       Larger/Broader Product Capability Enhances Returns
                                                                                                       • Commit and hold up to $500 million in a single transaction(1)
                                                                                                       • Incumbency creates organic growth opportunities within
                                                                                                         existing portfolio
                                                                                                       • Ability to underwrite and syndicate to drive fee income
                                                                                                       Deep PE Sponsor Network
                                                                                                       • Relationships with over 450 sponsors
         62 portfolio                                                                                  • Closed at least one investment with approximately 350
                                                                                                         financial sponsors and multiple investments with over 175
         companies                                                                                       financial sponsors in the U.S.
                                                             150 portfolio
                                                              companies                                Scale Creates Cost of Capital Advantages
                                                                                                       • Enhances access to capital
                                                                                                       • Leads to diversified funding sources and more efficient
                        Ares office locations                                                            access to capital

Note: portfolio company locations excludes 36 portfolio companies outside of the United States.
All data is as of December 31, 2017 unless otherwise noted.
(1) Includes Ares Capital and certain of its financial services portfolio companies.
(2) Based on fair value.
 Ares Capital Corporation - Not for Publication or Distribution                                   10
Why is Direct Origination Important?

   1
                         Widens the Funnel to Provide For a Larger Deal Universe                                Selectivity

   2
                 Primary Diligence on Thousands of Deals Reviewed Since Inception                          Better Investing

   3
                                                                                                          Differentiated and
                                  Control Over Structures and Better Economics
                                                                                                         Diversified Portfolios

   4
                                              Incumbency and Relationships                                Long-Term Annuity

                                    Origination is the core foundation of our disciplined investment strategy

Diversification does not assure profit or protect against market loss.
Ares Capital Corporation - Not for Publication or Distribution               11
Flexibility of Capital: Diversified Product Offerings
                             Going to market as a total solution provider to our prospective and existing borrowers
                                             allows us to see a broad view of market opportunity

                                                                 Corporate:                     $30 - $250 million
           TARGETED
                                                                 Project Finance:               $10 - $200 million
     INVESTMENT HOLD SIZES                                       EBITDA Range:                  Generally under $100 million

                                                                   Leveraged Buyouts                Restructurings
                                                                                                  General Refinancing          Power Generation
         TRANSACTION TYPES                                            Acquisitions
                                                                                                   Rescue Financing               Oil & Gas
                                                                    Recapitalizations
                                                                                                    Growth Capital

                                                                        Revolvers                  Unitranche Loans
                                                                                                                               Junior Capital
               PRODUCTS                                              First Lien Loans              Second Lien Loans
              PRODUCTS                                                Stretch Senior                Mezzanine Debt
                                                                                                                               Minority Equity

                                                                 Private Equity Sponsors
                                                                                                  Project Developers            Entrepreneurs
                  PARTNERS                                        Management Teams
                                                                                                    Family Offices              Other Lenders
                                                                     Intermediaries

Ares Capital Corporation - Not for Publication or Distribution                             12
Long Tenured & Highly Experienced Investment Team
       ARCC benefits from a long tenured and highly experienced team with significant
       expertise in direct lending and extensive middle market knowledge
    • ARCC’s investment team has invested over $45 billion across more than 950 transactions since 2004(1)
    • 75% of senior investment professionals in our direct lending team have been with Ares for at least 5 years(2)
    • The members of the investment committee possess an average of 22 years of investing experience and every member has been
      with Ares more than 10 years
    • ARCC receives referrals from other teams across the Ares Platform
                                                                       U.S. Direct Lending Investment Committee
                            Mark              Michael               Kipp              Mitch                                   Kort                Dave             Michael
      Partners                                                                                          Jim Miller                                                            Average
                           Affolter          Arougheti             deVeer            Goldstein                              Schnabel            Schwartz            Smith
      Industry
                          28 Years            25 Years            22 Years            23 Years           18 Years            20 Years            17 Years          22 Years   22 Years
     Experience
     Years with
                          10 Years            14 Years            14 Years            13 Years           11 Years            16 Years            13 Years          14 Years   13 Years
       Ares

                                                                                      Extensive Direct Lending Team
                                                                                                 Direct Lending                               Commercial Finance
                                   No. Investment Professionals                                         100+                                              50+
                                   No. Senior Investment
                                                                                                         40                                                13
                                   Professionals (2)
                                   Average Industry Experience of
                                                                                                     18 years                                          20 years
                                   Sr. Professionals
                                   No. of Offices                                                         6                                                 6
As of December 31, 2017.
(1) Includes invested capital from inception on October 8, 2014 through December 31, 2017. Excludes syndications within one year of origination, $1.8 billion of
investments acquired from Allied Capital on April 1, 2010 and $2.5 billion of investments acquired from American Capital on January 3, 2017.
(2) Includes principals, managing directors and partners.
 Ares Capital Corporation - Not for Publication or Distribution                                        13
Ares’ Extensive Credit Group Provides Many Benefits to ARCC
       Integrated scaled global platform combines direct origination, deep fundamental credit research
       and broad perspective of relative value

                              $71.7 billion AUM(1)                                                                                              Advantages

              25+ Partners averaging 24 years of experience
                                                                                                                                      Access to Differentiated
                                                                                                Deep Investment                                                                     Ability to Express
                 ~235 dedicated investment professionals                                                                               Information to Inform
                                                                                                Opportunity Set                                                                      Relative Value
                                                                                                                                          Credit Decisions

           Origination, Research & Investment Management                                                      Leading Platform of Liquid and Direct Lending Strategies

                            14 portfolio managers                                          Syndicated                            Structured
                                                                                                                                                               Middle                       Private Mezz/
                                                                                             Loans                             Credit / CMBS                 Market Cash                    Opportunistic
           ~55 industry research and structured credit professionals                                                                                         Flow Loans
                     ~120 direct origination professionals
                 11 distressed and restructuring specialists (2)
                                                                                                                                               Asset Based                        Project
                                                                                                              High Yield                         Lending                          Finance
                       Syndication, Trading & Servicing

                       6 traders in the U.S. and Europe                                    Liquid Credit                                                                               Illiquid Credit
                  6 dedicated capital markets professionals
    ~30 direct lending professionals focused solely on asset management
                                                                                                                                               Accolades (2)

                 Investor Relations & Business Operations

     Established investor relations and client service across the Americas,                   ARCC Received Most Honored
                                                                                                 Designation & Highest
                  Europe, Asia, Australia and the Middle East                                 Rankings for Best CEO, CFO, IR          Top Quartile           Lender of the Year        Global Sponsored
                                                                                                Professional and Investor             Rankings for             North America           Deal of the Year -
                                                                                                   Relations Program                 Several Funds           2014, 2015 & 2016               2016

                      We have experienced teams across the platform that are positioned for excellence in investing and client service
  Note: As of December 31, 2017, unless otherwise noted.
  1.    As of December 31, 2017 AUM amounts include funds managed by Ivy Hill Asset Management, L.P., a wholly owned portfolio compan y of Ares Capital
        Corporation and a registered investment adviser.
  2.    The performance, awards/ratings noted herein relate only to selected funds/strategies and may not be representative of any given client’s experience and
        should not be viewed as indicative of Ares’ past performance or its funds’ future performance. All investments involve risk, including possible loss of principal.
  Please refer to the Endnotes on slides 39 - 44 for additional information on accolades.
Ares Capital Corporation - Not for Publication or Distribution                                        14
Rigorous Underwriting and Credit Management
        Our in-depth process often spans several months, allowing for thoughtful decision making

                                                                                                      Key Attributes of ARCC Borrowers (1)

                                                                                                              Franchise businesses

                                                                                                                  High free cash flow

                                                                                                        Above market growth prospects

                                                                                                         Diverse sources of profitability

                                                                                                        Premier financial sponsors with
                                                                                                         meaningful “skin in the game”

                                                                                                          Leading management teams

                                                                                                          Appropriate capital structure

                                                                                                                  ARCC has lead role
Ares’ Approach:
• Seek to invest in leading, non-cyclical businesses with attractive growth prospects and high free cash flows
• Use direct origination and scale to provide greater influence on loan structures to maintain high selectivity
• Seek to be the lead lender with voting control to have the ability to impact outcomes
• Use incumbent positions to support growth of leading portfolio companies and to help enhance credit quality
• Be proactive managing investments and use our robust process to preserve capital and create value

(1) Not every investment meets each of the criteria.
 Ares Capital Corporation - Not for Publication or Distribution           15
Incumbency Provides Source for Differentiated Sourcing
       Current portfolio includes 170+ private equity sponsors and 310+ middle market companies

                                               Incumbent Position Helps Us Preserve The High Quality of Our Portfolio

            Enables us to finance and grow                                                                Allows us to remain active with
                with leading portfolio                              Helps reduce portfolio risk               deployment while being
               companies, in our view                                                                                defensive

                                                                                        Ability to maintain better than
                                            Ability to leverage history with
                                                                                        market terms, documentation
                                                      the borrower
                                                                                                   and pricing

                                                63% of commitments during 2017 were to existing portfolio companies

            Since inception, follow-on capital provided to incumbent borrowers was approximately double our initial investment

As of December 31, 2017, unless otherwise noted.
Ares Capital Corporation - Not for Publication or Distribution                     16
Differentiated Asset Management Capabilities and Focus
                                                                 Longstanding Process with Clear Differentiation

    •    23 person dedicated asset management                                                                •     For the past 7 years, Ares has spent a
         team is enhanced by Ares firm resources                                                                   significant amount of time and effort
         such as legal, industry experts, etc.                                                                     creating a cloud based platform which
    •    6 have restructuring experience                                                                           enhances access, speed and quality of
                                                                                                                   information
    •    Team has deep capabilities:
             •     Restructuring                                     Large Asset              Proprietary             • System architecture provides
             •     Valuation                                        Management                Technology                extensive reporting capabilities and
                                                                                                                        data to support investment and
             •     Due diligence                                           Team
                                                                                                                        portfolio management decisions
             •     Valuation

•       Investment teams work                                                                                             • Be early, be smart, be flexible
        alongside asset management                                      Active                Extensive workout
        team once loan is originated –                             Management                 Restructuring              • Deep ability to protect capital
        life of loan approach                                        Approach                 Experience                   while avoiding unnecessary
•       Ongoing dialogue with company                                                                                      damage to sponsor relationships
        and sponsors/owners                                                                                        • Generated net positive realized gains
•       Ares Management provides                                                                                     vs losses since inception
        operational and informational
        advantages to maximize value

As of December 31, 2017, unless otherwise noted.
Ares Capital Corporation - Not for Publication or Distribution                           17
ARCC’s Strong Financial Results
        Lead to an Attractive Credit Profile

Ares Capital Corporation - Not for Publication or Distribution
Portfolio Diversification and Industry Selection
       Attractively positioned portfolio, diversified by asset class and industry

         Focus on defensively                                   Well diversified                             Strong investment
                                                                                                                                                             Focus on high free cash
         positioned, attractive                                   portfolio –                              discipline and focus on
                                                                                                                                                                flow businesses
               industries                                       314 companies                               downside production

                          Portfolio by Asset Class (1)                                                                   Portfolio by Industry (1)

                                    7%                                                                                                 7%
                            4%                                                                                              2%
                                                                                                                           2%
                          1%                                                                                             3%                                 23%
                     8%                                                                                                3%
                                                                                                                     3%
                  4%                                            44%                                                 3%
                                                                                                                    4%

                                                                                                                    4%
                                                                                                                       4%                                        19%
                                                                                                                            4%
                          32%
                                                                                                                                 6%
                                                                                                                                         6%         7%

                                                                                                  Healthcare-Services                                Business Services
            Senior oriented portfolio: 80% senior secured loans(2)                                Consumer Products                                  Services-Other
                                                                                                  Manufacturing                                      Financial Services
         First Lien Senior Secured Loans           Second Lien Senior Secured Loans               Food and Beverage                                  SDLP
         Senior Direct Lending Program             Senior Subordinated Debt                       Power Generation                                   Restaurants and Food Services
                                                                                                  Automotive Services                                Education
         Collateralized Loan Obligations           Preferred Equity
                                                                                                  Wholesale Distribution                             Oil and Gas
         Other Equity and Other                                                                   Containers-Packaging                               Remaining

(1) At fair value as of December 31, 2017.
(2) Including First Lien Senior Secured Loans, Second Lien Senior Secured Loans and investments in the subordinated certificates of the Senior Direct Lending Program.
Ares Capital Corporation - Not for Publication or Distribution                                        19
Portfolio Company EBITDA and Credit Statistics
       On average, our portfolio companies use moderate leverage and have strong interest coverage

           Moderate portfolio                             Strong portfolio company                          Annual portfolio company                Portfolio company EBITDA
           company leverage                                   interest coverage                              EBITDA growth ~6% (1)                        of $62 million

    8.0x                                                                                                                 $80.00
                   $72.9
                                         $69.4                   $70.1
    7.0x                                                                           $65.9                                 $70.00
                                                                                                        $62.2
    6.0x            5.5x                                         5.5x                                                    $60.00
                                          5.3x                                     5.4x                  5.4x

    5.0x                                                                                                                 $50.00         Portfolio Weighted Average EBITDA (2)

    4.0x                                                                                                                 $40.00         Portfolio Weighted Average Total Net
                                                                                                                                        Leverage Multiple (3)

    3.0x                                                                                                                 $30.00         Portfolio Weighted Average Interest Coverage
                    2.4x                  2.4x                   2.3x              2.4x                  2.3x                           Ratio (4)

    2.0x                                                                                                                 $20.00

    1.0x                                                                                                                 $10.00

    0.0x                                                                                                                 $0.00
                   Q4-16                Q1-17                    Q2-17            Q3-17                Q4-17

Note: Past performance is not indicative of future results. Refer to Endnotes on slides 39 - 44 for additional important information.
Ares Capital Corporation - Not for Publication or Distribution                                         20
Sustained Market Premium for ARCC Yields with Lower Losses
       ARCC’s portfolio has historically generated premium performance to middle market and syndicated
       bank loans and high yield bonds

                                                       ARCC’s Portfolio Yield vs. Leveraged Loans & High Yield Bonds

       11%
                                                                                                                                                                            Premium to
        9%                                                                                                                                                                  Middle Market
                                                                                                                                                                            Leveraged Loans
        7%

        5%
                              2013                                2014                                2015                                2016                      2017

                            ARCC Yield on Debt and Income Producing Securities (1)                                   S&P LSTA Leveraged Loan Yields (2)
                            S&P LSTA Middle Market Leveraged Loan Yields (3)                                         ICE BofAML US HY Master II (4)

                                      Premium yields...                                                                                 ...with lower loss rates
                                                                      Yield    ARCC                                                                                Non-Accrual Rate/
                                                                    12/31/17 Premium                                                                                 Default Rate
    ARCC Yield on Debt and Income Producing                                                              Average ARCC Non-Accrual Rate
                                                                       9.8%                                                                                                2.8%
    Securities (1)                                                                                       at Amortized Cost (5)
    ICE BofAML U.S. High Yield Master II                               6.2%            3.6%              High Yield Bond Default Rate (6)                               5.1%
    S&P LSTA Leveraged Loan Yields                                     5.2%            4.6%                                                                        Average Annual
                                                                                                                                                                   Gain/(Loss) Rate
    S&P LSTA Middle Market Leveraged Loan
                                                                       7.3%            2.5%              ARCC (7)                                                          1.1%
    Yields
    3-month LIBOR                                                      1.7%            8.1%              High Yield Bonds (8)                                           (2.7)%

Note: Past performance is not indicative of future results. Refer to Endnotes on slides 39 - 44 for additional important information.
Ares Capital Corporation - Not for Publication or Distribution                                         21
Strong Investment Performance
       ARCC’s net realized gain/(loss) rates have consistently outperformed BDC peers and banks

   Since IPO in October 2004 through December 31, 2017:                                                                                                               ARCC generated 230 bps of average annual
                                                                                                                                                                            incremental gain differential
                                             Cumulative internal rate of return to ARCC on                                                                                      vs. peers since 2004
     14% IRR to ARCC (1)(2)
                                             ~$21 billion of exited investments                                                                                        1.20%

                                                                                                                                  Net realized gain/(loss) rate (5)
                                                                                                                                                                       0.80%
           ~$610 million
                                                                                                                                                                                  ARCC
           Net Realized                      Cumulative net realized gains generated                                                                                   0.40%
             Gains(3)(4)
                                                                                                                                                                       0.00%
                                             Average annualized net realized gain rate on the
                                                                                                                                                                      -0.40%                      Banks
       1.1% Net Realized                     principal amount of its investments. ARCC had a                                                                                                                    BDC
         Gain Rate%(3)                       net realized loss in only one fiscal year since                                                                                                                   Peers
                                                                                                                                                                      -0.80%
                                             inception(3)
                                                                                                                                                                      -1.20%
                                                                                                                                                                                  ARCC            Banks      BDC Peers
                                             Net Realized Gain/(Loss) and Net Charge Off Rates of ARCC, BDC Peers, and Banks

                                                       CY2007      CY2008       CY2009      CY2010       CY2011       CY2012                    CY2013                         CY2014    CY2015     CY2016    LTM*       Avg(7)

ARCC(3)                                                 0.4%         0.3%       (2.0)%        1.3%          2.1%        0.9%                                          1.0%      1.2%      1.5%       1.2%      0.2%      1.1%
BDC Peer Group Average(5)                               0.3%         0.3%       (7.6)%       (4.3)%         (1.4)%     (0.5)%                           (0.9)%                  0.7%     (0.1)%     (1.4)%    (2.5)%     (1.2)%

Outperformance vs. BDCs (%)                             0.1%         —%          5.6%         5.6%          3.5%        1.4%                                          1.9%      0.5%      1.6%       2.6%      2.7%      2.3%

Bank C&I Net Charge Off Rate(6)                        (0.5)%       (1.0)%      (2.3)%       (1.7)%         (1.0)%     (0.5)%                           (0.3)%                 (0.2)%    (0.2)%     (0.4)%    (0.4)%     (0.8)%
Outperformance vs. Banks (%)                            0.9%         1.3%        0.3%         3.0%          3.1%        1.4%                                          1.3%      1.4%      1.7%       1.6%      0.6%      1.9%

Note: Past performance is not indicative of future results. Refer to Endnotes on slides 39 - 44 for additional important information.
* As of 12/31/17 for ARCC. As of 9/30/17 for BDC Peer Group and Banks.
Ares Capital Corporation - Not for Publication or Distribution                                         22
Compelling Core Earnings and Return on Equity
       ARCC has generated strong core earnings(1) and stable core ROE(2) since our IPO

            Long standing track record of stable core ROE ranging                                                                                       We’ve out-earned our dividend with cumulative core earnings
              from ~9% to ~12% annually over the past 10 years                                                                                                      plus net realized gains since our IPO

                                              Consistent Core                                                                                               Cumulative Core Earnings Plus Net Realized Gains vs.
                                             Return on Equity (2)                                                                                                        Cumulative Dividends (1)
    14%

    12%                                                                                                                                                $5,000
                                                                                                                                                       $4,500
    10%                                                                                                                                                $4,000
                                                                                                                                                       $3,500

                                                                                                                                          $ Millions
      8%                                                                                                                                               $3,000
                                                                                                                                                       $2,500
      6%                                                                                                                                               $2,000
      4%                                                                                                                                               $1,500
                                                                                                                                                       $1,000
      2%                                                                                                                                                 $500
                                                                                                                                                           $0
      0%
                                                                2011

                                                                              2013
              2004
                     2005
                            2006
                                    2007
                                           2008
                                                  2009
                                                         2010

                                                                       2012

                                                                                     2014
                                                                                            2015
                                                                                                   2016
                                                                                                          Q1-17
                                                                                                                  Q2-17
                                                                                                                          Q3-17
                                                                                                                                  Q4-17

                                                                                                                                                                 Cumulative Core Earnings Plus Net Realized Gains
                                                                                                                                                                 Cumulative Dividends Paid
                                                                                                            Annualized
                                   Core Earnings ROE                                 10 Yr US T-Note

Note: All data as of December 31, 2017. There can be no assurance that dividends will continue to be paid at historic levels or at all. Past performance is not
indicative of future results. See Endnotes on slides 39 - 44 for additional important information.
Ares Capital Corporation - Not for Publication or Distribution                                                                                         23
Low Leverage with Significant Unencumbered Assets
       Creditors of ARCC benefit from conservative liability structure and low leverage

                          Low Leverage:                                              Strong Asset Coverage for                                 Significant Fixed Charge Coverage
                          Debt/Equity (1)                                               Unsecured Notes (2)                                             from Earnings (3)

  1.50x                                                              4.0x                                                               4.0x
                                     BDC
                                     Regulatory                      3.5x                                                               3.5x
  1.25x                              Limit: 1.0x
                                                                     3.0x                                                               3.0x
  1.00x
                                                                     2.5x                                                               2.5x

  0.75x                                                              2.0x                                                               2.0x

                                                                     1.5x                                                               1.5x
  0.50x
                                                                     1.0x                                                               1.0x
  0.25x
                                                                     0.5x                                                               0.5x

  0.00x                                                              0.0x                                                               0.0x
               2013 2014 2015 2016 2017                                         2013 2014 2015 2016 2017                                         2013 2014 2015 2016 2017

Note: Past performance is not indicative of future results. Refer to Endnotes on slides 39 - 44 for additional important information.
Ares Capital Corporation - Not for Publication or Distribution                                         24
Deep Sources of Liquidity and Well Laddered Maturities
       Investment portfolio provides ample cash flows to support upcoming debt maturities

                              Sales & Repayments                                                                                          Cumulative Assets Maturing Well In Excess
                       as % of Portfolio at Amortized Cost                                                                                of Cumulative Debt Maturing ($ in millions)

        60%                                                                                                                      $4,500                                                      $12,000
                                                                                                                                 $4,000

                                                                                                      Maturities at Fair Value

                                                                                                                                                                                                       Cumulative Maturities
        50%                                                                                                                                                                                  $10,000
                                                                                                                                 $3,500
        40%                                                                                                                      $3,000                                                      $8,000
        30%                                                                                                                      $2,500
                                                                                                                                                                                             $6,000
                                                                                                                                 $2,000
        20%                                                                                                                      $1,500                                                      $4,000
        10%                                                                                                                      $1,000
                                                                                                                                                                                             $2,000
                                                                                                                                   $500
         0%
                                                                                                                                     $0                                                      $0

                     Exists as % of Portfolio at Amortized Cost                    Average
                                                                                                                                             Investment Maturities (at fair value) (1)
                                                                                                                                             Debt Maturities (at par)
                                                                                                                                             Cumulative Investment Maturities (at fair value) (1)
                                                                                                                                             Cumulative Debt Maturities (at par)

                Assuming the long term average of 35% sales and repayments on our current portfolio of $11.9 billion at amortized cost
                implies $4.1 billion of annual liquidity, our portfolio liquidity is significantly in excess of debt maturities in any one ye ar

Note: As of December, 31, 2017, unless otherwise stated. Past performance is not indicative of future results.
Refer to Endnotes on slides 39 - 44 for additional important information.
Ares Capital Corporation - Not for Publication or Distribution                                               25
Additional Sources of Repayment
            In addition to the liquidity from our portfolio we have ~$2.5B of availability on lines of credit as
            well as a history of issuing debt to refinance maturities
                          Sources of Borrowings & Capacity                                                                Contractual Maturities (5)

                                     ~$2.5 billion of
                 $8,000              available borrowing             $7,446                              2,500
                                     capacity
                                                                      $50
                 $7,000
                                                                                                         2,000
                 $6,000
                                  $4,943                             $3,508
                 $5,000
                                                                                                         1,500
    $ Millions

                                                                                            $ Millions
                                  $1,055
                 $4,000
                                   $958                               $958
                 $3,000                                                                                  1,000

                 $2,000                                                                                          $750                                          $600
                                  $2,930                             $2,930                               500                                                             $980
                 $1,000
                                                                                                                                    $600
                                                                                                                 $270   $300                                   $388
                    $0                                                                                      0
                              Outstanding (1)            Committed Capacity (2)                                  2018   2019        2020          2021         2022     Thereafter
                                      Unsecured Debt (3)                                                                 Secured Revolving Credit Facilities (10)(11)
                                      Convertible debt
                                      Revolver (4)                                                                       Other Unsecured Notes (7)(8)(9)
                                                                                                                         Convertible Unsecured Notes (6)

                    Market access supplements existing liquidity - completed 16 debt capital markets transactions / $5.7 billion of financings to date12

Note: As of December, 31, 2017, unless otherwise stated. Past performance is not indicative of future results.
Refer to Endnotes on slides 39 - 44 for additional important information.
Ares Capital Corporation - Not for Publication or Distribution                                         26
Active & Index Eligible BBB Issuer

Ares Capital Corporation - Not for Publication or Distribution
Long Standing Investment Grade Ratings
       ARCC is the only BDC with a BBB rating from both Fitch and S&P, and has never had a rating
       downgrade (1)

        Current Rating                                      BBB                                                                                         BBB
      Current Outlook                                     Stable                                                                                      Stable
          Date Rating
          Established                           November 2009                                                                                      July 2007

               “The ratings of Ares Capital Corporation reflect its                                            “Our rating on ARCC reflects the company's low
               strong franchise, low leverage, demonstrated access                                             financial leverage, successful track record, and good
               to the debt and equity markets, consistent                                                      diversity of funding. The rating also reflects the
               operating performance, moderate portfolio                                                       firm's good market position relative to peers we rate
               concentrations, superior funding flexibility, solid                                             similarly.
               dividend coverage, experienced management team                                                  – November 22, 2016 (4)
               and strong access to deal flow.” – January 3, 2017 (2)

               “Fitch continues to believe that Ares has the                                                   “In our opinion, ARCC has the best market position in
               strongest capital structure in the BDC space.”                                                  the BDC space…” – November 22, 2016 (4)
               – March 7, 2017 (3)

1) All of ARCC’s unsecured and convertible notes are rated by S&P and Fitch with the exception of our 2047 retail notes, which are rated by Moody’s. Our 2047 retail
notes were assumed as part of the Allied Capital Acquisition on April 1, 2010. Moody’s rated these notes Ba1 with a positive outlook as of June 21, 2017.
2) FitchRatings, “Ares Capital Corporation Full Rating Report,” January 3, 2017.
3) FitchRatings, “Fitch Affirms Ares Capital at ‘BBB'; Outlook stable,” March 7, 2017.
4) Source: S&P Global Ratings, “RatingsDirect Report,” November 22, 2016.
Ares Capital Corporation - Not for Publication or Distribution                                        28
Expanded Market Access and Growing Liquidity
       Our growth has supported improved pricing, expanded access and more actively traded bonds

                                                     Improved funding cost and increased liquidity over time

                                          $750mm                                                                                    $750mm
                                           4.875%                                                                                    3.500%
                                          5Y notes                                                                                  5Y notes
                                    3.0    T+366                                                                                      T+170

                                    2.5
                                    2.0
                       $ Billions

                                    1.5
                                    1.0
                                    0.5
                                    0.0
                                              2013                   2014                 2015                            2016        2017
                                                                      5 Yr Term Unsecured Notes Outstanding

                         Expanded Liquidity:                                                         New Tenors:
                         • 2017 quarterly average trading volume in                                  • In 2018, we closed on our inaugural $600
                           ARCC unsecured debt was ~ $450mm or ~18%                                    million 7 year note with a 4.25% coupon
                           of total unsecured debt outstanding (1)                                     (T+190 bps)

1)    Twelve months ended 12/31/2017; trading volumes based on estimated TRACE data and includes all trades >=100k per JP Morgan
Ares Capital Corporation - Not for Publication or Distribution                                  29
Strong Execution on Unsecured Notes Offerings
       Continued to improve interest rate since our first issuance, which has also led to new markets, such
       as our 7-year issuance in 2018

                                   5 Year Unsecured Notes                                                                          5 Year Convertible Notes

              6.0%                                                                                       6.0%    5.750%
                                                                                                                             5.125%
                        4.875%                                                                                                             4.875%        4.750%
              5.0%                                                                                       5.0%
                                                                                                                                                                          4.375%
                                           3.875%                                                                                                                                  3.750%
              4.0%                                               3.625%        3.500%                    4.0%
     Coupon

                                                                                                Coupon
              3.0%                                                                                       3.0%

              2.0%                                                                                       2.0%

              1.0%                                                                                       1.0%

              0.0%                                                                                       0.0%
                        Nov-13             Nov-14                Sep-16        Aug-17                            Jan-11       Mar-11        Mar-12        Oct-12          Jul-13   Jan-17
                        Spread:                  Issuance Date                 Spread:                           Spread:                      Issuance Date                         Spread:
                         3.66%                                                  1.70%                             3.70%                                                              1.80%

              Spreads have declined by 180 bps since November 2013(1)                                           Spreads have declined by 190 bps since January 2011 (2)

                                                                      In January 2018, we completed our inaugural 7-year
                                                                     notes offering at 4.25%, representing a 190 bps spread

(1) Measured as the spread to 5 Year U.S. Treasuries on day of pricing of our 2018 Notes issued at a stated interest rate of 4.875% on November 19, 2013 as compared to
the spread to 5 Year U.S. Treasuries of our 2023 Notes issued at a stated rate of 3.5% on August 10, 2017.
(2) Measured as the spread to 5 Year U.S. Treasuries on day of pricing of our 2016 Convertible Notes issued at a stated interest rate of 5.750% on January 25, 2011 as
compared to the spread to 5 Year U.S. Treasuries of our 2022 Convertible Notes issued at a stated rate of 3.750% on January 27, 2017.
Ares Capital Corporation - Not for Publication or Distribution                                           30
Conclusion
        We believe these factors lead to a well positioned company to continue to generate attractive future
        financial performance that benefits bondholders

    1
            Attractive Industry & Corporate Structure

                                          2
                                                  Significant Competitive Advantages

                                                                  3
                                                                       Well Positioned with Strong Investment
                                                                       Performance

                                                                                       4
                                                                                            Active, BBB Rated Index Eligible Issuer

Ares Capital Corporation - Not for Publication or Distribution                  31
Appendix:
        Additional Investment and Financial Considerations

Ares Capital Corporation - Not for Publication or Distribution
ARCC’s Earnings Will Likely Benefit from Higher LIBOR Rates
        ARCC has an asset sensitive balance sheet that we believe will benefit from an expected rise in base
        interest rates

                              3 Month LIBOR Forward Rates (1)                                                           Enhanced Ability to Benefit from Rising Rates (2)

       3.20%                                                                                               • Heavily weighted to floating-rate loans (3)
                                                                                                               o    90% floating rate loan portfolio
       3.00%
                                                                                                               o    8% fixed rate loan portfolio
       2.80%                                                                                               • Heavily weighted to fixed-rate borrowings
                                                                                                               o    87% fixed rate (4)
       2.60%                                                                                                   o    13% floating rate
                                                                                                           • Conservative Leverage
       2.40%
                                                                                                               o    0.66x net debt to equity
       2.20%

                                                                                                          Increase in LIBOR                           Annual Per Share Impact (2)(5)
       2.00%
                                                                                                          100 bps                                     $0.17 per share
       1.80%
                   Feb. 2018 Feb. 2019 Feb. 2020 Feb. 2021 Feb. 2022
                                                                                                          200 bps                                     $0.34 per share

                                                                                                          300 bps                                     $0.51 per share

(1)   Source: Chatham Financial. Reflects the current and forward 3 month LIBOR rates for February 26, 2018 through 2022, all as of February 26, 2018.
(2)   As of December 31, 2017.
(3)   Remaining 2% consists of non-accruals and non-coupon bearing loans.
(4)   Includes the $395 million term loan tranche of Ares Capital's Revolving Credit Facility which Ares Capital effectively fixed the inter est rate at 3.8% through an interest rate swap agreement.
(5)   Marginal EPS contributions include the impact of income-based fees.

                                                                                                         33
Deep and Diverse Access to Debt Financing
       Efficient and seasoned issuer of liabilities

                                                  Total Aggregate
                                                                                                      Weighted
                                              Principal Amount of          Principal Amount
     ($ in millions)                                                                               Average Stated
                                                    Commitments               Outstanding (2)
                                                                                                   Interest Rate (3)
                                                    Outstanding (1)
     Secured Revolving Facilities (4)
     Revolving Credit Facility                               $2,108                     $395            3.814%
     Revolving Funding Facility                               1,000                       600           3.714%            •     Significant access to long-dated, lower cost revolving
     SMBC Funding Facility                                      400                        60           3.569%                  debt facilities
     Subtotal                                                $3,508                    $1,055           3.743%            •     No “mark to market” financing
                                                                                                                          •     Reduced pricing over time and continue to periodically
     SBA Debentures                                              $50                       $—              —%                   extend maturities (5-7 year terms)

     Unsecured Notes Payable (5)
     2018 Convertible Notes                                   $270                      $270            4.750%
     2018 Notes                                                 750                       750           4.875%
                                                                                                                          •     Seasoned issuer in the institutional unsecured debt
     2019 Convertible Notes                                     300                       300           4.375%
                                                                                                                                market
     2020 Notes                                                 600                       600           3.875%
                                                                                                                          •     More than 100 investors have invested in ARCC’s
     January 2022 Notes                                         600                       600           3.625%
                                                                                                                                Convertible and Investment Grade Notes
     2022 Convertible Notes                                     388                       388           3.750%                                                                           (5)
                                                                                                                          •     Raised over $5.7 billion in unsecured notes since 2011
     2023 Notes                                                 750                       750           3.500%
                                                                                                                                (including January 2018 issuance)
     2047 Notes                                                 230                       230           6.875%
     Subtotal                                                $3,888                    $3,888           4.221%
     Total                                                   $7,446                    $4,943           4.119%
     Weighted Average Stated Interest
                                                            3.87%(6)                   4.12%
     Rate

All data as of December 31, 2017, unless otherwise noted. Refer to Endnotes on slides 39 - 44 for additional important information.
                                                                                                      34
Significant Unencumbered Assets and Strong Interest Coverage
       Creditors of ARCC benefit from BDC leverage limitation and conservative liability structure

  (dollar amounts in millions)                                                                      12/31/13           12/31/14            12/31/15           12/31/16            12/31/17
  Investments at fair value pledged to secured facilities and SBA
  Debentures                                                                                    $         5,342    $       6,559       $       6,882      $       6,245       $      10,473
  Debt outstanding in secured facilities and SBA Debentures                                                185                556                897                856               1,055
  Excess collateral from secured facilities and SBA Debentures                                  $         5,157    $       6,003       $       5,985      $       5,389       $       9,418
  Cash and cash equivalents                                                                     $          150     $          195      $         257      $         223       $        316
  Unencumbered investments at fair value(1)                                                               2,291            2,469               2,392              2,575               1,368
  Total assets available for unsecured notes                                                    $         7,598    $       8,667       $       8,634      $       8,187       $      11,102
  Unsecured notes outstanding                                                                   $         2,894    $       3,443       $       3,300      $       3,095       $       3,888

  Asset coverage for unsecured notes                                                                       2.6x              2.5x                2.6x               2.6x               2.9x

  Ratio of Earnings to Fixed Charges(2)                                                                    3.7x              3.2x                3.2x               3.7x               3.8x

The use of leverage magnifies the potential for gain or loss on the amount invested and may increase the risk of investment.
1) Certain assets are not pledged to the Revolving Credit Facility and the facility restricts in certain respects ARCC’s ability to pledge these assets.
2) For the years ended December 31, 2013, 2014, 2015, 2016 and 2017. Earnings represent net investment income excluding interest and facility fees, income taxes and capital gains
     incentive fees accrued in accordance with GAAP. Fixed charges represent interest and facility fees.

Ares Capital Corporation - Not for Publication or Distribution                                       35
ARCC Has Experienced Consistently Low Non-Accruals
       ARCC’s non-accruals have been consistently below comparable larger credit market indices

                            Focus on Capital Preservation                                                           Long Term Average Non-Accrual and Default Rates

                                                                                                         6%
           • Our investment strategy highlights capital
                                                                                                                                                                     5.1%
             preservation                                                                                5%

           • Non-accruals have generally remained below                                                  4%
             the industry averages
                                                                                                                                                        3.1%
                                                                                                         3%               2.8%
           • In 2009, ARCC non-accruals of 2.5% compared
             to 10.3% for leveraged loan market (4)                                                      2%

           • At December 31, 2017, 3.1% of the total                                                     1%
             portfolio at amortized cost and 1.4% at fair
             value were on non-accrual                                                                   0%
                                                                                                                ARCC Non-Accrual Rate S&P LSTA LLI Default     Moody's HY Default
                                                                                                                 at Amortized Cost (1)      Rate (2)               Rate (3)
                                                                                                               Measured from 2000 or IPO (Oct. 04) to 2017

Note: Data as of December 31, 2017, unless otherwise noted. Past performance is not indicative of future results.
Refer to Endnotes on slides 39 - 44 for additional important information.
                                                                                                      36
Reconciliation of Core Earnings
       Reconciliations of Core Earnings to GAAP Earnings

                                                                                                                             For the years ended
    (in millions)                                                                             2012             2013           2014         2015                 2016             2017

    Core Earnings (1)                                                                     $         381 $           442 $           473 $            486 $           504 $            592

    Professional fees and other costs related to the American                                         —               —                —               —              (12)            (40)
    Capital Acquisition (2)

    Net realized and unrealized gains (losses)                                                      159               58            153             (129)             (20)            156

    Incentive fees attributable to net realized and unrealized gains
    and losses                                                                                      (32)             (11)            (29)              27                5            (41)

    Income tax and other expenses related to net realized and
    unrealized gains and losses                                                                       —               —                (6)             (5)              (3)             —

    GAAP Earnings                                                                         $         508 $           489 $           591 $            379 $           474 $            667

(1) Core Earnings is a non-GAAP financial measure. Core Earnings is the net increase (decrease) in stockholders’ equity resulting from operations less professional fees and other costs related to the
acquisition of American Capital, Ltd. (the "American Capital Acquisition"), net realized and unrealized gains and losses, any capital gains incentive fees attributable to such net realized and unrealized gains
and losses and any income taxes related to such net realized gains and losses. Net increase (decrease) in stockholders’ equity is the most directly comparable GAAP financial measure. Ares Capital believes
that Core Earnings provides useful information to investors regarding financial performance because it is one method Ares Cap ital uses to measure its financial condition and results of operations. The
presentation of this additional information is not meant to be considered in isolation or as a substitute for financial resul ts prepared in accordance with GAAP.
(2) See Note 14 to Ares Capital's consolidated financial statements included in the annual report on Form 10-K for the year ended December 31, 2017 for information regarding the American Capital
Acquisition.

Ares Capital Corporation - Not for Publication or Distribution                                            37
Endnotes

Ares Capital Corporation - Not for Publication or Distribution
Endnotes
 Slide 14: Ares’ Extensive Credit Group Provides Many Benefits to ARCC
 Performance Notes:
 • ARCC received the 2018 All- America Executive Team award alongside 43 other companies. Various Ares personnel received first place awards in the following categories: CEO, CFO, IR
     Professional and IR program. 248 other institutions also received a first-, second-, or third-place ranking in one or more of those four categories. Institutional Investor based these awards on
     the opinions of 1,940 portfolio managers and buy-side analysts, and 826 sell-side analysts who participated in this survey.
 •    Institutional Investor logo from Institutional Investor, November 7, 2017 ©2017 Institutional Investor, LLC. All rights reserved. Used by permission and protected by the Copyright Laws of the
      United States. The printing, copying, redistribution, or retransmission of this Content without express written permission is prohibited.
 •    Lipper Rankings reported in Lipper Marketplace Best Money Managers, September 30, 2017. Lipper Marketplace is the source of the long-only and multi-strategy credit rankings. Lipper’s Best
      Money Managers rankings consider only those funds that meet the following qualification: performance must be calculated “net” of all fees and commissions; must include cash; performance
      must be calculated in U.S. dollars; asset base must be at least $10 million in size for “traditional” U.S. asset classes (equity, fixed income, and balanced accounts); and, the classification of the
      product must fall into one of the categories which they rank. Lipper defines Short Duration as 1-5 years. Lipper’s Active Duration definition does not specify a time period but rather refers to
      an Active rather than Passive strategy. Ares Institutional Loan Fund was ranked 11 out of 58 for the 20 quarters ended September 30, 2017. Composites for Ares U.S. Bank Loan Aggregate and
      Ares U.S. High Yield additionally received rankings of 9 of 58 and 3 of 40, respectively, for the 20 quarters ended September 30, 2017.
 •    Private Equity International selected Ares Management as Mid-Cap Lender of the Year – North America for 2014 and Ares Capital Corporation as Lender of the Year – North America for 2015
      and 2016– Awards based on an industry wide global survey across 60 categories conducted by Private Equity International. In the Mid-Cap Lender of the Year in North America category
      (renamed to Lender of the Year in 2015), Ares was listed as one of three shortlisted firms as suggested by the editorial board of PEI Media. Survey participants voted independently. In addition,
      survey participants could nominate another firm not listed in the category.
 •    Private Debt Investor selected Ares Capital Corporation as Global Sponsored Deal of the Year (Qlik Technologies) for 2016. Awards based on an industry wide global survey across 43 categories
      conducted by Private Debt Investor. In the Global Sponsored Deal of the Year category Ares was listed as one of four shortlisted firms as suggested by the editorial board of PEI Media. Survey
      participants voted independently. In addition, survey participants could nominate another firm not listed in the category.

Ares Capital Corporation - Not for Publication or Distribution                                           39
Endnotes
Slide 20: Portfolio Company EBITDA and Credit Statistics
1.    For the portfolio companies included in the portfolio weighted average EBITDA data above (subject to additional exclusions de scribed in the following sentence), the weighted average EBITDA
      growth rate as of Q4-17 was approximately 6% on a comparable basis for the most recently reported LTM period versus prior year LTM period. In addition to those portfolio companies excluded as
      noted, this calculation excludes five companies where prior year comparable data was not available. The EBITDA growth rate fo r each included portfolio company is calculated as the percentage
      change for the most recently reported fiscal year to date comparable periods and is weighted based on the fair value of the p ortfolio company investments to calculate the portfolio weighted
      average EBITDA growth rate. For a particular portfolio company, EBITDA is generally defined as net income before net interest expense, income tax expense, depreciation and amortization. EBITDA
      amounts used in the calculation are estimated from the most recent portfolio company financial statements, have not been inde pendently verified by Ares Capital and may reflect a normalized or
      adjusted amount. Accordingly, Ares Capital makes no representation or warranty in respect of this information.
2.    Weighted average EBITDA amounts are weighted based on the fair value of the portfolio company investments except for the weighted aver age EBITDA for the Senior Secured Loan Program
      (“SSLP”), which was weighted based on the principal amount of the loan made by the SSLP to such portfolio company. EBITDA amounts are estimated from the most recent portfolio company
      financial statements, have not been independently verified by Ares Capital and may reflect a normalized or adjusted amount. A ccordingly, Ares Capital makes no representation or warranty in
      respect of this information. Please refer to Notes A and B below for additional important information.
3.    Portfolio weighted average total net leverage multiples represent Ares Capital’s last dollar of invested debt capital (net of cash) as a multiple of EBITDA. Portfolio weighted average total net
      leverage multiples for borrowers in the SSLP and Senior Direct Lending Program (“SDLP”)represent the SSLP's and SDLP's last dollar of invested debt capital (net of cash) as a multiple of EBITDA. The
      weighted average total net leverage multiple for the underlying borrowers in the SSLP was 5.1x , 4.9x and 4.9x as of 12/31/16, 3/31/17 and 6/30/17, respectively. The weighted average total net
      leverage multiple for the underlying borrowers in the SDLP was 5.3x, 5.2x, 5.6x ,5.4x and 5.5x as of 12/31/16, 3/31/17, 6/30/ 17, 9/30/17 and 12/31/17, respectively. Portfolio company credit
      statistics for Ares Capital, the SSLP and the SDLP are derived from the most recently available portfolio company financial statements, have not been independently verified by Ares Capital and may
      reflect a normalized or adjusted amount. Accordingly, Ares Capital makes no representation or warranty in respect of this information. Please refer to Notes A and B below for additional important
      information.
4.    Portfolio weighted average interest coverage ratio represents the portfolio company’s EBITDA as a multiple of interest and facility fees expense. The weighted average interest coverage ratio for
      the underlying borrowers in the SSLP was 2.4x, 2.5x and 2.3x as of 12/31/16, 3/31/17 and 6/30/17, respectively. The weighted average interest coverage ratio for the underlying borrowers in the
      SDLP was 2.5x, 2.6x, 2.3x, 2.4x and 2.3x as of 12/31/16, 3/31/17, 6/30/17, 9/30/17 and 12/31/17, respectively. Portfolio company credit statistics for Ares Capital, the SSLP and the SDLP are derived
      from the most recently available portfolio company financial statements, have not been independently verified by Ares Capital and may reflect a normalized or adjusted amount. Accordingly, Ares
      Capital makes no representation or warranty in respect of this information. Please refer to Notes A and B below for additiona l important information.
Note A: This portfolio weighted average EBITDA data includes information solely in respect of corporate investments in Ares Capital's portfolio and the weighted average total net leverage multiple and
interest coverage ratio data includes information solely in respect of corporate portfolio companies in which Ares Capital ha s a debt investment (in each case, subject to the exclusions described in the
following sentence). Excluded from the data above is information in respect of the following: (i) the SSLP (and the underlying borrowers in the SSLP), (ii) the SDLP (and the underlying borrowers in the
SDLP), (iii) portfolio companies that do not report EBITDA, including IHAM, (iv) investment funds/vehicles, (v) discrete projects in the project finance/power generation sector, (vi) certain oil and gas
companies, (vii) venture capital backed companies and (viii) commercial real estate finance companies. The weighted average E BITDA for the underlying borrowers in the SSLP was $54.3 million, $58.0
million and $43.7 million as of 12/31/16, 3/31/17 and 6/30/17, respectively. The weighted average EBITDA for the underlying b orrowers in the SDLP was $31.2 million, $31.8 million, $38.3 million, $40.4
million and $41.5 million as of 12/31/16, 3/31/17, 6/30/17, 9/30/17 and 12/31/17, respectively.
Note B: EBITDA is a non-GAAP financial measure. For a particular portfolio company, EBITDA is generally defined as net income before net interest expense, income tax expense, depreciation and
amortization. EBITDA amounts are estimated from the most recent portfolio company financial statements, have not been indepen dently verified by Ares Capital and may reflect a normalized or
adjusted amount. Accordingly, Ares Capital makes no representation or warranty in respect of this information.

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Endnotes
Slide 21: Sustained Market Premium for ARCC Yields with Lower Losses
1.   The weighted average yield on debt and other income producing securities is computed as (a) annual stated interest rate or yield earned plus the net annual amortization of original issue discount
     and market discount or premium earned on accruing debt and other income producing securities, divided by (b) total accruing d ebt and other income producing securities at fair value.
2.   The S&P/LSTA Leveraged Loan Index is a market value-weighted index designed to measure the performance of the U.S. leveraged loan market based upon market weightings, spreads and interest
     payments. Term loans from syndicated credits must meet the following criteria at issuance in order to be eligible for inclusion in the index: senior secured, minimum initial term of one year, US
     dollar denominated, minimum initial spread of LIBOR + 125 basis points, $50M initially funded loans. Inception date: January 1, 1997.
3.   The Middle Market Index consists of middle market facilities drawn from the larger S&P/LSTA (Loan Syndications and Trading Association) Leveraged Loan Index. It is designed to measure the
     performance of the U.S. leveraged loan market. S&P/LSTA defines the middle market as deals with an EBITDA of less than $50 million.
4.   The ICE BofAML US High Yield Index ("H0A0") tracks the performance of US dollar denominated below investment grade corporate debt publicly issued in the US domestic market. Qualifying
     securities must have a below investment grade rating (based on an average of Moody’s, S&P and Fitch), at least 18 months to f inal maturity at the time of issuance, at least one year remaining term
     to final maturity as of the rebalancing date, a fixed coupon schedule and a minimum amount outstanding of $100 million. Index constituents are capitalization‐weighted based on their current
     amount outstanding times the market price plus accrued interest. Inception date: August 31, 1986.
5.   Represents ARCC’s average non-accrual rate at amortized cost from inception in October 8, 2004 to December 31, 2017.
6.   Source: Moody's U.S. Trailing 12-month issuer-weighted spec-grade default rate. Actual speculative grade default data taken from January 2000 to December 31, 2017.
7.   Calculated as an average of the historical annual net realized gain/loss rates (where annual net realized gain/loss rate is calculated a s the amount of net realized gains/losses for a particular period
     from Ares Capital IPO in October 2004 to December 31, 2017 divided by the average quarterly investments at amortized cost in such period). For purposes of this calculation, SSLP and SDLP
     subordinated certificates are considered debt investments. Excludes $196 million one‐time gain on the acquisition of Allied C apital Corporation in Q2‐10 and gains/losses from extinguishment of
     debt and sale of other assets.
8.   Source: Moody’s 2017 Annual Default Study. Reflects average annual loss rate for speculative grade bonds from 2000-2017.

Slide 22: Strong Investment Performance
1.   Based on original cash invested, net of syndications, of approximately $19.3 billion and total proceeds from such exited inve stments of approximately $24.9 billion.
2.   Internal rate of return ("IRR") is the discount rate that makes the net present value of all cash flows related to a particular investment equal to zero. Internal rate of return is gross of management
     fees and expenses related to investments as these fees and expenses are not allocable to specific investments. The effect of such management and other expenses may reduce, maybe materially,
     the IRR’s shown herein. Investments are considered to be exited when the original investment objective has been achieved thro ugh the receipt of cash and/or non-cash consideration upon the
     repayment of Ares Capital’s debt investment or sale of an investment, or through the determination that no further consideration was collectible and, thus, a loss may have been realized. These
     IRR results are historical results relating to Ares Capital’s past performance and are not necessarily indicative of future r esults, the achievement of which cannot be assured.
3.   Calculated as an average of the historical annual net realized gain/loss rates (where annual net realized gain/loss rate is calculated as the amount of net realized gains/losses for a particular period
     from Ares Capital IPO in October 2004 to December 31, 2017 divided by the average quarterly investments at amortized cost in such period). For purposes of this calculation, SDLP and SSLP
     subordinated certificates are considered debt investments.
4.   As of December 31, 2017. Excludes $196 million one‐time gain on the acquisition of Allied Capital Corporation in Q2‐10 and ga ins/losses from extinguishment of debt and sale of other assets.
5.   BDC peer group consists of BDCs with a market capitalization of $500 million or greater as of September 30, 2017 or who are u nder common management with a BDC that meets these criteria.
     Peers include AINV, BKCC, CGBD, OCSL, OCSI, FSIC, GBDC, GSBD, HTGC, MAIN, NMFC, PFLT, PNNT, PSEC, SLRC, SUNS, TCAP, TCPC, and TSLX.
6.   Source: KBW and FDIC Commercial Banking Data. Calculated as net charge-offs for commercial and industrial loans divided by net commercial and industrial loans and leases for the respective
     periods.
7.   Annual average from October 8, 2004 through December 31, 2016, and the last twelve month period ending September 30, 2017. Fo r ARCC, the last twelve month period is as of December 31,
     2017.

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