SCULPTOR CAPITAL MANAGEMENT, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

This discussion and analysis should be read in conjunction with our unaudited
consolidated financial statements and the related notes included in Item 1 of
this quarterly report and with our audited consolidated financial statements and
the related notes included in our Annual Report. In addition, this discussion
and analysis contains forward-looking statements and involves numerous risks and
uncertainties, including, but not limited to, those described under the heading
"Forward-Looking Statements" in this report, and under the heading "Item 1A.
Risk Factors" in this quarterly report and in our Annual Report, and in other
reports we file with the SEC, that could cause actual results to differ
materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis. An investment in
our Class A Shares is not an investment in any of our funds.

Overview

Overview of Our Business

Sculptor Capital is a leading institutional alternative asset manager, with
approximately $36.8 billion in Assets Under Management as of July 1, 2022 and a
global presence with offices in New York, London, Hong Kong, and Shanghai. We
provide asset management services and investment products across Multi-Strategy,
Credit, and Real Estate. We serve our global client base through our commingled
funds, separate accounts, and specialized products. Our capabilities span all
major geographies and asset classes. Our approach to asset management is based
on the same fundamental elements that we have employed since Sculptor Capital
was founded in 1994. Our distinctive investment process seeks to generate
attractive and consistent risk-adjusted returns across market cycles through a
combination of fundamental bottom-up research, a high degree of flexibility, a
collaborative team, and integrated risk management. We currently serve a diverse
global investor base with investment solutions across core capabilities in
multi-strategy funds, dedicated credit funds, including opportunistic credit
funds and Institutional Credit Strategies products and real estate funds.

The COVID-19 Pandemic

As the COVID-19 pandemic evolved, we continued to focus on the health and
well-being of our employees and the uninterrupted service to investors in our
funds and our shareholders. We have largely returned to the office with safety
protocols in place consistent with government guidelines. We continue to monitor
government guidelines and maintain the effectiveness of our information
technology infrastructure and other controls to remain agile should the
situation change.

Due to the uncertainty over the timing and extent of any possible global
economic recovery, we cannot readily estimate or determine the effects that the
ongoing COVID-19 pandemic will ultimately have on our future business and
financial results, as well as on our liquidity and capital resources. Please see
the COVID-19 commentary included throughout this MD&A, including "-Liquidity and
Capital Resources," and "Part I-Item 1A. Risk Factors" included in our Annual
Report for additional information.

Overview of Our Financial Results

As a global alternative asset manager, our results of operations are impacted by
a variety of factors, including conditions in the global financial markets and
economic and political environments. Financial markets severely corrected in the
second quarter as investors collectively gauged the rising uncertainty of a
deteriorating global growth outlook. This tops an already fraught market debate
around record inflation, rising interest rates, and the immense value distortion
of risk assets for much of the last two-plus years. From equities to bonds, the
first half of 2022 has been one of the worst on record as 60/40 strategies
suffered their weakest performance in 90 years. However, we believe both our
funds, through their unconstrained investment style, and our platform, from our
business diversification and strong balance sheet, are well positioned to
navigate these challenging conditions.
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As of June 30, 2022, our AUM was $36.9 billion, a decrease of $944.5 million
from the prior year period. Our AUM decreased, primarily due to
performance-related depreciation in multi-strategy funds, as well as
distributions and other reductions in Institutional Credit Strategies and real
estate funds, partially offset by net inflows in Institutional Credit Strategies
and real estate funds. We continued our fundraising momentum for our
multi-strategy funds with gross inflows of $776.5 million in the first half of
2022. We expanded our product offering through new products and new distribution
channels, partnering with new and existing clients. In 2022, we held first
closes for our Real Estate Credit Fund II, Tactical Credit Fund ("STAX"), the
latest vintage in our series of seven closed-end opportunistic credit funds, and
closed a $350.0 million structured alternative investment solution, which was
tailored to meet the needs of insurance investors. Lastly, we launched two
additional CLOs in the first half of 2022. These new launches further diversify
our business by product, channel and vintage, continuing the trend of raising
long term capital, as we grew our long-term AUM to 71% of our total AUM as of
June 30, 2022.

We reported a GAAP net loss of $8.1 million in the second quarter of 2022,
compared to net income of $21.8 million for the second quarter of 2021, and GAAP
net income of $8.8 million in the first half of 2022, compared to net income of
$1.5 million in the first half of 2021.

Management fees for the second quarter of 2022 were $71.8 million, a decrease of
$4.8 million compared to the second quarter of 2021. Our management fees fell
primarily due to Institutional Credit Strategies, driven by the one-time
recovery of previously deferred subordinated management fees in the prior year
as well as lower weighted-average management fee rates. We continue to issue new
CLOs and reset older CLO vintages, which extends the duration of our AUM in
Institutional Credit Strategies, but we have seen our average fee rate decline
in these vehicles, bringing down management fees despite growth in AUM.

Incentive income was $44.6 million for the second quarter of 2022 driven by crystallizations and distributions in real estate funds, primarily from Sculptor Real Estate Fund III.

Expenses were $111.3 million for the second quarter of 2022, up $22.7 million
from the second quarter of 2021 driven by higher compensation and benefits
expense, which included higher bonus expense primarily as a result of higher
real estate incentive income profit sharing, and higher equity-based
compensation expense. Additionally, general, administrative and other expenses
were higher due to higher professional services expenses.

Other loss for the second quarter of 2022 increased compared 2021, as a result
of losses on our investments and losses of consolidated entities in the second
quarter of 2022. These were partially offset by a decrease in the fair value of
warrants to purchase our Class A Shares, as well as losses on retirement of debt
incurred in the prior year period in connection with $224.4 million of
prepayments of the 2020 Term Loan.

Economic Income was $32.6 million for the second quarter of 2022, compared to
$75.1 million for the second quarter of 2021. Economic Income was $61.8 million
for the first half of 2022, compared to $116.0 million in the first half of
2021. The decreases were primarily due to lower incentive income, higher
compensation and benefits expenses from incentive income profit sharing and
lower management fees.

Economic Income is a non-GAAP measure. For additional information regarding non-GAAP measures, as well as for a discussion of the drivers of the year-over-year change in Economic Income, please see “-Economic Income Analysis.”

Managing Business Performance

Our financial results are primarily driven by the combination of our AUM and the
investment performance of our funds. Both of these factors directly affect the
revenues we earn from management fees and incentive income. Growth in AUM in our
funds and positive investment performance of our funds drive growth in our
revenues and earnings. Conversely, poor investment performance slows our growth
by decreasing our AUM and increasing the potential for redemptions from our
funds, which would have a negative effect on our revenues and earnings.

We typically accept capital from new and existing investors in our
multi-strategy and certain open-end opportunistic credit funds on a monthly
basis on the first day of each month. Investors in these funds (other than with
respect to capital invested in Special Investments) typically have the right to
redeem their interests in a fund following an initial lock-up period of
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one to four years. Following the expiration of these lock-up periods, subject to
certain limitations, investors may redeem capital generally on a quarterly or
annual basis upon giving 30 to 90 days prior written notice. The lock-up
requirements for our funds may generally be waived or modified at the sole
discretion of each funds' general partner or board of directors, as applicable.

With respect to investors with quarterly redemption rights, requests for
redemptions submitted during a quarter generally reduce AUM on the first day of
the following quarter. Accordingly, quarterly redemptions generally will have no
impact on management fees during the quarter in which they are submitted.
Instead, these redemptions will reduce management fees in the following quarter.
With respect to investors with annual redemption rights, redemptions paid prior
to the end of a quarter impact AUM in the quarter in which they are paid, and
therefore impact management fees for that quarter.

Investors in our closed-end credit funds, securitization vehicles, real estate
and certain other funds are not able to redeem their investments. In those
funds, investors generally make a commitment that is funded over an investment
period (or at launch for our securitization vehicles). Upon the expiration of
the investment period, the investments are then sold or realized over time, and
distributions are made to the investors in the fund.

Information with respect to our AUM throughout this report, including the tables
set forth below, includes investments by us, our executive managing directors,
employees and certain other related parties. As of June 30, 2022, approximately
3% of our AUM represented investments by us, our executive managing directors,
employees and certain other related parties in our funds. As of that date,
approximately 47% of these affiliated AUM are not charged management fees and
are not subject to an incentive income calculation. Additionally, to the extent
that a fund is an investor in another fund or vehicle, we waive or rebate a
corresponding portion of the management fees charged to the fund.

As further discussed below in "-Understanding Our Results-Revenues-Management
Fees," we generally calculate management fees based on AUM as of the beginning
of each quarter. The AUM in the tables below are presented net of management
fees and incentive income as of the end of the period. Accordingly, the AUM
presented in the tables below are not the amounts used to calculate management
fees for the respective periods.

Appreciation (depreciation) in the tables below reflects the aggregate net
capital appreciation (depreciation) for the entire period and is presented on a
total return basis, net of all fees and expenses (except incentive income on
Special Investments), and includes the reinvestment of all dividends and other
income. Management fees and incentive income vary by product.
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Summary of Changes in AUM

The tables below present the changes to our AUM for the respective periods based on the type of funds or investment vehicles we manage.

                                                                                     Three Months Ended June 30, 2022
                                                             Inflows /              Distributions /           Appreciation /
                                  March 31, 2022           (Outflows)(1)           Other Reductions           (Depreciation)            Other(2)           June 30, 2022

                                                                                          (dollars in thousands)
Multi-strategy funds            $    11,076,217          $      (137,889)         $              -          $     (1,188,851)         $        -          $   9,749,477
Credit
  Opportunistic credit funds          6,309,552                   75,275                  (103,589)                 (254,941)                  -              6,026,297
  Institutional Credit
Strategies                           16,657,708                  123,637                   (52,195)                   (2,801)           (266,485)            16,459,864
Real estate funds                     4,590,385                   77,782                   (33,348)                      333             (11,200)             4,623,952

Total                           $    38,633,862          $       138,805          $       (189,132)         $     (1,446,260)         $ (277,685)         $  36,859,590


                                                                                    Three Months Ended June 30, 2021
                                                            Inflows /              Distributions /            Appreciation /
                                 March 31, 2021           (Outflows)(1)           Other Reductions            (Depreciation)            Other(2)           June 30, 2021

                                                                                         (dollars in thousands)
Multi-strategy funds           $    10,918,733          $       119,155          $            (36)         $         267,940          $        -          $  11,305,792
Credit
  Opportunistic credit funds         6,552,499                 (307,334)                   (5,361)                   227,610                   -              6,467,414
  Institutional Credit
Strategies                          15,652,429                  725,922                  (727,594)                       208               4,033             15,654,998
Real estate funds                    4,250,757                  239,280                  (114,467)                       275                   -              4,375,845

Total                          $    37,374,418          $       777,023          $       (847,458)         $         496,033          $    4,033          $  37,804,049


                                                                                       Six Months Ended June 30, 2022
                                                                Inflows /              Distributions /           Appreciation /
                                  December 31, 2021           (Outflows)(1)           Other Reductions           (Depreciation)            Other(2)           June 30, 2022

                                                                                           (dollars in thousands)
Multi-strategy funds            $       11,112,445          $       172,722          $            (49)         $     (1,535,641)         $        -          $   9,749,477
Credit
  Opportunistic credit funds             6,350,474                  (22,853)                 (103,589)                 (197,735)                  -              6,026,297
  Institutional Credit
Strategies                              16,052,406                  920,280                  (153,396)                   (2,947)           (356,479)            16,459,864
Real estate funds                        4,544,862                  214,393                  (119,780)                      333             (15,856)             4,623,952

Total                           $       38,060,187          $     1,284,542          $       (376,814)         $     (1,735,990)         $ (372,335)         $  36,859,590


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                                                                                     Six Months Ended June 30, 2021
                                                               Inflows /             Distributions /          Appreciation /
                                 December 31, 2020           (Outflows)(1)          Other Reductions          (Depreciation)            Other(2)           June 30, 2021

                                                                                         (dollars in thousands)
Multi-strategy funds           $       10,504,024          $       197,392  

$ (759) $605,135 $ –

   $  11,305,792
Credit
  Opportunistic credit funds            6,287,777                 (424,411)                (10,961)                  615,009                   -              6,467,414
  Institutional Credit
Strategies                             15,697,827                1,035,394                (768,542)                      417            (310,098)            15,654,998
Real estate funds                       4,308,648                  378,420                (312,823)                    1,600                   -              4,375,845

Total                          $       36,798,276          $     1,186,795          $   (1,093,085)         $      1,222,161          $ (310,098)         $  37,804,049


_______________

(1) Includes transfers between Sculptor funds.

(2)Includes the effects of changes in the par value of the underlying collateral
of the CLOs, foreign currency translation changes in the measurement of AUM of
our European CLOs and other funds, and changes in the portfolio appraisal value
for aircraft securitization vehicles. For FP AUM, this also includes movements
in or out of FP AUM.

AUM totaled $36.9 billion as of June 30, 2022. In the six months ended June 30,
2022, AUM decreased by $1.2 billion, driven by performance-related depreciation
of $1.7 billion, primarily from multi-strategy funds, a decrease of
$294.9 million due to the effects of foreign currency translation adjustments on
CLOs, and distributions and other reductions of $376.8 million, driven primarily
by distributions from our CLOs and real estate funds. These decreases were
partially offset by net inflows of $1.3 billion across Institutional Credit
Strategies, multi-strategy and real estate funds.

AUM net inflows of $1.3 billion were comprised of (i) $2.1 billion of gross
inflows, driven by $958.2 million in Institutional Credit Strategies, from the
launch of additional CLOs, $698.7 million in multi-strategy funds and
$214.4 million in real estate funds, driven by the launch of Real Estate Credit
Fund II; and (ii) $762.2 million of gross outflows due to redemptions, primarily
in our multi-strategy and opportunistic credit funds. In 2022, excluding
securitization vehicles within Institutional Credit Strategies, our largest
sources of gross inflows were from high net worth and family offices, sovereign
wealth and corporates, and pensions, while pensions, fund-of-funds, and high net
worth and family offices were the largest source of gross outflows.

Distributions and other reductions of $376.8 million were driven primarily by
$153.4 million of distributions from Institutional Credit Strategies as a result
of paydowns in certain of our CLOs, and $119.8 million of distributions from our
real estate funds as a result of realizations.

In the six months ended June 30, 2021, our funds experienced performance-related
appreciation of $1.2 billion, net inflows of $1.2 billion and a decrease of
$310.1 million primarily due to the effects of changes in par value of
underlying collateral of the CLOs. The net inflows were comprised of (i) $2.2
billion of gross inflows, driven by $1.0 billion in Institutional Credit
Strategies, primarily driven by the launch of additional CLOs, and $760.2
million in multi-strategy funds; and (ii) $1.0 billion of gross outflows due to
redemptions, primarily in our multi-strategy and opportunistic credit funds.
Distributions and other reductions of $1.1 billion were driven primarily by
$768.5 million of distributions from Institutional Credit Strategies as a result
of a wind down of a CLO, and $312.8 million of distributions from our real
estate funds, as a result of realizations in our real estate funds. In 2021,
excluding securitization vehicles within Institutional Credit Strategies, our
largest sources of gross inflows were from high net worth and family offices,
sovereign wealth and corporates, and fund-of-funds, while pensions and
fund-of-funds were the largest source of gross outflows.
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Summary of Changes in FP AUM

The tables below present the changes to our FP AUM for the respective periods
based on the type of funds or investment vehicles we manage. FP AUM represents
the AUM on which we earn management fees and / or incentive income.

                                                                                     Three Months Ended June 30, 2022
                                                             Inflows /              Distributions /           Appreciation /
                                  March 31, 2022           (Outflows)(1)           Other Reductions           (Depreciation)            Other(2)           June 30, 2022

                                                                                          (dollars in thousands)
Multi-strategy funds            $    10,837,660          $      (145,836)         $              -          $     (1,160,088)         $    8,915          $   9,540,651
Credit
  Opportunistic credit funds          5,730,008                   71,312                  (100,715)                 (251,223)             50,531              5,499,913
  Institutional Credit
Strategies                           11,337,931                  136,884                   (29,665)                   (2,346)           (206,992)            11,235,812
Real estate funds                     3,923,995                   52,211                   (30,724)                        -             (51,200)             3,894,282

Total                           $    31,829,594          $       114,571          $       (161,104)         $     (1,413,657)         $ (198,746)         $  30,170,658


                                                                                    Three Months Ended June 30, 2021
                                                            Inflows /              Distributions /            Appreciation /
                                 March 31, 2021           (Outflows)(1)           Other Reductions            (Depreciation)            Other(2)          June 30, 2021

                                                                                         (dollars in thousands)
Multi-strategy funds           $    10,708,351          $        80,973          $            (35)         $         260,030          $  12,841          $  11,062,160
Credit
  Opportunistic credit funds         5,895,539                 (297,453)                   (5,358)                   225,345             61,244              5,879,317
  Institutional Credit
Strategies                          12,226,454                  436,667                  (411,144)                        45           (153,932)            12,098,090
Real estate funds                    3,559,184                  422,876                  (101,194)                         -                275              3,881,141

Total                          $    32,389,528          $       643,063          $       (517,731)         $         485,420          $ (79,572)         $  32,920,708


                                                                                       Six Months Ended June 30, 2022
                                                                Inflows /              Distributions /           Appreciation /
                                  December 31, 2021           (Outflows)(1)           Other Reductions           (Depreciation)            Other(2)           June 30, 2022

                                                                                           (dollars in thousands)
Multi-strategy funds            $       10,877,541          $       158,142          $            (49)         $     (1,500,539)         $    5,556          $   9,540,651
Credit
  Opportunistic credit funds             5,742,605                  (26,223)                 (100,715)                 (194,872)             79,118              5,499,913
  Institutional Credit
Strategies                              11,142,956                  458,449                   (67,852)                   (2,360)           (295,381)            11,235,812
Real estate funds                        3,875,427                  162,211                   (87,487)                        -             (55,869)             3,894,282

Total                           $       31,638,529          $       752,579          $       (256,103)         $     (1,697,771)         $ (266,576)         $  30,170,658


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                                                                                        Six Months Ended June 30, 2021
                                                                Inflows /              Distributions /           Appreciation /
                                  December 31, 2020           (Outflows)(1)           Other Reductions           (Depreciation)             Other(2)            June 30, 2021

                                                                                            (dollars in thousands)
Multi-strategy funds            $       10,319,387          $       137,207          $            (35)         $        594,026          $     11,575          $  11,062,160
Credit
  Opportunistic credit funds             5,964,678                 (395,464)                   (5,358)                  605,968              (290,507)             5,879,317
  Institutional Credit
Strategies                              12,694,258                  589,411                  (449,492)                       89              (736,176)            12,098,090
Real estate funds                        3,575,828                  558,753                  (255,037)                        -                 1,597              3,881,141

Total                           $       32,554,151          $       889,907          $       (709,922)         $      1,200,083          $ (1,013,511)         $  32,920,708


_______________

(1) Includes transfers between Sculptor funds.

(2)Includes the effects of changes in the par value of the underlying collateral
of the CLOs, foreign currency translation changes in the measurement of AUM of
our European CLOs and other funds, and changes in the portfolio appraisal value
for aircraft securitization vehicles. For FP AUM, this also includes movements
in or out of FP AUM.

FP AUM totaled $30.2 billion as of June 30, 2022. FP AUM is lower than AUM primarily due to:

•Amounts held by our employees or other related parties who do not pay fees in our multi-strategy funds, opportunistic credit funds, and real estate funds

•Uncalled capital for funds where we do not earn management fees until it is invested for our opportunistic credit funds and real estate funds; swear

•Fee rebates when our funds invest in the equity of CLOs in Institutional Credit
Strategies, in addition to the AUM associated with the structured alternative
investment solution, which will become FP AUM once it is invested in our funds.
Refer to the "Institutional Credit Strategies" section below for further
details.

In the six months ended June 30, 2022, FP AUM decreased by $1.5 billion, driven
largely by the drivers discussed in the Summary of Changes in AUM section above.
FP AUM as a percentage of AUM decreased during the period due to an increase in
the amount of CLO equity held by our funds for which there is no fee.

The table below presents our weighted-average FP AUM and average management fee
rates for our FP AUM. Weighted-average FP AUM exclude the impact of second
quarter investment performance for the periods presented, as these amounts
generally do not impact management fees calculated for those periods. Our
average management fee may vary from period to period based on the mix of
products that comprise our FP AUM. The average management fee rates below
consider management fees on an Economic Income basis. For reconciliations of our
non-GAAP measures to the respective GAAP measures, please see "-Economic Income
Reconciliations" at the end of this MD&A.
                                                   Three Months Ended June 30,                   Six Months Ended June 30,
                                                    2022                  2021                  2022                  2021

                                                                            (dollars in thousands)

Weighted-average fee-paying assets under
management                                    $  31,728,559          $ 

31,919,091 $31,824,604 $32,259,491
Average management fee rates

                           0.84  %               0.89  %               0.85  %               0.87  %


Fund Performance Information

The tables below present performance information for the funds we manage. The
return information presented represents, where applicable, the composite
performance of all feeder funds that comprise each of the master funds
presented. Gross return information is generally calculated using the total
return of all feeder funds, net of all fees and expenses except management fees
and incentive income of such feeder funds and master funds, and the returns of
each feeder fund include the reinvestment of all dividends and other income. Net
return information is generally calculated as the gross returns less management
fees and incentive income. Return information that includes Special Investments
excludes incentive income on
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unrealized gains attributable to such investments, which could reduce returns at
the time of realization. Special Investments and initial public offering
investments are not allocated to all investors in the funds, and investors that
were not allocated Special Investments and initial public offering investments
may experience materially different returns.

The performance information presented in this "Fund Performance Information"
section is not indicative of the performance of our Class A Shares and is not
necessarily indicative of the future results of any particular fund, including
the accrued unrecognized amounts of incentive income. An investment in our
Class A Shares is not an investment in any of our funds. There can be no
assurance that any of our existing or future funds will achieve similar results.
The timing and amount of incentive income generated from our funds are
inherently uncertain. Incentive income is a function of investment performance
and realizations of investments, which vary period-to-period based on market
conditions and other factors. We cannot predict when, or if, any realization of
investments will occur. Incentive income recognized for any particular period is
not a reliable indicator of incentive income that may be earned in subsequent
periods.

Multi-Strategy Funds

Our multi-strategy funds invest globally in high-conviction investment ideas
across asset classes, regions and investment strategies with a primary focus is
on idiosyncratic opportunities where return drivers are less sensitive to
direction of broader financial markets and which tend to arise when value is
obscured by attributes such as complexity, corporate actions, market
dislocations, or investor misunderstandings. Additionally, we have the
flexibility to take on market-directional risk when we believe that broad market
dislocations have created asymmetric upside/downside potential.

The table below presents AUM and investment performance for our multi-strategy
funds. AUM are generally based on the net asset value of these funds plus any
unfunded commitments, if applicable. Management fees generally range from 1.00%
to 2.00% annually of FP AUM. For the second quarter of 2022, our multi-strategy
funds had an average management fee rate of 1.27% of FP AUM.

We generally crystallize incentive income from the majority of our
multi-strategy funds on an annual basis. Incentive income is generally equal to
20% of the realized and unrealized profits attributable to each investor. A
portion of the AUM in each of the Sculptor Master Fund and our other
multi-strategy funds is subject to initial commitment periods of three years,
and for certain of these assets, we only earn incentive income once profits
attributable to an investor exceed a preferential return, or "hurdle rate,"
which is generally equal to the 3-month T-bill rate for our multi-strategy
funds. Once the investment performance has exceeded the hurdle rate for these
assets, we may receive a "catch-up" allocation, resulting in a potential
recognition by us of a full 20% of the net profits attributable to investors in
these assets upon crystallization at the end of the multi-year commitment
period.

                                                                                             Returns for the Six Months Ended June 30,                                Annualized Returns Since
                                  Assets Under Management as of June                                                                                              Inception Through June 30,
                                                  30,                                          2022                              2021                                        2022
                                      2022                  2021                      Gross              Net             Gross            Net                          Gross              Net

Fund                                    (dollars in thousands)
Sculptor Master Fund(1)          $  9,031,780          $ 10,343,152         

-12.6% -13.2% 8.2% 5.9%

                  15.6  % (2)      10.7  % (2)
Sculptor Enhanced Master Fund         706,133               952,657                   -17.6  %          -18.3  %          4.9  %          3.4  %                         10.5  %           6.4  %
Other funds                            11,564                 9,983                        n/m               n/m             n/m             n/m                             n/m              n/m
                                 $  9,749,477          $ 11,305,792


_______________

n/m not meaningful

(1)The returns for the Sculptor Master Fund exclude Special Investments. Special
Investments in the Sculptor Master Fund are held by investors representing a
small percentage of AUM in the fund. Inclusive of these Special Investments, the
returns of the Sculptor Master Fund for the six months ended June 30, 2022 were
-12.2% gross and -12.8% net, for the six months ended June 30, 2021 were 8.3%
gross and 6.1% net, and annualized since inception through June 30, 2022 were
15.4% gross and 10.6% net.

(2)The annualized returns since inception are those of the Sculptor
Multi-Strategy Composite, which represents the composite performance of all
accounts that were managed in accordance with our broad multi-strategy mandate
that were not subject to portfolio investment restrictions or other factors that
limited our investment discretion since inception on April 1, 1994. Performance
is calculated using the total return of all such accounts net of all investment
fees and expenses of such accounts, and the returns include the reinvestment of
all dividends and other income. The performance calculation for the Sculptor
Master
                                       55
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Fund excludes realized and unrealized gains and losses attributable to currency
hedging specific to certain investors investing in Sculptor Master Fund in
currencies other than the U.S. dollar. For the period from April 1, 1994 through
December 31, 1997, the returns are gross of certain overhead expenses that were
reimbursed by the accounts. Such reimbursement arrangements were terminated at
the inception of the Sculptor Master Fund on January 1, 1998. The size of the
accounts comprising the composite during the time period shown vary materially.
Such differences impacted our investment decisions and the diversity of the
investment strategies followed. Furthermore, the composition of the investment
strategies we follow is subject to our discretion, has varied materially since
inception and is expected to vary materially in the future. As of June 30, 2022,
the annualized returns since the Sculptor Master Fund's inception on January 1,
1998 were 12.5% gross and 8.2% net excluding Special Investments and 12.2% gross
and 8.1% net inclusive of Special Investments.

AUM in our multi-strategy funds decreased by $1.6 billion, or 14%, year-over-year. This was driven primarily by $1.6 billion of performance-related depreciation, partially offset by $75.3 million of net inflows.

Our funds exhibited resilience in the face of extreme market stress during the
quarter and experienced a portion of the market volatility. Our multi-strategy
approach affirmed its value as it dampened volatility. In the first half of
2022, the Sculptor Master Fund generated a gross return of -12.6% and a net
return of -13.2%. Equities was the largest detractor for the quarter, although
the fund also faced losses in credit strategies.

In the first half of 2021, the Sculptor Master Fund generated a gross return
of 8.2% and a net return of 5.9%. The fund profited from positions within
fundamental equities, corporate credit, structured credit and merger arbitrage,
while proactive risk management provided downside protection during a period of
pronounced factor volatility in equity markets.

Credit
                                          Assets Under Management as of June 30,
                                                  2022                         2021

                                                  (dollars in thousands)
Opportunistic credit funds        $          6,026,297                    $  6,467,414
Institutional Credit Strategies             16,459,864                      15,654,998
                                  $         22,486,161                    $ 22,122,412


Opportunistic Credit Funds

Our opportunistic credit funds seek to generate risk-adjusted returns by capturing value in mispriced investments across disrupted, dislocated and distressed corporate, structured and private credit markets globally.

Within our Opportunistic Credit strategy, we manage open-ended and closed-ended
funds on behalf of investors. In our open-ended funds, we allow for
contributions and redemptions (subject to initial lock-up and notice periods) on
a periodic basis, similar to our multi-strategy funds. In our closed-ended
funds, investors commit capital that is funded over an investment period. Upon
the expiration of the investment period, the investments are then sold or
realized over a period of time, and distributions are made to the investors in
the fund.

AUM for our opportunistic credit funds are generally based on the net asset
value of those funds plus any unfunded commitments, if applicable. Management
fees for our opportunistic credit funds generally range from 0.75% to 1.75%
annually of the net asset value of these funds. For the second quarter of 2022,
our opportunistic credit funds had an average management fee rate of 0.88% of FP
AUM.
                                       56
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The table below presents AUM and investment performance information for certain
of our opportunistic credit funds. Incentive income related to these funds
(excluding the closed-end opportunistic fund, which is explained further below)
is generally equal to 20% of realized and unrealized profits attributable to
each investor, and a portion of these AUM is subject to hurdle rates, which are
generally 5% to 8% for our open-end opportunistic credit funds. Once the
cumulative investment performance has exceeded the hurdle rate, we may receive a
"catch-up" allocation, resulting in the potential recognition by us of a full
20% of the net profits attributable to investors in these funds. The measurement
periods for these AUM generally range from one to five years.

We generally crystallize incentive income from our opportunistic credit funds at
the end of a multi-year measurement period. This results in a timing difference
between when we can recognize incentive income and when we accrue the associated
discretionary bonus expense. Incentive income accrued at the fund level that
cannot yet be recognized drives an increase in our ABURI balance. Compensation
expense related to ABURI generated from our opportunistic credit funds is
generally recognized in the fourth quarter of the year the underlying fund
performance is generated which may not occur at the same time that the related
revenues are recognized by us.
                                                                                                 Returns for the Six Months Ended June 30,
                                    Assets Under Management as of June                                                                                     Annualized Returns Since Inception Through
                                                   30,                                         2022                              2021                                     June 30, 2022
                                        2022                  2021                    Gross             Net             Gross             Net                                                            Gross             Net

Fund                                         (dollars in thousands)
Sculptor Credit Opportunities
Master Fund(1)                     $  1,904,832          $ 2,336,582                   -2.4  %          -2.8  %          14.6  %          11.7  %                                                         13.2  %          9.3  %
Customized Credit Focused Platform    3,827,891            3,792,908                See below for return information on our Customized Credit Focused Platform.
Closed-end opportunistic credit
funds                                   293,574              337,924                See below for return information on our closed-end opportunistic credit funds.

                                   $  6,026,297          $ 6,467,414


_______________

(1)The returns for the Sculptor Credit Opportunities Master Fund exclude Special
Investments, which are held by investors representing a small percentage of AUM
in the fund. Inclusive of these Special Investments, the returns of the Sculptor
Credit Opportunities Master Fund for the six months ended June 30, 2022 were
-2.4% gross and -2.8% net, for the six months ended June 30, 2021 were 14.6%
gross and 11.8% net, and annualized since inception through June 30, 2022 were
12.9% gross and 9.1% net.

AUM in our opportunistic credit funds decreased by $441.1 million, or 7%,
year-over-year. This was driven primarily by $398.2 million of net outflows,
offset by $88.2 million of performance-related appreciation and $85.0 million
related to the first closing STAX, which is the latest vintage in our series of
seven closed-end opportunistic credit funds. We continue to raise capital for
STAX and held a second closing on July 1 with $250.0 million, bringing total
committed capital to $370.0 million. We plan to hold additional closes
throughout the year and have seen previous periods of market volatility act as a
catalyst for capital raising in these types of strategies.

In the first half of 2022, the Sculptor Credit Opportunities Master Fund, our
global opportunistic credit fund, generated a gross return of -2.4% and a net
return of -2.8%. The fund delivered strong results as compared to Global High
Yield and global equities. In 2022, the fund experienced losses in corporate
credit and structured credit.

In the first half of 2021, the Sculptor Credit Opportunities Master Fund
generated a gross return of 14.6% and a net return of 11.7%. The fund continued
to see contributions to performance from exposure added in the depths of the
dislocation. Corporate credit led performance from additional positive
development across a variety of our largest process driven investments in both
the U.S. and Europe. The portfolio benefited from the successful progression of
a number of long-term restructurings where we had added to our exposure over the
past year at and near pricing lows.

Our Customized Credit Focused Platform invests in a flexible credit mandate across the credit spectrum to allow timely investments as market conditions change and dislocate. The table below presents investment performance for the fund.

                                       57
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                                      Weighted Average Return for the Six Months Ended June 30,(2)                        Inception to Date as of June 30, 2022

                                              2022                                    2021                                      IRR                        Net Invested
Customized Credit Focused                                                                                                                                     Capital
Platform                            Gross                Net                Gross                Net               Gross(3)              Net(4)             Multiple(5)
Opportunistic Credit
Performance(1)                        -4.6  %             -4.0  %             14.1  %             11.3  %               14.8  %             11.2  %                  2.5x


_______________

(1)Performance presented is for the opportunistic credit strategies in the
Customized Credit Focused Platform. As of June 30, 2022, approximately 93% of
the invested capital in the Customized Credit Focused Platform is invested in
the Platform's opportunistic credit strategies.

(2) Weighted Average Returns reflect the total profit & loss divided by the weighted average capital base, which represents net asset value plus net contributions (distributions) for the period.

(3)Gross IRR represents estimated, unaudited, annualized pre-tax returns based
on the timing of cash inflows and outflows for each investment. It is calculated
in the same manner as Net IRR, however, it does not reflect adjustments to cash
flows related to incentive income, management fees and the applicable fund
expenses. Gross IRR represents the estimated, unaudited, annualized pre-tax
return based on the actual and/or projected timing of cash inflows from, and
outflows to, investors for each investment (irrespective of any funding from a
credit facility or other third-party financing source used by the Customized
Credit Focused Platform). In certain cases, funding from a credit facility or
other third party financing source was initially used by the Customized Credit
Focused Platform to acquire an investment or pay certain expenses, which may
have the effect of increasing the Gross IRR above that which would have been
presented, had drawdowns from limited partners been initially used to acquire
the investment or pay such expenses. Gross IRR includes the effect of investment
hedges as determined by the Company. There can be no assurance that an
appropriate hedge will be identified for each investment or that an appropriate
hedge will be available for all investments.

(4) Net IRR is the Gross IRR adjusted to reflect actual management fees, incentive income and expenses incurred by the Customized Credit Focused Platform.

(5)Net invested capital multiple measures the current net asset value over the
net invested capital, where net invested capital represents cumulative
contributions less cumulative distributions. The Customized Credit Focused
Platform has an active liquid investment program, a key element of which
includes ramping up and ramping down depending on market conditions. Much of the
capital has recently been deployed.

The table below presents AUM investment performance and other information for
our closed-end opportunistic credit funds. Our closed-end opportunistic credit
funds follow a European-style waterfall, whereby incentive income may be paid to
us only after a fund investor receives distributions in excess of their total
contributed capital and a preferential return, which is generally 6% to 8%.
Incentive income related to these funds is generally equal to 20% of the
cumulative realized profits in excess of the preferential return attributable to
each investor over the life of the fund. Once the investment performance has
exceeded the preferential return, we may receive a "catch-up" allocation,
resulting in a potential recognition by us of a full 20% of the net profits
attributable to investors in these funds. These funds have concluded their
investment periods, and therefore we expect AUM for these funds to decrease as
investments are sold and the related proceeds are distributed to the investors
in these funds.
                                   Assets Under Management as of
                                             June 30,                                                          Inception to Date as of June 30, 2022
                                                                                    Total             Total Invested           Gross
                                      2022                2021                   Commitments            Capital(1)            IRR(2)            Net IRR(3)            Gross MOIC(4)

Fund (Investment Period)                            (dollars in thousands)
Sculptor Tactical Credit Fund
(2022 - 2025)(5)                      83,651                  -                     119,940                 85,142                  n/m                   n/m                     n/m
Sculptor European Credit
Opportunities Fund (2012-2015)             -                  -                     459,600                305,487              15.7  %               11.8  %                    1.5x
Sculptor Structured Products
Domestic Fund II (2011-2014)               -             10,956                     326,850                326,850              19.2  %               15.1  %                    2.1x
Sculptor Structured Products
Offshore Fund II (2011-2014)               -              9,967                     304,531                304,531              16.5  %               12.9  %                    1.9x
Sculptor Structured Products
Offshore Fund I (2010-2013)                -              3,907                     155,098                155,098              23.7  %               18.9  %                    2.1x
Sculptor Structured Products
Domestic Fund I (2010-2013)            3,423              4,242                      99,986                 99,986              22.6  %               18.0  %                    2.0x
OZ Global Credit Master Fund I
(2008-2009)                                -                  -                     214,141                214,141               5.5  %                4.2  %                    1.1x
Other funds                          206,500            308,852                     428,940                284,582                  n/m                   n/m                     n/m
                                 $   293,574          $ 337,924                $  2,109,086          $   1,775,817


_______________

n/m not meaningful

(1) Represents funded capital commitments net of recallable distributions to investors.

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(2)Gross IRR for our closed-end opportunistic credit funds represents the
estimated, unaudited, annualized return based on the timing of cash inflows and
outflows for the fund as of June 30, 2022, including the fair value of
unrealized investments as of such date, together with any appreciation or
depreciation from related hedging activity. Gross IRR does not include the
effects of management fees or incentive income, which would reduce the return,
and includes the reinvestment of all fund income.

(3)Net IRR is calculated as described in footnote (2), but is reduced by all
management fees, as well as paid incentive and accrued incentive income that
will be payable upon the distribution of each fund's capital in accordance with
the terms of the relevant fund. Accrued incentive income may be higher or lower
at such time. The net IRR represents a composite rate of return for a fund and
does not reflect the net IRR specific to any individual investor.

(4)Gross Multiple on Invested Capital ("MOIC") for our closed-end opportunistic
credit funds is calculated by dividing the sum of the net asset value of the
fund, accrued incentive income, life-to-date incentive income and management
fees paid and any non-recallable distributions made from the fund by the
invested capital.

(5) This fund is in the first year of deployment; therefore, IRR and MOIC information is not presented, as it is not meaningful.

Institutional Credit Strategies

Institutional Credit Strategies is our asset management platform that invests in performing credits, including leveraged loans, high-yield bonds, private credit/bespoke financing and investment grade credit via CLOs, aircraft securitization vehicles, CBOs, and other customized solutions for clients.

AUM for Institutional Credit Strategies are generally based on the amount of
equity outstanding for CLOs and CBOs (during the warehouse period), the par
value of the collateral assets and cash held for CLOs and CBOs (after the
warehouse period), and adjusted portfolio appraisal values for the aircraft
collateral within the securitization vehicles. AUM also includes the net asset
value of other investment vehicles within the strategy. However, AUM are reduced
for any investments in CLOs and securitization vehicles held by our other funds.
Management fees for Institutional Credit Strategies generally range from 0.25%
to 0.50% annually of AUM. For the second quarter of 2022, Institutional Credit
Strategies had an average management fee rate of 0.40% net of rebates on
cross-investments from other funds we manage.

Given market pressures, average fee rates in our Institutional Credit Strategies
business decreased in line with the broader market trends. We continue to issue
new CLOs and reset older CLO vintages, which extends the duration of our AUM and
we believe may lead to enhanced returns to our investors.

Incentive income from our CLOs and CBO is generally equal to 20% of the excess
cash flows due to the holders of the subordinated notes issued by the CLOs and
CBO and is generally subject to a 12% hurdle rate. Because of the hurdle rate
and structure of our CLOs and CBO, we do not expect to earn a meaningful amount
of incentive income from these entities, and therefore no return information is
presented for these vehicles. We do not earn incentive income from our aircraft
securitization vehicles.

During the first quarter of 2022, we closed on a $350.0 million structured
alternative investment solution, which was tailored to meet the needs of
insurance investors. The financing vehicle issued senior and subordinated notes
to investors and used those proceeds to invest in a diversified portfolio of
funds managed by us. Prior to investing in the portfolio of funds, the AUM is
included within Institutional Credit Strategies. Upon investment in the funds,
which began during April 2022, we earn management and incentive fees based on
the terms of the underlying funds in which the vehicle invests and the
associated AUM is included in those funds.
                                       59
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                                    Most Recent Launch or                              Assets Under Management as of June 30,
                                      Refinancing Year              Deal Size                2022                  2021

                                                                                    (dollars in thousands)

Collateralized loan obligations             2017                 $  1,658,282          $   1,024,627          $  1,024,781
                                            2018                    5,315,728              4,038,908             4,807,567
                                            2019                      653,250                      -                     -
                                            2020                    1,868,287              1,673,813             1,713,880
                                            2021                    8,174,069              6,981,035             6,814,580
                                            2022                      852,334                783,981                     -
                                                                   18,521,950             14,502,364            14,360,808

Aircraft securitization vehicles            2018                      696,000                432,723               475,415
                                            2019                    1,128,000                299,178               357,369
                                            2020                      472,732                173,943               172,738
                                            2021                      821,529                591,256                     -
                                                                    3,118,261              1,497,100             1,005,522

Collateralized bond obligation              2021                      367,050                286,141               273,987

Other funds                                                                                  174,259                14,681
                                                                 $ 22,007,261          $  16,459,864          $ 15,654,998


AUM in Institutional Credit Strategies totaled $16.5 billion as of June 30,
2022, increasing $804.9 million, or 5%, year-over-year. The year-over-year
increase in AUM in Institutional Credit Strategies was driven primarily by the
launches of five CLOs and a non-fee paying aircraft securitization vehicle,
partially offset by the redemption and amortization of certain of our CLOs, as a
result of natural life-cycle events, and decreases driven by foreign currency
translation adjustments and changes in underlying collateral value.

Real Estate Funds

Our real estate funds generally make investments in commercial and residential
real estate, including real property, multi-property portfolios, real
estate-related joint ventures, real estate operating companies and other real
estate-related assets. We seek to build portfolios that are balanced between
traditional and non-traditional asset classes, employing moderate leverage,
using creative structures and targeting high cash-on-cash returns.

AUM for our real estate funds are generally based on the amount of capital
committed by our fund investors during the investment period and the amount of
actual capital invested for periods following the investment period. AUM are
reduced for unfunded commitments that will be funded through transfers from
other funds. AUM for the special purpose acquisition company ("SPAC") sponsored
by us includes the proceeds raised in the initial public offering that are
currently held in a trust for use in a business combination. The SPAC AUM is
non-fee paying, and our AUM will be reduced if and when the SPAC undergoes a
business combination or in the event of its liquidation. Management fees for our
real estate funds, exclusive of co-investment vehicles, generally range from
0.50% to 1.50% annually of FP AUM, however, management fees for Sculptor Real
Estate Credit Fund I are based on invested capital both during and after the
investment period. For the second quarter of 2022, our real estate funds,
inclusive of co-investment vehicles, had an average management fee rate of 0.86%
of FP AUM.

The tables below present AUM, investment performance and other information for
our real estate funds. The amounts included within "co-investment and other
funds" below mainly relate to co-investment vehicles in which we partner with
clients on investment opportunities, typically with lower fees.

Our real estate funds generally follow an American-style waterfall, whereby
incentive income may be paid to us after a fund investment is realized if a fund
investor receives distributions in excess of the capital contributed for such
investment, as well as a preferential return on such investment, which is
generally 6% to 10%. Upon each subsequent realization, incentive income,
                                       60
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which is generally 20% of realized profits, is recalculated based on the
cumulative realized profits in excess of the preferential return attributable to
each investor over the life of the fund. Once the investment performance has
exceeded the preferential rate, we may receive a "catch-up" allocation,
resulting in a potential recognition by us of a full 20% of the realized net
profits attributable to investors in these funds.

In addition, we recognize incentive income on our real estate funds related to
certain tax distributions on realizations at the fund level. Realizations at the
fund level may give rise to tax liabilities for our investors and us. Funds
distribute capital back to us to cover these tax liabilities and this in turn
drives the recognition of tax distribution-related incentive income. In
addition, incentive income is recognized as investments are sold and related
distributions are made to investors and us. Due to the recalculation of
cumulative realized profits upon each realization, the fund may clawback
incentive income previously paid to us. As a result, we record incentive income
paid to us by the real estate funds as unearned revenue in our consolidated
balance sheets until the criteria for revenue recognition has been met as we
have received cash before we can recognize the revenue.

For additional information on incentive income accrued at fund level for our real estate, as well as other funds, see “Longer-Term AUM and Accrued Unrecognized Incentive Income” for additional information.

For funds that have concluded their investment periods, we expect AUM to
decrease as investments are sold and the related proceeds are distributed to the
investors in these funds.
                                                               Assets Under Management as of June
                                                                              30,
                                                                   2022                  2021

Fund (Investment Period)                                             (dollars in thousands)
Sculptor Real Estate Fund I (2005-2010)                       $          -          $         -
Sculptor Real Estate Fund II (2011-2014)                            20,413               26,148
Sculptor Real Estate Fund III (2014-2019)                          251,089              327,771
Sculptor Real Estate Fund IV (2019-2023)                         2,593,626  

2,593,365

Sculptor Real Estate Credit Fund I (2015-2020)                     375,001              345,914
Sculptor Real Estate Credit Fund II (2022-2025)                    136,035                    -
Co-investment and other funds                                    1,247,788            1,082,647
                                                              $  4,623,952          $ 4,375,845


                                                                                                                  Inception to Date as of June 30, 2022
                                                                                            Total Investments                                                                   Realized/Partially Realized Investments(1)
                                  Total               Invested               Total               Gross                                                           Invested               Total               Gross
                               Commitments           Capital(2)             Value(3)            IRR(4)            Net IRR(5)            Gross MOIC(6)             Capital               Value              IRR(4)            Gross MOIC(6)

Fund                                                                                                (dollars in thousands)

Sculptor Real Estate Fund I $408,081 $386,298 $

  847,612              25.5  %               16.1  %                    2.2x       $    386,298          $   847,612              25.5  %               

2.2x

Sculptor Real Estate Fund II      839,508               762,588            1,611,953              32.9  %               21.8  %                    2.1x            762,588            1,611,953              32.9  %           

2.1x

Sculptor Real Estate Fund
III                             1,500,000             1,101,784            2,137,145              30.2  %               16.4  %                    1.9x            920,933            1,867,810              34.3  %                    2.0x
Sculptor Real Estate Fund
IV(7)                           2,596,024               916,080            1,141,061                  n/m                   n/m                     n/m            293,006              440,611                  n/m                     n/m
Sculptor Real Estate Credit
Fund I                            736,225               677,221              861,513              18.5  %               13.3  %                    1.3x            338,375              456,642              20.3  %                

1.3x

Sculptor Real Estate Credit
Fund II(7)                        136,235                      n/m                  n/m               n/m                   n/m                     n/m                   n/m                  n/m               n/m                     n/m
Co-investment and other
funds                           1,357,509             1,181,282            1,485,151                  n/m                   n/m                     n/m            196,791              353,206                  n/m                     n/m
                             $  7,573,582          $  5,025,253          $ 8,084,435                                                                          $  2,897,991          $ 5,577,834


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                                                                 Unrealized 

Investments as of June 30, 2022

                                                            Invested               Total                 Gross
                                                             Capital               Value                MOIC(6)

Fund                                                            (dollars in thousands)
Sculptor Real Estate Fund I                              $          -          $         -                   -
Sculptor Real Estate Fund II                                        -                    -                   -
Sculptor Real Estate Fund III                                 180,851              269,335                     1.5x
Sculptor Real Estate Fund IV(7)                               623,074              700,450                      n/m
Sculptor Real Estate Credit Fund I                            338,845              404,871                     1.2x
Sculptor Real Estate Credit Fund II(7)                               n/m                  n/m                   n/m
Co-investment and other funds                                 984,491            1,131,944                      n/m
                                                         $  2,127,261          $ 2,506,600


_______________

n/m not meaningful

(1) An investment is considered partially realized when the total amount of proceeds received, including dividends, interest or other distributions of income and return of capital, represents at least 50% of invested capital.

(2) Invested capital represents total aggregate contributions made for investments by the fund.

(3)Total value represents the sum of realized distributions and the fair value
of unrealized and partially realized investments as of June 30, 2022. Total
value will be impacted (either positively or negatively) by future economic and
other factors. Accordingly, the total value ultimately realized will likely be
higher or lower than the amounts presented as of June 30, 2022.

(4)Gross IRR for our real estate funds represents the estimated, unaudited,
annualized return based on the timing of cash inflows and outflows for the
aggregated investments as of June 30, 2022, including the fair value of
unrealized and partially realized investments as of such date, together with any
unrealized appreciation or depreciation from related hedging activity. Gross IRR
is not adjusted for estimated management fees, incentive income or other fees or
expenses to be paid by the fund, which would reduce the return.

(5)Net IRR is calculated as described in footnote (4), but is reduced by
management fees and other fund-level fees and expenses not adjusted for in the
calculation of gross IRR. Net IRR is further reduced by paid incentive and
accrued incentive income that will be payable upon the distribution of each
fund's capital in accordance with the terms of the relevant fund. Accrued
incentive income may be higher or lower at such time. The net IRR represents a
composite rate of return for a fund and does not reflect the net IRR specific to
any individual investor.

(6)Gross MOIC for our real estate funds is calculated by dividing the value of a
fund's investments by the invested capital, prior to adjustments for incentive
income, management fees or other expenses to be paid by the fund.

(7) These funds have invested less than half of their committed capital; therefore, IRR and MOIC information is not presented, as it is not meaningful. Sculptor Real Estate Credit Fund II total commitments included $34.3 million
associated with the structure alternative investment solution.

AUM in our real estate funds totaled $4.6 billion as of June 30, 2022,
increasing $248.1 million, or 6%, year-over-year due to net inflows of
$544.3 million, primarily due to the launch of our SPAC and the first closing of
Sculptor Real Estate Credit Fund II. This was partially offset by $277.5 million
of distributions and other reductions, primarily related to Sculptor Real Estate
Fund III, Sculptor Real Estate Credit Fund I, and various other real estate
funds, as these funds are harvesting investments and making distributions. Our
real estate funds continue to deploy capital and generate strong returns with a
16.4% annualized net return in Sculptor Real Estate Fund III and a 13.3%
annualized net return in Sculptor Real Estate Credit Fund I.


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Longer-Term AUM and Accrued But Unrecognized Incentive Income (“ABURI”)

Ace of June 30, 2022, approximately 71% of our AUM was subject to initial commitment periods of three years or longer, excluding AUM that had initial commitment periods of three years or longer and subsequently moved to shorter commitment periods at the end of their initial commitment period. The table below presents the amount of these AUM.

                                   June 30, 2022      December 31, 2021
                                          (dollars in thousands)
Multi-strategy funds              $     459,873      $          458,242
Credit
Opportunistic credit funds            4,606,318               4,773,980
Institutional Credit Strategies      16,446,064              16,038,071
Real estate funds                     4,623,952               4,544,862
                                  $  26,136,207      $       25,815,155


Incentive income on these assets, if any, is based on the cumulative investment
performance generated over this commitment period. These amounts may ultimately
not be recognized as revenue by us in the event of future losses in the
respective funds. See "-Understanding Our Results-Revenues-Incentive Income" for
additional information.

Our longer-term AUM has continued to increase over time, as our product mix
continues to shift toward longer-duration products. Longer-term AUM has
increased from 26% in 2013 to 45% in 2016 to 71% as of June 30, 2022, driven by
growth in opportunistic credit, Institutional Credit Strategies and real estate
funds. During the first quarter, longer-term AUM increased from the launch of a
structured alternative investment solution, which was tailored to insurance
investors and provides exposure to our funds across the platform in a long-dated
format. Longer-term AUM creates stability in our platform and provides more
consistency in our management fee earnings.

The table below presents the changes in the amount of incentive income accrued
at the fund level but that has not yet been recognized in our revenues (ABURI)
during the six months ended June 30, 2022:
                                                                              Recognized
                                                        December 31,          Incentive
                                                            2021                Income             Performance           June 30, 2022
                                                                                     (dollars in thousands)
Multi-strategy funds                                    $    5,246          

$ (401) $ (4,119) $ 726 Credit Opportunistic credit funds

                                  98,674              (10,417)              (31,582)                 56,675

Real estate funds                                          122,940              (46,881)               54,995                 131,054

                                                        $  226,860          $   (57,699)         $     19,294          $      188,455


Incentive income, if any, on our longer-term AUM is based on the cumulative
investment performance generated over the respective commitment period. As of
June 30, 2022, our ABURI was $188.5 million, down $38.4 million in the first
half of 2022 primarily from the crystallization of ABURI into incentive income.
In real estate, we generated $55.0 million of performance for the year which was
largely crystallized during the period. During the first half of the year, the
opportunistic credit funds reversed a portion of previously accrued ABURI due to
performance.

Our ABURI from longer-term AUM generally comprises the following:

• Multi-strategy funds. Multi-strategy ABURI is derived from clients in the three-year liquidity tranche, where incentive income other than tax distributions will be recognized at the end of each client’s three-year period.

•Opportunistic credit funds. Opportunistic credit funds ABURI is derived from three sources:

•Clients in the three-year and four-year liquidity tranches of an open-end
opportunistic credit fund, where incentive income other than tax distributions
will be recognized at the end of each client's three-year or four-year period.
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•Long-dated closed-end opportunistic credit funds, where incentive income will
be recognized during each fund's harvest period after invested capital and a
preferred return has been distributed to the clients, other than tax
distributions.

• The Customized Credit Focused Platform, where incentive income is recognized at the end of a multi-year term; previously crystallized on December 31, 2020other than tax distributions.

• Real estate funds. Real Estate ABURI is derived from long-dated real estate funds, where incentive income will start to be recognized following the completion of each fund’s investment period as investments are realized and after invested capital and a preferred return has been distributed to the clients other than tax distributions.

Certain ABURI amounts will generally have compensation expense (on an Economic
Income Basis) that will reduce the amount ultimately realized on a net basis.
Compensation expense relating to ABURI from our real estate funds is generally
recognized at the same time the related incentive income revenue is recognized
as the compensation is structured as carried interest in these vehicles.
Compensation expense relating to ABURI generated from our multi-strategy funds
and opportunistic credit funds is generally recognized in the fourth quarter of
the year the underlying fund performance is generated which may not occur at the
same time that the related revenues are generated.

Understanding Our Results

Revenues

Our operations historically have been financed primarily by cash flows generated
by our business. Our principal sources of revenues are management fees and
incentive income. For any given period, our revenues are influenced by the
amount of our AUM, the investment performance of our funds and the timing of
when we recognize incentive income for certain AUM as discussed below.

The ability of investors to contribute capital to and redeem capital from our
funds causes our AUM to fluctuate from period to period. Fluctuations in AUM
also result from our funds' investment performance. Both of these factors
directly impact the revenues we earn from management fees and incentive income.
For example, a $1.0 billion increase or decrease in AUM subject to a 1%
management fee would generally increase or decrease annual management fees by
$10.0 million. If profits, net of management fees, attributable to a fee-paying
fund investor were $10.0 million in a given year, we generally would earn
incentive income equal to $2.0 million, assuming a 20% incentive income rate, a
one-year commitment period, no hurdle rate and no high-water marks from prior
years.

For any given quarter, our revenues are influenced by the combination of AUM and
the investment performance of our funds. For example, incentive income for the
majority of our multi-strategy AUM is recognized in the fourth quarter each
year, based on full year investment performance.

Management Fees. Management fees are generally calculated and paid to us on a
quarterly basis in advance, based on the amount of AUM at the beginning of the
quarter. Management fees are prorated for capital inflows and redemptions during
the quarter. Accordingly, changes in our management fee revenues from quarter to
quarter are driven by changes in the quarterly opening balances of AUM, the
relative magnitude and timing of inflows and redemptions during the respective
quarter, the impact of differing management fee rates charged on those inflows
and redemptions, as well as the impact of the deferral of subordinated
management fees from certain CLOs. See "-Weighted-Average FP AUM and Average
Management Fee Rates" for information on our average management fee rate and
Note 12 to our consolidated financial statements in our Annual Report for
additional information regarding management fees.

Incentive Income. We earn incentive income based on the cumulative performance
of our funds over a commitment period. We recognize incentive income when such
amounts are probable of not significantly reversing. See Note 12 to our
consolidated financial statements in our Annual Report for additional
information regarding incentive income.
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Other Revenues. Other revenues consist primarily of interest income on
investments in CLOs, cash equivalents and long-term U.S. government obligations,
as well as subrental income. Interest income is recognized on an effective yield
basis. Subrental income is recognized on a straight-line basis over the lease
term.

Income of Consolidated Entities. Revenues recorded as income of consolidated
entities consist primarily of interest income, dividends income, fees and other
income.

Expenses

Compensation and Benefits. Compensation and benefits consist of salaries,
employee benefits, payroll taxes, and discretionary and guaranteed cash bonus
expenses. We generally recognize compensation and benefits expenses over the
related service period.

On an annual basis, compensation and benefits comprise a significant portion of
total expenses, with discretionary cash bonuses generally comprising a
significant portion of total compensation and benefits. We accrue minimum annual
discretionary cash bonuses on a straight-line basis during the year. The total
amount of discretionary cash bonuses ultimately recognized for the full year,
which is determined in the fourth quarter of each year, could differ materially
from the minimum amount accrued, as the total discretionary cash bonus is
dependent upon a variety of factors, including fund performance for the year.

Due to multi-year crystallizations in our credit and real estate funds, we may
recognize discretionary bonus expense as incentive is generated at the fund
level but before the Company recognizes the related incentive income. For
additional information on incentive income recognized at fund level but not yet
recognized by us see "-Longer-Term AUM and Accrued Unrecognized Incentive
Income" for additional information. We generally pay our bonuses in January of
the year following the year in which bonuses were accrued.

Compensation and benefits also include equity-based compensation expense, which
is primarily in the form of RSUs granted to our independent board members,
employees and executive managing directors, as well as RSAs, PSUs and Partner
Equity Units granted to executive managing directors. These awards are
structured to create strong alignment of economic interest between our
executives and shareholders, in addition to retaining key talent.

We also have profit-sharing arrangements whereby certain employees or executive
managing directors are entitled to a share of incentive income that we earn
primarily from our real estate funds. This incentive income is typically paid to
us and then we pay a portion to the profit-sharing participant as investments
held by these funds are realized. To the extent that the payments to the
employees or executive managing directors are probable and reasonably estimable,
we accrue these payments as compensation expense for GAAP purposes, which may
occur prior to the recognition of the related incentive income.

Deferred cash interests ("DCIs") are also granted to certain employees and
executive managing directors as a form of compensation. DCIs reflect notional
fund investments made by us on behalf of an employee or executive managing
director. DCIs generally vest over a three-year period, subject to an employee's
or executive managing director's continued service. Upon vesting, we pay the
employee or executive managing director an amount in cash equal to the notional
investment represented by the DCIs, as adjusted for notional fund performance.
Except as otherwise provided in the relevant DCI plan or in an award agreement,
in the event of a termination of the employee's or executive managing director's
service, any portion of the DCIs that is unvested as of the date of termination
will be forfeited. These awards are designed to create strong alignment of
economic interest between our executives and fund investors, in addition to
retaining key talent.

Sculptor's compensation structure is designed to align the interests of our
executive managing directors and employees with those of investors in our funds
and our Class A Shareholders. Our compensation structure focuses on both
individual and firm-wide performance through bonus compensation in a combination
of equity and deferred cash interests that vest over time.

Interest Expense. Amounts included within interest expense relate primarily to indebtedness outstanding.

General, Administrative and Other. General, administrative and other expenses
are comprised of professional services, occupancy and equipment, information
processing and communications, recurring placement and related service fees,
business
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development, insurance, impairment of right-of-use lease assets, foreign
currency transaction gains and losses, and other miscellaneous expenses. Legal
settlements and provisions are also included within general, administrative and
other.

Expenses of Consolidated Entities. Expenses recorded as expenses of consolidated entities consist of interest expense, general, administrative and other miscellaneous expenses.

Other (Loss) Income

Changes in Fair Value of Warrant Liabilities. Changes in fair value of warrant liabilities represent gains (losses) from changes in fair value of warrants.

Changes in Tax Receivable Agreement Liability. Changes in tax receivable
agreement liability consists of changes in our estimate of the future payments
related to the tax receivable agreement that result from changes in future
income tax savings due to changes in tax rates. See Note 16 to our consolidated
financial statements included in this report for additional information.

Net Losses on Retirement of Debt. Net losses on retirement of debt consist of
net losses realized upon the retirement of any indebtedness outstanding, and
include the write-off of unamortized debt discounts and issuance costs, as well
as other fees incurred in connection with the retirement of debt.

Net (Losses) Gains on Investments. Net (losses) gains on investments primarily
consist of realized and unrealized net gains and losses on investments in U.S.
government obligations and investments in our funds, including CLOs and other
funds we manage.

Net (Losses) Gains of Consolidated Entities. Net (losses) gains of consolidated
entities primarily consist of changes in the fair value of warrant liabilities
related to our consolidated SPAC and gains (losses) on investments held by
consolidated entities, as well as changes in the fair value of the structured
alternative investment solution's assets and liabilities and related interest
and other income.

Income Taxes

Income taxes consist of our provision for federal, state and local income taxes
in the U.S. and foreign income taxes, including provisions for deferred income
taxes resulting from temporary differences between the tax and GAAP bases. The
computation of the provision requires certain estimates and significant
judgment, including, but not limited to, the expected taxable income for the
year, projections of the proportion of income earned and taxed in foreign
jurisdictions, permanent differences between the tax and GAAP bases and the
likelihood of being able to fully utilize deferred income tax assets existing as
of the end of the period.

Net Income (Loss) Attributable to Noncontrolling Interests

Noncontrolling interests represent ownership interests in our subsidiaries held
by parties other than us and are primarily made up of Group A Units. Increases
or decreases in net (loss) income attributable to the Group A Units are driven
by the earnings of the Sculptor Operating Group. See Note 3 for additional
information regarding our ownership interest in the Sculptor Operating Group.

In 2021, we consolidated our SPAC, wherein investors are able to redeem Class A
shares issued by the SPAC. Allocations of earnings to these shares are reflected
within net income (loss) attributable to redeemable noncontrolling interests in
the consolidated statements of operations. Increases or decreases in the net
income (loss) attributable to SPAC investors' interests in the SPAC is driven
primarily by interest income generated on cash and cash equivalents, changes in
fair value of warrant liabilities of the SPAC and various expenses related to
legal costs, business development and insurance.
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Results of Operations

Three and Six Months Ended June 30, 2022 Compared to Three and Six Months Ended
June 30, 2021

Net (Loss) Income Attributable to Class A Shareholders

                                               Three Months Ended June 30,                 Six Months Ended June 30,
                                                 2022                  2021                 2022                 2021
                                                                       (dollars in thousands)
Net (Loss) Income Attributable to Class A
Shareholders                               $       (8,052)         $  

21,814 $8,830 $1,521

Refer below for the discussion of the contributing factors to changes in Net (Loss) Income Attributable to Class A Shareholders from the previous year.

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