Q1 2024 Blue Owl Capital Inc Earnings Call

Operator: Good morning, and welcome to Blue Owl Capital's 1st Quarter 2024 Earnings Call. During the presentation, your lines will remain in listen-only mode. Later on, we will have a question and answer session, and if you'd like to ask a question later, please press star and number one on your telephone keypad. I'd like to advise all parties that this conference call is being recorded. I will now turn the call over to Ann Dai, Head of Investor Relations for Blue Owl. Please go ahead.

Okay.

Speaker Change: Good morning, and welcome to the Blue our capital spheres, What's your 2024 earnings call. During the presentation. Your lines will be remain on listen only mode.

Speaker Change: Later on we will have a question and answer session and if you'd like to ask a question later, Please press star and number one on your telephone keypad I'd like to advice all parties that this conference call is being recorded.

Speaker Change: I'll now turn the call over to Ann Dai.

Ann Dai: <unk> of Investor Relations. Please go ahead.

Ann Dai: Thanks, Operator, and good morning to everyone. Joining me today are Marc Lipschultz, Co-Chief Executive Officer, and Alan Kirshenbaum, our Chief Financial Officer. I'd like to remind our listeners that remarks made during the call may contain forward-looking statements, which are not a guarantee of future performance or results and involve a number of risks and uncertainties that are outside the company's control. Actual results may differ materially from those in forward-looking statements as a result of a number of factors, including those described from time to time in Blue Isle Capital's filings with the Securities and Exchange Commission.

Ann Dai: Thanks, operator, and good morning to everyone. Joining me today are Mark light source co Chief Executive Officer, and Alan Kirshenbaum, Our Chief Financial Officer.

Ann Dai: I'd like to remind our listeners that remarks made during the call may contain forward looking statements, which are not a guarantee of future performance or results and involve a number of risks and uncertainties that are outside the company's control.

Ann Dai: Actual results may differ materially from those in forward looking statements as a result of a number of factors, including those described from time to time in <unk> filings with the Securities and Exchange Commission.

Ann Dai: The company assumes no obligation to update any forward-looking... We'd also like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our earnings presentation, available on the investor resources section of our website at blueisle.com. Please note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Blue Owl Fund. This morning, we issued our financial results for the first quarter of 2024, reporting fee-related earnings, or FRE, of $0.20 per share and distributable earnings, or DE, of $0.17 per share.

Ann Dai: The company assumes no obligation to update any forward looking statements.

Ann Dai: We'd also like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our earnings presentation available on the Investor resources section of our website at <unk> Dot com.

Ann Dai: Please note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any dwell time.

Ann Dai: This morning, we issued our financial results for the first quarter of 2024 reporting fee related earnings or FRE of <unk> 20 per share and distributable earnings or <unk> 17 per share.

Ann Dai: We also declared a dividend of <unk> 10 per share for the first quarter payable on May 30 to holders of record as of May 21st during the call today, we will be referring to the earnings presentation, which we posted to our website. This morning. So please have that on hand follow along.

Ann Dai: We also declared a dividend of $0.18 per share for the first quarter, payable on May 30th to holders of record as of May 21st. During the call today, we'll be referring to the earnings presentation, which we posted to our website this morning, so please have that on hand to follow along. With that, I'd like to turn the call over to Marc.

Speaker Change: With that I'd like to turn the call over tomorrow.

Ann Dai: Great. Thank you very much, Ann.

Tom: Thank you very much Anne.

Marc S. Lipschultz: We reported another strong quarter of results for Blue Isle this morning, with 12 straight quarters of consecutive management fee and FRE growth since we've been a public company. We're very pleased with the predictable, consistent, and robust growth we've been able to generate for our shareholders across a range of market backdrops, reflecting the benefits of our FRE-centric and permanent capital-heavy business model. Said plainly, our earnings consists almost entirely of management fees. So we're not subject to the volatility and uncertainty of revenues tied to realized gains and capital markets activity.

Tom: We reported another strong quarter of results for Blue All this morning, with 12 straight quarters of consecutive management fee and FRE growth since we've been a public company.

Tom: We're very pleased with the predictable consistent and robust growth, we've been able to generate for our shareholders across a range of market backdrops, reflecting the benefits of our FRE centric and permanent capital heavy business model.

Tom: <unk> claims are earnings consist almost entirely of management piece. So we're not subject to the volatility and uncertainty of revenues tied to realized gains and capital markets activity.

Marc S. Lipschultz: And having long-term capital means that very little leaves our system, providing us with a resilient asset base that grows faster than our peer group for the same number of dollars raised. We think the market is starting to understand and appreciate the value of these stabilizing attributes and how they contribute to our premium growth profile. On a 12-month, year-over-year basis, we grew FRE revenue and FRE by 24% and DE by 20%.

Ann Dai: And having long duration capital means that very little leaves our system, providing us with a resilient asset base grows faster than our peer group for the same number of dollars rates.

Ann Dai: We think the market is starting to understand and appreciate the value of these stabilized natural buttes and how they contributed to our premium growth profile.

Ann Dai: On a 12 month year over year basis, we grew FRE revenue and FRE by 24% and <unk> by 20%.

Marc S. Lipschultz: We're humbled to be among the leaders in these metrics across our whole peer group, which includes very accomplished firms in our industry. And it's something we don't take lightly, as we continue to plant the seeds for future growth at Blue Owl. Globally, demand for differentiated, income-driven returns remains very strong, and we continue to see good interest in our credit, chief e-strategic capital, and real estate strategies across institutional and wealth investors. During the quarter, we held the final close on our latest triple net lease fund, bringing in nearly $500 million.

Ann Dai: We're humbled to be among the leaders in these metrics across our whole peer group that includes a very accomplished firms our industry and it's something we don't take lightly as we continue to plant the seeds for future growth at lunch.

Ann Dai: Globally demand for differentiated income driven returns remains very strong and we continue to see good interest in our credit GP strategic capital and real estate strategies across institutional and wealth investors.

Ann Dai: During the quarter, we held the final close on our latest triple net lease funds, bringing in nearly $500 million.

Marc S. Lipschultz: We raised $5.2 billion total after receiving approval to exceed our hard cap of $5 billion. This fund was the largest US-focused real estate fund in 2023 and more than doubled the size of its predecessor, demonstrating significant investor demand despite a very challenging backdrop for real estate fundraising. In the wealth channel, growth flows into our perpetually distributed products reached $2.1 billion in the first quarter, 16% higher than the fourth quarter, and almost double what we raised in the first quarter of 2023. And in April alone, we raised close to $1 billion in those perpetual crops.

Ann Dai: We raised $5 $2 billion total after receiving approval to exceed our hard cap of $5 billion.

Ann Dai: This fund was the largest U S focused real estate fund in 2023 and more than doubled the size of its predecessor.

Ann Dai: Demonstrating significant investor demand, despite a very challenging backdrop or real estate fundraising Jonathan.

Ann Dai: In the wealth channel gross flows into our perpetually distributed products reached $2 1 billion in the first quarter, 16% higher than the fourth quarter and almost double what we raised in the first quarter of 2023 and.

Ann Dai: And in April alone, we raised close to $1 billion in those perpetual products.

Marc S. Lipschultz: We also closed on $1.4 billion of institutional capital in our direct lending business across separate accounts and closed on first lien lending and strategic equity strategies, complementing continued growth and wealth. And our new MidCap GP strategic capital strategy is off to a very good start with over half a billion dollars raised during the first quarter. Subsequent to Quarter End, we announced two acquisitions that further expand our suite of investment offerings and broaden the markets to which we provide capital solutions. First, we made a preferred investment into Couvert and announced our intention to acquire Couvert Asset Management, reflecting a creative and accretive way to broaden Blue Owl's value proposition to the insurance space.

Ann Dai: We also closed on $1 $4 billion of institutional capital in our direct lending business across separate accounts and closes for our first lien lending and strategic equity strategies complementing the continued growth in wealth.

Ann Dai: And our new mid cap GP strategic capital strategy is off to a very good start with over half a billion dollars raised during the first quarter.

Ann Dai: Subsequent to quarter end, we announced two acquisitions that further expand our suite of investment offerings and broaden the markets to which we provide capital solutions for.

Ann Dai: First we made a preferred investments into <unk> and announced our intention to acquire <unk> asset management, reflecting a creative and accretive way to broaden blew our value proposition to the insurance space. The global life annuity market is over <unk> 20 trillion in size and an increasing number of insurance companies are looking to partner with specialized asset managers.

Marc S. Lipschultz: The global life and annuity market is over $20 trillion in size, and an increasing number of insurance companies are looking to partner with specialized asset managers that can create better risk-adjusted returns through differentiated sourcing, underwriting, and structure. By adding a set of more IG-focused credit and real estate capabilities to Blue Owl's existing and scaled Origination platforms, we can bring a more comprehensive insurance asset management solution to the market. Blue Owl will also benefit from Couvert's growth as we expect they will continue to take market share and expand into the annuities market.

Ann Dai: They can create better risk adjusted returns differentiated sourcing underwriting and structuring.

Ann Dai: By adding a set of more <unk> focused credit and real estate capabilities to blue all with existing and scaled origination platforms. We can bring a more comprehensive insurance asset management solutions in the marketplace. We will also benefit from <unk> as we expect they will continue to take market share and expanding annuities Mark <unk>.

Marc S. Lipschultz: Acquiring Couvert Asset Management adds $20 billion of AUM for Blue Owl, not inclusive of incremental growth at Couvert. I think we approach this acquisition in a very blue-all way, meaning we came from a mindset of providing solutions and not competing with our clients. We had no desire to become balance sheet heavy or to become an insurance company.

Ann Dai: Acquiring <unk> asset management adds $20 billion of AUM level, not inclusive of incremental growth at <unk>.

Speaker Change: I think we approach this acquisition and a very blue all away, maybe we came from a mindset providing solutions to not competing with our clients. We have no desire to become balance sheet heavy or to become an insurance company.

Marc S. Lipschultz: Instead, we plan to partner with them and allow them to continue to do what they do best, underwriting liabilities, while we focus on what we do best, managing assets. This solutions mentality is in keeping with what you see across the rest of our business. In direct lending, for instance, we provide financing solutions to sponsors for their portfolio companies. In GP stakes, we provide capital to the sponsors themselves. We prefer to help them grow their businesses as opposed to competing with them in those businesses.

Ann Dai: We plan to partner with them and allow them to continue to do what they do best underwriting liabilities, while we focus on what we do best managing asks this solutions mentality is in keeping with what you see across the rest of our business indirect lending for instance, we provide financing solutions to sponsors for their portfolio companies in <unk>.

Ann Dai: Six we provide capital to the sponsors themselves, we prefer to help them grow their businesses as opposed to competing with them in those businesses.

Marc S. Lipschultz: Now turning back to M&A, the second transaction we announced recently was our intention to acquire Prima Capital, an investment manager focused on real estate lending with approximately $10 billion of assets under management. Structurally, we see an increasing need for capital to finance real estate and have been interested in expanding our capabilities in this area. Trima struck us as a great fit for Bilal, given its leading position, high-quality portfolio, and strong historical track record through cycles, and we expect to leverage Bilal's scale and expertise to accelerate expansion. Pro forma for these two transactions, Blue Owl's AUM would exceed $200 billion, crossing another meaningful mile.

Ann Dai: I'll turn it back to M&A. The second transaction, we announced recently was our intention to acquire prima capital.

Ann Dai: <unk> manager focused on real estate lending with approximately $10 billion of assets under management.

Ann Dai: Structurally we see an increasing need for capital to finance real estate have been interested in expanding our capabilities in this area.

Ann Dai: <unk> struck us as a great fit for <unk>, given its leading position high quality portfolio and strong historical track record through cycles, and we expect to leverage <unk> scale and expertise to accelerate expansion.

Ann Dai: Pro forma for these two transactions blue hours would exceed 200 billion.

Ann Dai: And another meaningful milestone.

Marc S. Lipschultz: Now moving on to business performance, in credit, we saw a fairly constructive environment for deployment with elevated repayment activity. As a reminder, the return of syndicated market activity reflects greater market participant confidence, which will enable increasing M&A activity. We've proven we can deploy significant capital when syndicated markets are active, and we believe we're well positioned to do it again. Noting the outsized market share the direct lenders have seen over the past year and a half, the longer-term secular trend has been one in which sponsors have increasingly gravitated towards direct lenders for the value proposition they offer. And we see this trend continue.

Ann Dai: Now moving on to business performance in credit, we saw a fairly constructive environment for deployment with elevated repayment activity.

Ann Dai: As a reminder, the return of syndicated market activity reflects greater market participant confidence, which over time will enable increased M&A activity.

Ann Dai: We've proven we can deploy significant capital when syndicated markets are active and we believe we are well positioned to do it again.

Ann Dai: Noting the outsized market share of the direct lenders have seen over the past year and a half the longer term secular trend has been one which sponsors have increasingly gravitated towards direct lenders for the value proposition there and.

Ann Dai: And we see this trend continue we.

Marc S. Lipschultz: We see healthy sponsor appetite to deploy incremental dry powder and monetize existing investments over time, and we expect Blue Owl to play a meaningful role in new capital deployment and refinancing. As Alan will detail, direct lending metrics remain strong. We have had just seven basis points of annualized realized losses, which has largely been offset by realized gains.

Ann Dai: We see healthy sponsor appetite to deploy incremental dry powder and monetize existing investments over time.

Ann Dai: And we expect <unk> to play a meaningful role in new capital deployment and refinances.

Ann Dai: As al will detail direct lending metrics remained strong.

Marc S. Lipschultz: And the underlying revenue and EBITDA growth of the portfolio remains in the low double digits on average. At a high level, our observation is that the economy is sound and rates are likely to be higher for longer. Well, we would have loved for spreads to stay 100 basis points wider as they were a year ago.

We have had just seven basis points annualized realized loss, which has largely been offset by realized gains and the underlying revenue and EBITDA growth of the portfolio remains in the low double digits on average high level. Our observation is that the economy is sound and rates are likely to be higher for work.

Marc S. Lipschultz: Well, we would have loved for spreads to stay 100 basis points wider as they were a year ago. We believe the opportunities. We're seeing today offer very compelling spreads for the risks were being asked to date.

Marc S. Lipschultz: We believe the opportunities we're seeing today offer very compelling spreads for the risk we're being asked to take. In our GP stakes business, our partner managers continue to benefit from two meaningful secular trends, growing allocations to alternatives and GP consolidation. Collectively, our partner managers now manage nearly $1.8 trillion, giving us an unparalleled view of the alternative asset management industry. Over the past decade, we've observed significant diversification across the industry, including the emergence and scaling of notable asset classes, such as private credit, as well as the expansion in the universe of investable assets or private capital.

Ann Dai: And our GP Stakes business, our partner managers continued to benefit from two meaningful secular trends growing allocations to alternatives and GP consolidation.

Ann Dai: Luckily our partner managers now manage nearly one eight trillion.

Ann Dai: Given us an unparalleled view over the alternative asset management industry.

Marc S. Lipschultz: Over the past decade, we've observed significant diversification across the industry, including the emergence of scaling a notable asset classes, such as private credit as well as the expansion in the universe of investable assets or private cap <unk>.

Marc S. Lipschultz: We've also seen market share accrue to the most established, largest private market managers, where our flagship funds have a leading market share. In addition, now that we've pulled down some initial capital for our mid-cap strategy and partnership with Lynette. We are also able to invest in the most exceptional managers that are not the right fit for our existing mandate. We're ready to capitalize on a visible pipeline of differentiated managers who are at an earlier stage of development.

Marc S. Lipschultz: We've also seen market share crew to the most established largest private market managers, where our flagship funds have a leading market share.

Marc S. Lipschultz: In addition, now that we've closed on some initial capital for our mid cap strategy in partnership with the net.

Ann Dai: We also are able to invest in the most exceptional managers that were not the right fit for our existing mandates.

Marc S. Lipschultz: We're ready to capitalize on a visible pipeline of differentiated managers or are at an earlier stage of development and we think investors are very excited about this opportunity as well.

Marc S. Lipschultz: And we think investors are very excited about this opportunity as well. In real estate, we continue to actively deploy capital at attractive cap rates close to 8% behind our four major themes: Digital Infrastructure, Onshoring, Healthcare Real Estate, and Essential Retail.

Marc S. Lipschultz: In real estate, we continue to actively deploy capital at attractive cap rates close to 8% behind our four major themes digital infrastructure.

Marc S. Lipschultz: On shoring healthcare real estate and essential retail.

Marc S. Lipschultz: The capital needs at each of these areas is very significant and we have good line of sight as a capital deployment in.

Marc S. Lipschultz: The capital needs in each of these areas are very significant, and we have good line of sight on capital deployment. In addition to the success we saw with our Drawdown fundraise, which is now finished, we continue to see a meaningful step up in private wealth flow. First quarter flows in our perpetually offered net lease product were 45% higher than the fourth quarter as a result of the stronger production from our new distribution platform.

Marc S. Lipschultz: In addition to the success, we saw with our drawdown fund raise which is not finished we continue to see a meaningful step up in private wealth flows.

Ann Dai: First quarter flows in our perpetually offered net lease propped, where 45% higher than the fourth quarter as a result of the stronger production from new distribution platforms.

Marc S. Lipschultz: In summary, we're pleased with the continued expansion of our existing business, and to supplement the robust growth we're already generating, we've announced some new acquisitions in areas that we find adjacent, strategic, and synergistic and which can become quite substantial in the coming years. With that, I'll turn it to Alan to discuss our financial results.

Ann Dai: In summary, we're pleased with the continued expansion of our existing business and to supplement the robust growth, we're already generating we've announced some new acquisitions in areas that we find adjacent strategic and synergistic.

Ann Dai: And which can become quite substantial in the coming years with that let me turn it to Alan to discuss our financial results.

Alan J. Kirshenbaum: Thank you, Marc. Good morning, everyone.

Alan: Thank you Mark good morning, everyone. Thank you for joining us today to start off we are pleased with the strong results. We continue to report with the first quarter of 2020 for being our 12 consecutive quarter every quarter. Since we listed of both management fee and FRE sequential growth the only public alternative asset manager that has demonstrated.

Alan: This over this period, we've been able to achieve this because of our differentiated asset base and earnings profile with long duration assets, creating a recurring revenue profile, while fundraising add new layers to our layer cake of management fees and FRE.

Alan J. Kirshenbaum: Thank you for joining us today. To start off, we're pleased with the strong results we continue to report, with the first quarter of 2024 being our 12th consecutive quarter, every quarter since we listed, of both management fee and FRE sequential growth, the only public alternative asset manager that has demonstrated this over this period. We've been able to achieve this because of our differentiated asset base and earnings profile, with long-duration assets creating a recurring revenue profile, while fundraising adds new layers to our layer cake of management fees and FRE. So let's go through some of the key highlights on an LTM year-over-year basis through March 31st.

Alan J. Kirshenbaum: Management fees are up 22%, and 92% of these management fees are from permanent capital vehicles. FRE is up 24%, and our FRE margin is right on top of our 60% target, and DE is up 20%. As you can see on slide 12, we raised $4.7 billion in the first quarter and $16.7 billion for the last 12 months. Inclusive of debt capital, new capital raised was over $28 billion over the last 12 months. I'll break down the first quarter fundraising numbers across our strategies and products.

Speaker Change: So let's go through some of the key highlights on an LTM year over year basis through March 31.

Alan J. Kirshenbaum: Management fees are up 22% and 92% of these management fees are from permanent capital vehicles.

Speaker Change: <unk> is up 24% and our FRE margin is right on top of our 60% target.

Speaker Change: And <unk> is up 20%.

Speaker Change: As you can see on slide 12, we raised $4 7 billion in the first quarter and $16 7 billion for the last 12 months inclusive of debt capital New capital raised was over $28 billion over the last 12 months.

Alan J. Kirshenbaum: I'll break down the first quarter fundraising numbers across our strategies and products.

Alan J. Kirshenbaum: In credit, we raised $3 billion. $2.6 billion was raised in our diversified and first lien lending strategies, of which $1.3 billion was raised in our non-traded BDC OCIC, up over 100% compared to the first quarter of 2023. The remainder was raised across software lending and our newly launched strategic equity strategy. In GP strategic capital, we held an initial close of approximately $600 million for our new mid-cap strategy. In real estate, we raised approximately $1 billion with nearly $500 million for the sixth Vintage Drawdown Fund, bringing that fund to its final close at $5.2 billion, and over $500 million in our non-traded REIT, O-RENT, up more than 70% compared to the first quarter of 2023. We are seeing increased engagement on the distribution platforms that added O-Rent in late 2023 and continue to see opportunities to expand distribution globally for this product.

Alan J. Kirshenbaum: Credit, we raised $3 billion.

$2 6 billion was raised in our diversified and first lien lending strategies of which $1 3 billion was raised in our non traded BDC or CIC up over 100% compared to the first quarter of 2023.

Alan J. Kirshenbaum: The remainder was raised across software lending and our newly launched strategic equity strategy in.

Alan J. Kirshenbaum: And GP strategic capital, we held an initial close of approximately $600 million for our new mid cap strategy.

Alan J. Kirshenbaum: In real estate, we raised approximately $1 billion.

Alan J. Kirshenbaum: With nearly $500 million for the six vintage draw down funds, bringing that fund to its final close at $5 2 billion.

Alan J. Kirshenbaum: And over $500 million, and our non traded REIT or rent up more than 70% compared to the first quarter of 2023.

Alan J. Kirshenbaum: We are seeing increased engagement on the distribution platforms that added a rems in late 2023 and continue to see opportunities to expand distribution globally for this product.

Alan J. Kirshenbaum: We're pleased with the increasing breadth of fundraising across strategies and products, which will continue to expand with the expected closing of our announced acquisitions of Cuvair and Prima. In addition, we've had very few assets leave the system, with distributions, redemptions, and capital return aggregating just 4% of our average AUM over the last 12 months. We believe this number is approximately double for our peers and could increase further for them during more active monetization environments, highlighting Blue Owl's more durable asset base.

Alan J. Kirshenbaum: We're pleased with the increasing breadth of fundraising across strategies and products, which will continue to expand with the expected closing of our announced acquisition of <unk> premium.

Alan J. Kirshenbaum: In addition, we've had very few assets, leaving the system with distributions redemptions and capital return aggregating just 4% of our average AUM over the last 12 months. We believe this number is approximately double for our peers and could increase further for them during more active monetization environment, highlighting blue hours more durable.

Alan J. Kirshenbaum: Asset base.

Alan J. Kirshenbaum: Finally, to supplement the staying power of existing AUM and the benefit of ongoing fundraising, we have substantial embedded earnings that we will unlock over time. AUM not yet paying fees was $16.8 billion as of the first quarter, corresponding to roughly $240 million of incremental annual management fees once deployed. This equates to a fee rate of approximately 1.4%.

Alan J. Kirshenbaum: Finally to supplement the staying power of existing AUM and the benefit of ongoing fundraising we have substantial embedded earnings that we will unlock overtime.

Alan J. Kirshenbaum: AUM not yet paying fees was $16 8 billion as of the first quarter corresponding to roughly $240 million of incremental annual management fees once deployed disagree.

Alan J. Kirshenbaum: This equates to a fee rate of approximately one 4%.

Alan J. Kirshenbaum: We also have approximately $135 million of incremental management fees that would turn on upon the listing of our remaining private BDCs over time. These two items alone would represent an increase of over 20% from our 2023 total FRE revenue. Moving on to our credit platform, we had gross originations of $8.9 billion for the quarter, and net funded deployment of $2.9 billion. This brings our gross originations for the last 12 months to $24.9 billion, with $9.8 billion of net funded deployment.

Alan J. Kirshenbaum: We also have approximately $135 million of incremental management fees that will turn on upon the listing of our remaining private bdcs overtime.

Alan J. Kirshenbaum: These two items alone would represent an increase of over 20% from our 2023 total FRC revenues.

Alan J. Kirshenbaum: Moving on to our credit platform, we had gross originations of $8 9 billion for the quarter and net funded deployment of $2 9 billion. This brings our gross originations for the last 12 months to $24 9 billion with $9 8 billion of net funded deployment.

Alan J. Kirshenbaum: Our credit portfolio returned 3.7% in the first quarter and 17.4% over the last 12 months. Weighted average LTVs are in the high 30s across direct lending and in the low 30s specifically in our software lending portfolio. For our GP strategic capital platform, total invested commitments for our fifth GP stakes fund, including agreements in principle, are over 11 billion of capital with line of sight into over 3 billion of opportunities, which, if all signs are correct, would bring us through the remaining capital available in fund five.

Alan J. Kirshenbaum: Our credit portfolio returned three 7% in the first quarter and 17, 4% over the last 12 months.

Alan J. Kirshenbaum: Average ltvs are in the high <unk> across direct lending and in the low 30, specifically in our software lending portfolio.

Alan J. Kirshenbaum: For our GP strategic capital platform total invested commitments for our fifth GP Stakes fund, including agreements in principle are over $11 billion of capital with line of sight into over $3 billion of opportunities, which if all signs would bring us through the remaining capital available in fund five.

Alan J. Kirshenbaum: And performance across these funds remains strong, with a net IRR of 23% for Fund 3, 42% for Fund 4, and 15% for Fund 5, which compare favorably to the median returns for private equity funds of the same vintage.

Alan J. Kirshenbaum: And performance across these funds remained strong with a net IRR of 23% for fund, 342% for fund four and 15% for fund five which compare favorably to the median returns for private equity funds of the same vintages.

Alan J. Kirshenbaum: And in our real estate platform, our pipeline of opportunities continues to grow with nearly $4 billion of transaction volume under letter of intent or contract to close. With regard to performance, we achieved gross returns across our real estate portfolio of over 6% over the last 12 months, comparing very favorably to the broader real estate market as a result of our distinctive net lease strategy and the timing of capital deployment. The net IRR across our fully realized funds has been 24%, which we think is impressive for essentially an investment-grade and creditworthy tenant risk profile. Okay, let's wrap up with a few closing thoughts.

Alan J. Kirshenbaum: And in our real estate platform, our pipeline of opportunities continues to grow with nearly $4 billion of transaction volume under letter of intent or contract to close.

Alan J. Kirshenbaum: With regards to performance, we achieved gross returns across our real estate portfolio of over 6% over the last 12 months, comparing very favorably to the broader real estate market as a result of our distinctive net lease strategy and the timing of capital deployment. The net IRR across our fully realized funds has been 24%.

Alan J. Kirshenbaum: Which we think is impressive for essentially an investment grade and credit worthy tenant risk profile.

Alan J. Kirshenbaum: On taxes, just a reminder that we expect to return to a low single-digit rate, say two to 3% for the remainder of 2024, which should result in a roughly 5% tax rate for the full year, as I discussed on our last earnings call. In light of the recent acquisition announcements, I want to reiterate our outlook for a 60% FRE margin for the foreseeable future, investing dollars back into the business to drive long-term growth. Subsequent to quarter end, we closed a $750 million, 6.25%, 10-year bond issue.

Alan J. Kirshenbaum: Okay, let's wrap up with a few closing thoughts on taxes. Just a reminder, that we expect to return back to a low single digit rate say, 2% to 3% for the remainder of 2024, which should result in a roughly 5% tax rate for the full year as I discussed on our last earnings call.

Alan J. Kirshenbaum: In light of the recent acquisition announcements I want to reiterate our outlook for 60% FRE margin for the foreseeable future investing dollars back into the business to drive long term growth.

Alan J. Kirshenbaum: Subsequent to quarter end, we closed a $750 million, 6.25% 10 year bond offering we.

Alan J. Kirshenbaum: We were pleased to see such strong levels of interest, with the deal nearly four times oversubscribed from both investors who have been long-time supporters of our business, as well as many debt investors that are new to our name. Finally, I'd like to touch on the significant shareholder transition that we've achieved since Blue Owl went public. In May of 2021, about 10% of our shares were held in the hands of public investors.

Alan J. Kirshenbaum: We were pleased to see such strong levels of interest with the deal nearly four times oversubscribed from both investors who have been long time supporters of our business as well as many debt investors that are new to our name.

Alan J. Kirshenbaum: Finally, I'd like to touch on the significant shareholder transition that we've achieved since <unk> went public in May of 2021 about 10% of our shares were held in the hands of public investors our flow it was about $1 5 billion.

Alan J. Kirshenbaum: Our float was about $1.5 billion. The other 90% of our shares were owned primarily by Neuberger Berman, management, and private phase investors. Over the past three years, we have largely replaced our legacy private phase investors with long-term oriented public shareholders, and we've also seen strong demand from public shareholders for the occasional sales by Neuberger Berman over the same period. Today, we have more than a third of our total shares in the hands of public investors, increasing our float to more than $9 billion, six times greater than where we started. As for management, our lockup expired about a year ago, and there has been essentially no selling outside of charitable donations and estate planning.

Alan J. Kirshenbaum: The other 90% of our shares were owned primarily by Neuberger Berman management and private phase investors over the past three years, we have largely replaced our legacy private phase investors with long term oriented public shareholders and we've also seen strong demand from public shareholders for the occasional sales by Neuberger Berman over there.

Alan J. Kirshenbaum: Same period.

Alan J. Kirshenbaum: Today, we have more than a third of our total shares in the hands of public investors, increasing our float to more than $9 billion six times greater than where we started as for management, our lockup expired about a year ago and there has been essentially no selling outside of charitable donations and estate planning.

Alan J. Kirshenbaum: We're very pleased with the progress we've made in working through the technical overhang in Blue Owl stock and think that the shifting demand-supply balance is a factor in how the stock has traded recently. With that, I'd like to thank everyone who has joined us on the call today. Operator, can we please open the line for questions? We are now opening the floor to questions.

Alan J. Kirshenbaum: We're very pleased with the progress we've made in working through the technical overhanging booed all stock and think that the shifting demand supply balance is a factor and how the stock has traded recently.

Alan J. Kirshenbaum: With that I'd like to thank everyone, who has joined US on the call today operator can we please open the line for questions.

Operator: We are now opening the floor to questions and answers. If you'd like to ask a question, please press star and number one on your telephone keypad. Please limit yourself to one question and hop back in the queue for a follow-up. Our first question comes from Alex Blastien from Goldman Sachs. Your line is now open.

Alan J. Kirshenbaum: We are now opening the floor for question and answer session.

Unknown Attendee: Like to ask a question. Please press star and number one on your telephone keypad.

Operator: Please limit yourself to one question and hop back into queue for follow ups.

Operator: Alex, we can't hear you.

Unknown Attendee: Our first question comes from Alex <unk>.

Kim: Kim from Goldman Sachs.

Unknown Attendee: Line is now open.

Unknown Attendee: Alex we can hear you.

Unknown Attendee: Really nicely, you highlighted that, I think, in your prepared remarks as well. Can you pull back the layers a little bit and talk through some sort of sources of increased sales? Is it the same platforms, or the addition of new platforms? To what extent is it also including some broadening of the existing FAA base within the platforms that you already own? So just to kind of help us frame how to run at the current pace of sales on a go-forward basis.

Unknown Attendee: Really nicely you highlighted that I think in your prepared remarks, as well can you pull back the layers a little bit and talk through sort of sources of increase sales is it. The same platforms addition of new platforms.

Unknown Attendee: To what extent is it also including some broadening of the existing asset base within within the platforms that you're already on so just to kind of help us frame how to run rate. The current pace of sales on a go forward basis.

Speaker Change: Alex the very beginning of that we didn't hear can you just repeat the very beginning please apologies sorry, yes. So I was just asking about the wealth channel trends you guys are seeing so far in the second quarter. It looks like April one subscriptions were really strong. So I was hoping to get a little bit more detail around the sources of strength.

Operator: Alex, the very beginning of that, we didn't hear. Can you just repeat the very beginning, please? Apologies. Sorry, yeah, so...

Unknown Attendee: So I was just asking about the Wealth Channel trends you guys are seeing so far in the second quarter. It looks like April 1 subscriptions were really strong, so I was hoping to get a little bit more detail around the sources of strength in terms of new products or new platforms rather than sort of expanding the footprint within the existing platforms and how to think about the run rate on the forward.

Unknown Attendee: In terms of new product or new platforms, rather or sort of expanding footprint within the existing platforms and how to think about the run rate on a forward basis.

Marc S. Lipschultz: Absolutely. Thank you, Alex.

Speaker Change: Absolutely. Thank you Alex so wealth has been and continues to be strong.

Marc S. Lipschultz: So wealth has been and continues to be strong. You obviously know our position, which, of course, is now coming up on taking nearly a decade to build this sort of platform. We really have a great embedded position with some products, which are growing, as you say, sort of by the expansion of usage within a platform. And then we have products that we have introduced that are growing by the expansion of platforms. So actually, we see both when you look at our results in terms of wealth.

Speaker Change: You, obviously know our position which.

Speaker Change: Now coming up on taking nearly a decade to build to their sort of platform. We really have a great embedded position with some products, which are growing as you say sort of by expansion in the usage within our platform and then we have products that we have introduced that are growing by expansion off platform.

Marc S. Lipschultz: Actually we saw we see bulk when you look at our results in wealth so in.

Marc S. Lipschultz: So in credit, in our core income and our tech income products, you will really see there is increased adoption, that is, more FAs and more clients using the product. So this is the virtuous circle of we're on a lot of platforms, and we've delivered great results for those investors. And so we have more FAs understanding how this is a really effective part of essentially a core allocation, and our product works really well for them.

Marc S. Lipschultz: In credit in our core income in our income products.

Marc S. Lipschultz: We're really seeing there is increased adoption that is more fas and more clients using the product. So this is the virtuous circle.

Marc S. Lipschultz: On a lot of platforms and we delivered great results for those investors and so we have more Fas understanding. How this is a really effective part of essentially a core allocation and our product works really well for them and so in the case of credit I think youre seeing primarily.

Marc S. Lipschultz: And so in the case of credit, I think you're seeing primarily the growth of user increases, more FAs, more customers. And of course, the beauty of that is this is still so limited in its penetration, when you really dive into the details, which obviously we do, on what's really being sold in a platform, how many people are using it, how many clients does each FA that uses it have involved, you get very excited about the forward look in this opportunity set, which you can also see from the macro numbers, and we just look at penetration of alts in general versus this very, very large world, call it retail, call it private wealth, or you want to slice it.

Marc S. Lipschultz: Growth of user increase as more <unk> more customers and of course the beauty of that is this is still so limited penetration when you really dive into the details, which obviously, we do on what's really being sold in a platform. How many people are using it how many clients does each FAA.

Marc S. Lipschultz: He uses it have involved you get very excited about the forward look in this opportunity set what you can also see from the macro numbers. When we just look at penetration of all in general versus this very very large world.

Marc S. Lipschultz: Call it retail call it private wealth or you want to slice it.

Marc S. Lipschultz: So we're seeing the virtuous circle of being a market leader in that credit platform at a very early stage and having, frankly, really, really great results. Real estate is a bit more of a study in the benefits, in this case, you get twofold benefits, ultimately becoming what we have in credit, which is you become more about deeper and deeper penetration.

Marc S. Lipschultz: We're seeing the virtuous circle of being a market leader in that credit platform at a very early.

Marc S. Lipschultz: Participants and having frankly really really great result, real estate is a bit more of a study in the benefits. In this case, you get twofold benefit ultimately because we havent credit, which as you become more about deeper and deeper penetration today, we're still even in the early stages of just increased platforms. So.

Marc S. Lipschultz: Today, we're still in the early stages of just increased platforms. So this year, we'll be adding quite a number of platforms in real estate, and we're seeing the benefits of that as we bring this product onto new platforms; it's given us whole new audiences. Again, remember, this is a product where we're delivering a 7% tax-advantaged current return plus appreciation with triple net leases on generally investment grade credit worthy counterparties.

Marc S. Lipschultz: This year, we'll be adding quite a number of platforms in real estate.

Marc S. Lipschultz: And we're seeing the benefits of that as we bring this product onto new platforms. It has given us a whole new audiences. Yes. This is a product where we're delivering a 7% tax advantaged.

Marc S. Lipschultz: Return current plus appreciation with triple net leases on generally investment grade credit worthy Counterparties. Many of this is a really special product and consider this as a time when real estate. Most people are delivering negative returns and are having negative flows were growing it at it so.

Marc S. Lipschultz: It's a really special product. And consider this is a time when, in real estate, most people are delivering negative returns and are having negative flows; we're growing and adding. So I think you have both actually perfectly well studied at any given month, any given quarter.

Marc S. Lipschultz: I think you have false actually perfectly well study and look at any given month or any given quarter, but the trend line is crystal clear right, which is we are continuing to see significant growth as well as a part of our platform that continuously offers products I'm really zero in on because episodic moments that we bring products like GP solutions, where you.

Marc S. Lipschultz: But the trend line is crystal clear, right, which is that we are continuing to see significant growth in wealth as a part of our platform and the continuously offered products I'm really zeroing in on because we always have episodic moments and we bring products like GP solutions where you go on for a while and then come back off the platform. So we really feel good about wealth and one other comment just while we're on it, you know, it's not about wealth, it's just about products in general.

Marc S. Lipschultz: Go on for a while and then you come back off of our platform. So we really feel good about well one other comment just while we're on it.

Marc S. Lipschultz: It is not about well just about product in general.

Marc S. Lipschultz: You know, you take April, as you said, so in April, we raised a billion dollars through these continuously offered products. And I think something that gets lost sometimes in a lot of the discussion, and I'm sure people appreciate it, but not all dollars are created equal. And, you know, just take a step back.

Marc S. Lipschultz: If you take April as you said so in April we raised $1 billion in these continuously offer products and I think something that gets lost sometimes in a lot of the discussion.

Marc S. Lipschultz: <unk>.

Marc S. Lipschultz: I'm sure people appreciate it but not.

Marc S. Lipschultz: Not all dollars are created equal.

Marc S. Lipschultz: And when you raise a billion dollars in the kinds of high quality, high value-added products that we do, which we get appropriately, you square that against dollars raised, there's a lot of very commoditized products that alternative managers raise. And that's fine. Different people have different strategies.

Marc S. Lipschultz: Just take a step back and when you raise a $1 billion.

Marc S. Lipschultz: Times of high quality high value added products that we do which we get appropriately painful.

Marc S. Lipschultz: Square that against dollars range, there's a lot of very commoditized product that also managers right and Thats why differently a lot of different strategies. As you know our focus has been very much on high value added products.

Marc S. Lipschultz: As you know, our focus has been very much on high-value-added products. But if you take a step back and think about what we earn on something like a billion dollars in continuously offered products, relative to, say, a highly commoditized product that we see people raising capital for, that literally could be the equivalent of needing to raise. A billion dollars in April, quite literally, mathematically, could be the equivalent of 10 billion of what many other people raise these days.

Marc S. Lipschultz: But if you take a step back and you think about what we earn on something like a $1 billion in continuous software products.

Marc S. Lipschultz: Relative to say a highly commoditized product that we see people raising capital for that number it could be the equivalent of needing to raise $10 million and a commoditized.

Marc S. Lipschultz: Insurance like products are highly commoditized fixed income type of products. So yes.

Marc S. Lipschultz: The $1 billion April quite literally mathematically it would be the equivalent of $10 billion of what many other people raise these days, but I think that gets lost in this conversation about is that as well that's just about nature of product and channel.

Marc S. Lipschultz: So I think that gets lost in this conversation about it's not just wealth; it's just about the nature of the product in general. So sorry to go off on that sidetrack. But I think it's an important point also when we talk about the nature of dollars raised. Yep, no.

Marc S. Lipschultz: Sorry to go off of that sidetrack, but I think it's an important point also when we talk about the nature of dollars raised.

Unknown Attendee: Yep, no thank you, all helpful detail, I appreciate it. The next question comes from Brennan Hawken from UBS.

Speaker Change: No. Thank you all helpful detail I appreciate it.

Operator: The next question comes from Brennan Hawken from UBS. Your line is now open.

Unknown Attendee: Next question comes from Brennan Hawken from UBS. Your line is now.

Operator: Your line is now open. Good morning. Thank you for taking my question.

Brennan Hawken: Good morning, Thank you for taking my question.

Brennan Hawken: We've heard a bit more recently about spread compression in private lending markets. So was hoping to hear your perspective on what youre seeing on the ground and if we are seeing some spread compression what do you think that might mean as far as the outlook for fr PR, that's begun to come through on the P&L for you.

Marc S. Lipschultz: Absolutely. So Look, spreads. So let's start with this. Yes, there has been spread, point of fact.

Brennan Hawken: Absolutely so.

Operator: No.

Brennan Hawken: Spreads so let's start with yes, there has been spread compression.

Marc S. Lipschultz: There was spread expansion a year ago, a year and a half ago, but before that, spreads were tighter. You know, I look over the long arc of time that we've done now about $100 billion or so in originations.

Brennan Hawken: A fab.

Brennan Hawken: There was spread expansion a year ago year, and a half ago for that spreads were tighter.

Marc S. Lipschultz: Look over the long arc of time that we've done now about $100 billion are solid originations and no doubt the case the spreads go up and spreads come down.

Marc S. Lipschultz: And it's no doubt the case that spreads go up and spreads come down. The key to our business and something really distinctive about private credit done right, again, we are deeply focused on credit, credit, credit, principal preservation, downside protection, and strong income results. And that has worked, you know; we're running at a seven basis point realized loss rate. So everything about doing this strategy, right, growing our business, which, of course, grows our fee base, is about delivering on the credit promise where we have been best of breed. And so the key to us, unlike many alternative products, let's call them the high-octane products, we're vintage is a big question.

Marc S. Lipschultz: Key to our business and something really distinctive about private credit done right. Again, we are deeply focused credit credit credit principal preservation downside protection and strong income results and that is work we're running at a seven basis point realized loss rates. So everything about doing this.

Marc S. Lipschultz: <unk> right growing our business, which of course grow our fee based is about delivering on the credit promise, where we have been best of breed.

Marc S. Lipschultz: And so the key to us. Unlike many alternative products, let's call. The high octane products were vintage is a big question to get in at the right time to get out at the right time make great returns, but if you get into the wrong equity product at 2021, and how you're sitting here today with a couple of years does dead time behind you Youre probably in the <unk>.

Marc S. Lipschultz: You know, if you get in at the right time to get out at the right time, make great returns. But gee, if you get into the wrong equity product in 2021, and now you're sitting here today with a couple of years, just dead time behind you, you're probably going to struggle with returns. The big difference for us is unlike the kind of entry moment and exit moment, I think about this more as a box, a range, a band.

Marc S. Lipschultz: With returns.

Marc S. Lipschultz: Big difference for US is unlike kind of entry moment of entry.

Marc S. Lipschultz: At the moment I think about this more as a box a range about the key is do we have really strong credits and are we getting an attractive return attractive spread.

Marc S. Lipschultz: The key is, do we have really strong credits? And are we getting an attractive return attractive spread for those credits? And here's the good news: as the corollary to our spreads compressed, they have compressed. Is it attractive? Absolutely. Absolutely.

Marc S. Lipschultz: For those credits and here's the good news on the corollary to our spreads compressed the half compressed isn't attractive absolutely.

Marc S. Lipschultz: The credit that we are seeing and the return that we are earning, remember, we're at a 532 90-day LIBOR. So when you take spreads, it's, of course, I prefer the 100 basis points wider spreads than we were seeing a year and a half ago. But the spreads we're seeing today, you know, aren't that different from what we saw three years ago, and those are really attractive loans and returns, too. So I'm not being dismissive.

Marc S. Lipschultz: Absolutely the credit so we are seeing and the returns you earn and remember runoff or $5 32.

Marc S. Lipschultz: 30 to 90 day LIBOR.

Marc S. Lipschultz: When you take spreads.

Marc S. Lipschultz: Of course, I prefer the 100 basis points wider spreads than we were seeing a year and a half ago, but the spreads we're seeing today arent that different from what we saw three years ago. Those are really attractive loans and returns too. So I'm not being dismissive will always prefer a higher spread but that isn't what matters to us is a band in which we're in a very good return.

Marc S. Lipschultz: We'll always prefer a higher spread, but that isn't what matters to us is a band in which we're earning a very good return for a very moderated risk. And we're certainly operating in that band and feel good about it. As to FRPR, I mean, we're in a pretty tight band, but I'll turn that over to Alan. Thank you, Marc. Brennan, I guess what I would

Marc S. Lipschultz: For a very moderated risk and we're certainly operating in a band and feel good about it as two fr Priv get worked up we're in a pretty tight band, but I'll turn it over to Alan Thank you Mark.

Alan J. Kirshenbaum: Thank you, Marc. Brennan, I guess what I would add to that is a few things. We continue to expect to see our Part 1 fees coming up quarter over quarter, year over year as we go through 2024. There are a series of reasons for that.

Alan: Brendan I guess, what I would add to that is a few things we continue to expect to see our part one fees coming up.

Alan: Quarter over quarter year over year as we go through 2024, there's a series of reasons for that one Mark just touched on the very strong fund raising we continue to see in our non traded products like CIC NTIC we.

Alan J. Kirshenbaum: One, Marc just touched on the very strong fundraising we continue to see in our non-traded products like CIC and TIC. We continue to deploy good capital in products like OTF2. So as we continue to deploy fundraise, we're going to continue to see strong increases in Part 1 fees. Also, if you go back to the end of last year where the SOFR curve was and where it is today, throughout, let's say, 2024, we're still averaging, let's say, 20 or 30 basis points higher.

Alan J. Kirshenbaum: We continue to deploy capital in products like OTF too. So as we continue to deploy fund raise we're going to continue to see strong increases in part one fees also if you go back to the end of last year, where the sofa curve was and where it is today throughout let's say.

Alan J. Kirshenbaum: And in 2025, where the curve is, we are 60 to 80 basis points higher today than where we were back in December. So we will continue to see strong returns on our Part 1 fees, or at least we would expect to because of all these. Great, thanks for that call. Thanks, Brennan. Our next question comes from Glenn Schorr from Evercore ISI. Your line is now open.

Alan J. Kirshenbaum: 2024, we're still averaging let's say 20 or 30 basis points higher than in 2025, where the curve is we are 60 to 80 basis points higher today than where we were back in December. So we will continue to see strong returns on our part one fees or at least we would expect to because.

Glenn Paul Schorr: All of these things.

Glenn Paul Schorr: Great Thanks for that color.

Glenn Paul Schorr: Thanks Brendan.

Operator: Thanks, Glenn. And It's a great question.

Operator: Our next question comes from Glenn Schorr from Evercore ISI. Your line is now open. Hi, thanks.

Alan J. Kirshenbaum: Our next question comes from Glenn Schorr from Evercore ISI. Your line is now open.

Glenn Paul Schorr: Hi, Thanks.

Operator: <unk>.

Glenn Paul Schorr: Big picture question on credit, obviously direct lending you're in animals youre expanding in health care infrastructure, expanding real estate lending and Cavallari brings investment grade.

Glenn Paul Schorr: Yet I'm still going to ask the question of do you feel like you have enough across private credit broadly and maybe Thats just really a question on what you already have an asset backed finance.

Glenn Paul Schorr: What's your plan in terms of expanding there. Thanks so much.

Marc S. Lipschultz: First, I want to reinforce that we indeed consider ourselves credit animals. With regard to the range of offerings you characterized well, we certainly have built out adjacencies that take us from diversified direct lending, which led us, of course, a long time ago now to understanding the great merits of software lending, which has really worked. It led us to first lien lending, you know, another derivative thereof that's really worked.

Glenn Paul Schorr: Thanks Glenn.

Glenn Paul Schorr: Great question first I want to reinforce we indeed consider ourselves credit animals.

Speaker Change: With that I'll take that one.

Marc S. Lipschultz: With regard to the range of offerings, you characterize well, we certainly have built out the adjacencies to take us from diversified direct lending that led us to of course, a long time ago now to understand the great merits of software London, which is really work has allowed us to first lien lending.

Marc S. Lipschultz: Our derivative thereof, Thats really work.

Marc S. Lipschultz: We now have as you point out with our new acquisitions with Prima we add it's very strong rated real estate oriented at a time when that market steeply disrupted with <unk>, we add of course other adjacent investment grade ore, while stronger credit derivative opportunities. So we definitely have.

Marc S. Lipschultz: We now have, as you point out, with our new acquisitions with Prima, we add, it's very strong rated real estate-oriented debt at a time when that market is deeply disrupted by Cuvier. We add, of course, other adjacent investment grade or, you know, stronger credit derivative opportunities. So we definitely have widened that range, and we like that. To answer your question very spot on, you know, we have some parts of alternative credit very strongly.

Marc S. Lipschultz: Widened that range and we like to have to answer your question very spot on.

Marc S. Lipschultz: Some parts of alternative credit very strongly.

Marc S. Lipschultz: You know, as we've commented, but I'll share this again, beneath the surface, we actually do a lot of lending in areas people don't particularly share our large business may not focus on, but we've developed very strong skills in rail car leasing, in aircraft leasing, in ABL finance with Wingspire, in life settlements, in royalties, in health care, as you pointed out, we've done about $13 billion in loans. So there's a lot we have built organically, and we will continue to utilize that capability for both our diversified products and, over time, as appropriate, in other specialized or asset-backed products.

Marc S. Lipschultz: But I'll share the scanned beneath the surface, we actually do a lot of London and areas people don't particularly share of our large business may not focus on but we've developed very strong skills and railcar leasing and aircraft leasing.

Marc S. Lipschultz: Al Finance with wings spire.

Marc S. Lipschultz: Life settlements.

Marc S. Lipschultz: <unk> royalties and health care as you pointed out we've got about $13 billion loan. So there is a lot. We have built organically and we will continue to utilize that capability for both our diversified products and over time as appropriate in other specialized or asset backed products. So we have the organic tools are there.

Marc S. Lipschultz: So we have the organic tools. But are there other areas, to put it rhetorically, that we could add in an alternative credit or asset-based credit? Absolutely true. So we continue to look at build and buy, and they're not, they're neither mutually exclusive nor mutually required. Which is to say, we've got a lot of tools to be successful in asset-based finance. We would be perfectly open to and interested in adding more tools, and we have our eyes open.

Marc S. Lipschultz: Their areas to put it rhetorically that we could add in an alternative credit our asset based credit absolutely sure.

Marc S. Lipschultz: So we continue to look at build buy and Theyre not they are not mutually exclusive.

Marc S. Lipschultz: Looser north.

Marc S. Lipschultz: Mutually required which is to say we've got a lot of tools to be successful in asset based finance will be perfectly open to and interested in adding more tools and we have our eyes open for that.

Speaker Change: Thanks, so much.

Operator: Thank you. Our next question comes from Tevin Chua from Wolf Research and Reliance Network.

Marc S. Lipschultz: Thank you and our next question comes from Stephen Ju from Wolfe Research. Your line is now open.

Unknown Attendee: Hi, good morning, Marc. Good morning, Alan. Hope you're doing well. You as well. You as well, Steven. So, um, you know, now that you've added both real estate, debt, and insurance capability,

Tevin Chua: Hi, Good morning, Mark Good morning, Al I Hope Youre doing well.

Unknown Attendee: You as well. You as well, Steven.

Tevin Chua: As well as well Stephen.

Unknown Attendee: So.

Unknown Attendee: Now that you've added both real estate data and insurance capabilities. The platform was hoping you could just speak to your confidence level on hitting or approaching the $1 <unk> in 2005, it might just be helpful to outline the roadmap similar to what.

Tevin Chua: Actually Alan how you laid it out last earnings call just given the building blocks should look a little bit different than before.

Marc S. Lipschultz: Yeah, again, thank you. Look, it's it is our favorite topic. It's what we talk about all the time, which is the continued path to the dollar dividend. And sitting here today, you know, we continue to feel the same way we are moving right forward being in and around that dollar, and every quarter where we march forward up to quote, I think, Glenn's title, or the blue street continues, I think to use yours, we move a quarter closer, and the band effectively gets tighter when we complete steps of the, and it's not an enormously complicated ladder or set of steps.

Speaker Change: Yes. Thank.

Speaker Change: Thank you look at it is our favorite topic as we talked about all the time, which is continued path to the dollar dividend and sitting here today. We continue to feel the same way, we are moving right toward being in and around that dollar and every quarter, where we march forward up until the right to quota.

Marc S. Lipschultz: Thank Glenn title or the Blue streak continues I think to use yours, we move a quarter closer and the band effectively gets tighter while we complete steps of the and it's not enormously complicated ladder, our SATA steps when we get things done like this quarter. We said look it we expect it will include.

Marc S. Lipschultz: But when we get things done, like this quarter, we said, Look, we expect it will include a strategic acquisition as part of it. We did this last quarter. We expect we'll take our other BDCs, some of them public over time. We did that with BDC, which is trading really well. In the meantime, OBDC trades at a premium to book. So, you know, we're solely ticking it off in the sort of I'm going to compile now also. We have Brennan's title as well.

Marc S. Lipschultz: A strategic acquisition is part of it we did to this last quarter.

Marc S. Lipschultz: We expect will take all of our other bdcs are some of them public overtime, we did that with BDC, which is trading really well at meantime, <unk> trades at a premium to book. So we're slowly ticking it off in the sort of I'm going to compile and I'll also add Brennan as title as well.

Marc S. Lipschultz: We think we are the boring blue streak moving up and to the right. So I think I've merged with proper attribution, three titles together, and you know, the destination, the goal is to get to that dollar. We continue to feel good about being in and around that level. Thanks Marc. Steven, thanks for the question.

Marc S. Lipschultz: I think we are the boring blue streak moving up into the right. So I think I'd merged with proper attribution three titles together.

Marc S. Lipschultz: That's the destination the goal is to get to that dollar and we continue to feel good about being in and around that level. So let me turn it over to Alan to give you the building blocks to go with that.

Marc S. Lipschultz: Thanks, Marc. Steven, thanks for the question. We are on track to be in or around the dollar share. I'm going to approach this in two ways, if that's okay.

Marc S. Lipschultz: Mark.

Speaker Change: Stephen Thanks for the question, we are on track to be in or around the dollar share I'm going to I'm going to approach. This in two ways. If that's okay. I just wanted to remind everyone.

Alan J. Kirshenbaum: I just want to remind everyone that we have a significant amount of embedded earnings power in our business. We have about a billion dollars of revenues that would, over the course of three different things, bring our 2023 revenues up over 60%. That billion dollars of revenues is about a quarter of that, $240 million, is just deploying the AUM that is not yet earning fees that we've already raised. We've got over $200 million in BDC step-up fees, of which, to Marc's point, $80 million we just turned on earlier this quarter in January. Those two items alone cost almost half a billion dollars.

Alan J. Kirshenbaum: We have a significant amount of embedded earnings power in our business, we have about $1 billion of revenues.

Alan J. Kirshenbaum: That's over a 25% increase in our 2023 revenue. And then when you add fundraisers for just our GP Stakes VI product and our two BDC non-traded products, that's another $600 million over the course of this year and next year. That would increase revenues by over 60%.

Alan J. Kirshenbaum: That would over the course of three different things that would bring our 2023 revenues up over 60% and so that $1 billion of revenues is about a quarter of that $240 million is just deploying the AUM that has not yet earning fees that we've already raised we've got over $200 million.

Alan J. Kirshenbaum: In BDC step up fees of which <unk> 80, we just turned on our earlier this quarter in January and those two items alone that's almost half a billion dollars that's over 25% increase to our 2023 revenues and then when you add fund raise for just our GP stake six product and our two bdcs.

Alan J. Kirshenbaum: Non traded products, that's another $600 million over the course of this year and next year that would increase revenues by over 60%, but to narrow and now on the dollar of share. So mark has already talked about a number of things Theres a lot of exciting things. We're working on almost all of those as as I think we've all.

Alan J. Kirshenbaum: But to narrow in now on the dollar a share, so, you know, Marc has already talked about a number of things. There are a lot of exciting things we're working on. But almost all of those, as I think we've all talked about in the past, are actually diluted to the dollar a share.

Alan J. Kirshenbaum: I talked about in the past, we're actually dilutive to the dollar a share that is putting dollars back into the business to focus on keeping our industry leading growth beyond the dollar share beyond 2025, there's just three things now so last quarter. There were four things we needed to do now Theres three things, we need to do to get in and around that.

Alan J. Kirshenbaum: That's us putting dollars back into the business to focus on keeping our industry-leading growth beyond the dollar a share, beyond 2025. There are just three things now. So last quarter, there were four things we needed to do. Now there are three things we need to do to get in and around that dollar a share. Marc touched on the fourth, which has fallen away now.

Alan J. Kirshenbaum: We've done an accretive transaction. We've done two. And so we checked that off. That's done. So there are three things left. Fundraise for our non-traded products. That's CIC, TIC, and O-Rent.

Alan J. Kirshenbaum: Sure Mark touched on the fourth which fell away now we've done an accretive transaction we've done too.

Alan J. Kirshenbaum: And so we check that off Thats done so theres three things left on my scorecard at least when I think of those three things we've got a fund raise for our non traded products that CIC TICC I know rent and as we just we just talked about in the earlier question. We are certainly on track.

Alan J. Kirshenbaum: And as we just talked about in the earlier question, we are certainly on track and doing very well towards achieving what we need to in terms of fundraise for our non-traded products. So I check that as being on track. Fundraising for GP Stake VI. We continue to get a lot of interest in that product, and we expect fundraising to go very well there. We expect to hit our $13 billion target, so I consider that on track as well.

Alan J. Kirshenbaum: And doing very well towards achieving.

Alan J. Kirshenbaum: Achieving what we need to and fund raise for our non traded products. So I check that as on track fund.

Alan J. Kirshenbaum: <unk> raised for GP stake six we continue to get a lot of interest in that product and we expect fundraising to go very well there we expect to hit our $13 billion target. So I consider that on track as well and then the third of the three items left is to list one of.

Alan J. Kirshenbaum: And then the third of the three items left is to list one of the two software lending BDCs. And I won't comment on timing for either of those, but we continue to think that there's something to do there over the course of this year or next. So we are tracking very well to be in and around that dollar a share for 2025.

Alan J. Kirshenbaum: The two software lending bdcs.

Alan J. Kirshenbaum: And I won't comment on on timing for either of those but we continue to think that there is something to do there over the course of this year or next year.

Alan J. Kirshenbaum: So we are tracking very well to be in and around that dollar a share for 2025.

Speaker Change: Great color and nice job titles together so thanks for taking my question.

Operator: If someone doesn't mind printing that somehow on a follow-up note just so I can claim that it actually existed in writing, that would be great. Steven, thank you. Our next question comes from Craig Sage-Stanley from Bank of America. Your line is now open. Hey guys,

Alan J. Kirshenbaum: Princeton that somehow on a follow up notices claimed that actually existed in right and that would be great.

Craig Sage-Stanley: Thank you.

Operator: Okay.

Operator: Our next question comes from Craig Siegenthaler from Bank of America. Your line is now open. Hey, guys, I think they got my last name better.

Craig Sage-Stanley: Our next question comes from Craig Stanley.

Operator: Donald from Bank of America. Your line is now open.

Craig William Siegenthaler: Hey, guys I think they've got my last name better on your I'll call. It in the last one but good morning.

Operator: Thanks.

Operator: Okay.

Craig William Siegenthaler: So my question's on M&A, you've added real estate debt and insurance just this year.

Operator: This morning, the Fts siting infrastructure as the next slightly white space.

Craig William Siegenthaler: I wanted to get your updated thoughts on M&A in row, specifically, what do you think of infrastructure equity and infrastructure debt.

Marc S. Lipschultz: Sure. So let me just take one step back and frame it. Our business has a very, very clear DNA, right? We focus on being very deep in an adjacent and tightly bound set of products. And we've talked about this metaphor before, but there are different strategies. There's the all directions on the compass strategy, and many of our very successful peers pursue that strategy. Picture what we're doing as a northbound highway. It's got a lot of lanes.

Craig William Siegenthaler: Sure. So let me just take one step back and frame.

Marc S. Lipschultz: Our business has a very very clear DNA right, we focus on.

Marc S. Lipschultz: <unk> been very deep in an adjacent and tightly bound set of products and we've talked about this about a four before but theres different strategies.

Marc S. Lipschultz: All directions on the copper strategy at many of our very successful peers pursue that strategy picture, what we're doing as a northbound highway it's got a lot of land.

Marc S. Lipschultz: In the lanes we occupy, we intend to be the leader or a leader. We're clearly the leader in Triple Net Lease, the leader in GP Stakes, a leader in direct lending, a couple other cars, but that makes for a pretty uncrowded commute when there's just a few cars in the lane. And then we've added some other pieces that are direct adjacencies, and you know, and let me now get onto these exact ones and then answer your infrastructure question.

Marc S. Lipschultz: And the lanes, we occupy we intend to be the leader or a leader.

Marc S. Lipschultz: Clearly the leader in Triple net lease all leader in GP stake a leader in direct lending couple other cars, but property that makes for a pretty uncrowded commute when theres, just a few cars and <unk>.

Marc S. Lipschultz: And then we've added some other pieces that are direct adjacencies and you've noted and let me now get odyssey's exact ones and then answering infrastructure question, So prima and insurance.

Marc S. Lipschultz: So Prima and Insurance, Couvert, offer two quite different additions to our capability set. So look, we're in real estate, and we're in credit, and we have certainly watched for a very long time as to when we could do real estate credit. Well, it's not too hard to figure out the adjacency of that statement. And we've said it, you know, on prior calls before.

Marc S. Lipschultz: There are two quite different additions to our capability set so look we're in real estate and we're on credit and we have certainly watch for a very long time as to when we could do real estate credit well not too hard to figure out contingency of that statement and we've said on these prior calls before here's the history.

Marc S. Lipschultz: Here's the history with real estate credit. We, as a credit firm, of course, have been approached all the time with, I think we've now looked at close to 10,000 different loans, and certainly we've been approached about real estate loans. And the phenomenon we have had for years and years is that we would be willing to do the work in our current diversified products. In theory, we could do real estate loans as a piece of it.

Marc S. Lipschultz: With real estate credit we are credit firm of course has been approached all the time with I think we've now looked at close to 10000 different loans and certainly we've been approached about real estate loans and the phenomenon, we have for years and years as we would be willing to do the work in our current diversified products an area, we could do real estate loans as a piece of it.

Marc S. Lipschultz: But every time we finished doing the credit work on what was behind the leases, what was behind the credit, we ended up saying, like for like, the spreads were way tighter and leveraged higher than a comparable direct corporate loan. So we didn't do it.

Marc S. Lipschultz: But every time, we finished doing the credit work out what was behind the leases what was behind the credit we ended up saying like for like the spreads were way tighter and leverage higher than a comparable direct corporate law. So we didn't do it.

Marc S. Lipschultz: And I don't know, at the time, we always said to each other, I don't understand why if you say the word real estate, all of a sudden, it's supposed to be at a tighter spread. Well, lo and behold, it's not. It turns out it's not.

Marc S. Lipschultz: And I don't know at the time, we always set which I'll I don't understand what you say the word real estate all of a sudden it's supposed to be at a tighter spread.

Marc S. Lipschultz: Paul it's not it turns out it's not in here, we are now or the market has become very disrupted and it becomes a very interesting point for us to bring our skills in real estate and credit into the highly disrupted market and by bringing premium onboard core really good at this and remember again. This is a very focused strategy prima desktop and single App.

Marc S. Lipschultz: And here we are now where the market has become very disrupted, and it is a very interesting time for us to bring our skills in real estate and credit to this highly disrupted market. And by bringing Prima on board, who are really good at this, remember, again, this is a very focused strategy. Prima does something like single asset, single borrower focus, risk retention, and they are really good at it. This is a much higher-grade product. So they have a very good book.

Marc S. Lipschultz: Asset single borrower focus risk retention really good at it and this is much higher grade products. So they have a very good book, we're not spending time thinking about Gee, what does the work out going to look like in real estate on almost any real estate lender would.

Marc S. Lipschultz: We're not spending time thinking about, "gee, what is the workout going to look like in real estate?" as almost any real estate lender would. So, that's a wonderful addition; you're using M&A in a sort of strategic and tactical way to add some terrific skills that we can build off organically. So that's a fill-in of a really nice capability product. Insurance, think about that as horizontal, right?

Marc S. Lipschultz: That's a wonderful addition, using M&A in the sort of strategic and tactical way to add a terrific skills that we can build off organically. So that is our affiliate not really.

Marc S. Lipschultz: Nice capability product in <unk>.

Marc S. Lipschultz: Insurance think about that as horizontal right. We have successfully become a leader in delivering institutional solutions institutional fundraising.

Marc S. Lipschultz: We have successfully become a leader in delivering institutional solutions, institutional fundraising, and wealth management, where we're a market leader. The one we've been missing is insurance delivering solutions properly packaged, properly structured for the insurance user. Remember, we always talk about this; we don't have different products. We have different entry points.

Marc S. Lipschultz: Well, where we're a market leader, but one we've been missing is insurance delivery solutions properly packaged properly structured for the insurance user when we always talk about this we don't have different products for different people have different entry ramps, we customize the structures we customize it.

Marc S. Lipschultz: We customize the structures. We customize a continuously-offered product because individual investors value some of that flexibility. It's different from what institutions value, so we customize their product. Now, with Couvert, we've added some complementary capabilities, but most importantly, we now have a way of customizing the solution for that user of capital. So now we have the third core leg of the stool.

Marc S. Lipschultz: Continuous software product just individual investors value some of that flexibility different from what institutions value. So we customize their product now with <unk>. We have added some complementary capabilities, but most importantly, we now as a way of customizing the solution for that user of capital that so now we add the third core.

Marc S. Lipschultz: Leg of the stool, we now have wealth and we have institutional and we have insurance, so think about that as horizontal taking our capabilities and again, our product suite is particularly well suited to the insurance user and now we have the ability to bring that bundled together and deliver the solutions to not compete with the insurance industry.

Marc S. Lipschultz: We now have wealth, and we have institutional, and we have insurance. So think about that as horizontal, taking our capabilities, and again, our product suite is particularly well-suited to the insurance user, and now we have the ability to bring that bundle together and deliver the solutions to, not compete with, the insurance industry. So I would say those two, you can see, are quite different. One adds a capability right in our sweet spot. One is horizontal.

Marc S. Lipschultz: So I would say those two you can see are quite different one adds a capability right in our sweet spot. One is horizontal it's not really about adding new products, it's about adding a way to deliver those products in a way that's perfectly package for its user so last to the ft article.

Marc S. Lipschultz: It's not really about adding new products; it's about adding a way to deliver those products in a way that's perfectly packaged for its users. So last, to the FT article.

Marc S. Lipschultz: I mean, I can't control their title, and the emphasis on infrastructure is a little disproportionate. It's just compatible with what we've observed before, which is when we think about our product, which is downside protection with strong, predictable returns, generally current income inflation protection that brings you very naturally to a few areas. It brings you to at the right moment, something like real estate credit. Okay, well, we have our foothold there. It brings you to things like asset-based lending, and we just talked about that.

Marc S. Lipschultz: Can't control their title.

Marc S. Lipschultz: The emphasis in infrastructure is a little little disproportionate. It's just compatible with what we've observed before which is when we think about our products, which is which is downside protection with strong predictable returns generally current income inflation protection that brings you very naturally to a few areas. It brings you to at the right moment.

Marc S. Lipschultz: Something like real estate credit, Okay, well, we have our foothold there and it brings you to things like asset based lending and we just talked about that we have a lot of organic capabilities and we'll have an eye on both organic and inorganic possibilities there.

Marc S. Lipschultz: We have a lot of organic capabilities, and we'll have an eye on both organic and inorganic possibilities there. And in our way, another example would be infrastructure. I don't do anything in infrastructure, or not.

Marc S. Lipschultz: Our way another example would be infrastructure.

Marc S. Lipschultz: Joe anything in infrastructure are not again, the emphasis is a bit excessive with the title, but I think if you read the article or kind of incorporate it with what I'm about to say, it's a natural area. That's adjacent for us because it's a space that is about lower risk principal preservation of strong returns and income orientation and that could either be an.

Marc S. Lipschultz: Again, the emphasis is a bit excessive in the title, but I think if you read through the article or kind of incorporate it with what I'm about to say, it's a natural area that's adjacent for us because it's a space that is about lower risk, principled preservation, strong returns, and income orientation. And that could either be in infrastructure debt or infrastructure equity.

Marc S. Lipschultz: Structure debt or infrastructure equity and so I view that as more of an example of how we can stay very tied to our strategy. We do what we do well understand our DNA well, but do it in an adjacent product.

Marc S. Lipschultz: And so I view that as more an example of how we can stay very tight to our strategy. Do what we do well, understand our DNA well, but do it in an adjacent product. Whether we do that or not, it's not as if, okay, next up. I think it's more about an example of how we think about the world strategically, which is to stay very deep in a very, very tightly bound, strategically aligned set of products.

Marc S. Lipschultz: Whether we do that or not its not as if okay. Next up I think it's more about an example of how we think about the world strategically which is to stay very deep in a very very tightly bound strategically aligned set of products.

Speaker Change: Thank you.

Operator: Thanks, Craig. The next question comes from Bill Katz from TD Cohen. Your line is now open. Thank you very much for taking the question.

Speaker Change: Thank you thanks Craig.

Operator: The next question comes from Bill Katz from TD Cohen. Your line is now open.

Marc S. Lipschultz: Next question comes from Bill Katz from TD Cowen Your line is now open.

William Katz: Okay. Thank you very much for taking the question. So just one of the debates comes up a lot.

William Katz: Is just a higher for longer backdrop, and how does that sort of the ebbs and flows of the puts and takes so I was wondering I think the part one fees are pretty straightforward I was wondering if you could talk a little about just the resilience of the platform, particularly on the credit side. If we were to stay at a higher for longer.

William Katz: How to think through the bare case that it would have a.

William Katz: Pickup in credit losses against the portfolio that hasn't been proven over prior credit cycles as currently.

William Katz: Together thank you.

Operator: Yes.

Marc S. Lipschultz: Sure, and then Alan and I could write individual comments on it, but let's, let me start with the headline. Look, we do floating rate debt. That is our business for our investors. And that mathematically, definitionally means that when rates are higher, the absolute returns for our investors are, on average, higher.

William Katz: Sure and then Alan and I can comment on it but let's let me start with the headline look we we do floating rate debt that is our business for our investors and that.

Marc S. Lipschultz: Mathematically definition really means when rates are higher the absolute returns for our investors are on average higher than when rates are lower on average there will be a little bit slower.

Marc S. Lipschultz: And when rates are lower, on average, they'll be a little bit lower. You're sitting here today, and look. There are a lot of things we've been right about and wrong about, and that'll continue to be true. But I will say that a year ago, and a lot of everyone on this call probably can check us on this one, we have been talking about the hire for longer case for quite a long time, and we see it in our portfolio. Remember, we probably have almost 400 companies that we lend money to. And we study them and work with them very, very closely.

Marc S. Lipschultz: Sitting here today and look there's a lot of things we've been right about in wrong about and that will continue to be true, but I will say that a year ago.

Marc S. Lipschultz: Everyone on this call probably can check us on this one we have been talking about the higher for longer case for quite a long time and we see it through our portfolio remember we have almost almost 400 companies that we lend money to and we study them and work with them very very closely and while we have seen consistently for the last year.

Marc S. Lipschultz: And what we have seen consistently, for the last year, and still today, is inflation has not gone away. Now, that's a consensus view. It seemed like a lonely voice in the woods a year ago.

Marc S. Lipschultz: Still today is inflation has not gone away now thats consensus view it seemed like a lonely voice in the woods a year ago, even four months ago. We don't have this conversation when the world was about seven rate cut now we're in a world, where it's somewhere balanced between zero rate cuts and one right. That's the new consensus.

Marc S. Lipschultz: That's a reality of what's happening from the ground up we've seen wage pressures continue to see cost pressures continue importantly, we see all of these companies raising their prices someone's paying for that so when you add it all together inflation not courses gotten rage and the way it was a year and half ago. It's very so look that does bring us to the higher for longer view from there.

Marc S. Lipschultz: Even four months ago, we'd go and have this conversation when the world was talking about seven rate cuts. Now we're in a world where it's somewhere balanced between zero rate cuts and one, right? That's the new consensus.

Marc S. Lipschultz: A ground up are not macro experts.

Marc S. Lipschultz: And that's the reality of what's happening from the ground up. We see wage pressures continue, we see cost pressures continue. Importantly, we see all these companies raising their prices. Someone's paying for that, so when you add it all together, inflation's not raging the way it was a year and a half ago. It's very real.

Marc S. Lipschultz: But as a result of that in a higher for longer world, which now seems pretty likely of course that does flow through and offer higher returns for our investors and to a degree fr PR remember, what's really important to other than the small amount of variance around fee related which is not the FRP or which is a modest part of our revenue base you have to remember.

Marc S. Lipschultz: So look, that does bring us to the hire for longer view from the ground up. We're not macro experts. But as a result of that, in a hire for longer world, which now seems pretty likely, of course, that does flow through to ever higher returns for our investors and, to a degree, FRPR. Remember, what's really important, though, other than the small amount of variance around fee-related revenue, which is not the FRPR, which is a modest part of our revenue base, you have to remember we at Blue Owl, and I know you know this, but I'm saying it more broadly, we at Blue Owl get paid fees to manage the business.

Marc S. Lipschultz: We at Blue.

Marc S. Lipschultz: This subset of more broadly we have blue all will get paid fees to manage the business.

Marc S. Lipschultz: We have no carry, we have no capital markets fees, we don't have all these other variable fees that other people have to manage, which is complicated. Our business is very straight forward, and even with gyrations and spread or whether we do have a rate cut, or don't have a rate cut, those are really, really moderate impacts on our business. So I'm going to let Alan comment on that, and then I'll come back to the credit question you had.

Speaker Change: Gary we have capital markets fees, we don't have all these other variable fees that other other.

Marc S. Lipschultz: Other people will have to manage which has complicated our business is very straightforward and even with gyrations in spread or whether we do have a rate cut don't have a rate cut was a really really moderate impacts on our business. Some of that let Alan comment on that and then I'll come back to the credit question you had in this case.

Alan J. Kirshenbaum: So two points here, I guess. One, I made the comment earlier that when you look at the curve today versus at the end of the year, we're 60 to 80 basis points higher on the curve than where we were. To translate that to how that impacts our business, I mentioned the last quarter's call when asked about a rate decline question. I had said that about a hundred basis points of rate decline would be about 40 million, 4-0, 40 million dollars of increased or decreased, and now in this case, it's increased, as opposed to the question last quarter which would have been decreased, about 40 million dollars of increased annual management. And then, let me tack it back on to the credit.

Marc S. Lipschultz: So.

Alan J. Kirshenbaum: Two points here I guess, one I made the comment earlier in 2025, when you look at the curve today versus at the end of the year were 60 to 80 basis points higher on the curve than where we were to translate that to how that impacts our business I had mentioned on last quarter's call when asked about a rate decline.

Alan J. Kirshenbaum: <unk> I have said that about 100 basis points of.

Alan J. Kirshenbaum: Rate decline would be about $40 million four zero of $40 million of increased or decreased and now in this case, it's increased as opposed to the question last quarter, which would be decreased about $40 million of increased annual management fees.

Marc S. Lipschultz: It's why we focus on the large end of the market. It's why we focus so intensely on low, low end values, which in our portfolios, remain on average in the 40s. So we're, and in software lower, our portfolio performance, you look at our we looked at our most recent results. On average, the EBITDA and revenue in our portfolio companies grew on average in the last quarter that we just finished our data analysis on double digits, double digits.

Alan J. Kirshenbaum: And then let me tack back on to the credit question and attack it in a couple ways. First of all, and I said this before, within the land of our credit business, credit is everything. It's what we focus on. It's what we focus on from day one.

Alan J. Kirshenbaum: And then let me tack back onto the credit question.

Alan J. Kirshenbaum: Tack it a.

Alan J. Kirshenbaum: A couple of ways first of all and I've said this before.

Alan J. Kirshenbaum: Within the land of our credit business credit is everything so what we focus on is what we're focused on from day. One it's why we focus on the large end of the market. It's why we focus so intensely on low loan to values, which in our portfolio today remains on average in the forties.

Alan J. Kirshenbaum: So we are.

Alan J. Kirshenbaum: And in software lower.

Alan J. Kirshenbaum: Our portfolio performance you look at our we look at our most recent results on average the EBITDA and revenue and our portfolio of companies grew on average in the last quarter that we just finished our data analysis on at double digits.

Marc S. Lipschultz: So we understand and, of course, we're always thinking about the credit, you know, downturn, which is really an economic downturn, right? There's no separate thing called a credit downturn unless you do credit poorly. And I feel confident we haven't done that.

Alan J. Kirshenbaum: Double digits. So we understand and of course, we're always thinking about Gee, the credit downturn, which is really an economic downturn right. After.

Marc S. Lipschultz: Have a thing called a credit downturn unless you do credit poorly.

Marc S. Lipschultz: Confident we haven't done that and so at the end of the day, we're still growing robustly in our portfolio on average of course theres going to be peculiar credit issues of course, there is companies that have their own procure their challenges, but remember our non accruals are well below 1% of our book and our loss rate historically now has been seven basis points.

Marc S. Lipschultz: And so at the end of the day, you know, we're still growing robustly in our portfolio on average. Of course, there will be peculiar credit issues. Of course, there are companies that have their own peculiar challenges. But remember, our non-accruals are well below 1% of our book, and our loss rate, historically, has been at seven basis points per year. So I think we're starting from an incredibly good place.

Marc S. Lipschultz: <unk> per year. So I think we're starting from an incredibly good place and I guess two things to take away from that we care intense about correct.

Marc S. Lipschultz: And here's the other, I guess, two things to take away from that we care intensely about. As an investor in Blue Owl stock, though, again, remember, we get paid fees to manage these funds. So ultimately, that's not really a question that bears on the shareholder of Blue Owl in any meaningful way. It matters to us, and it matters a lot to our LPs, and that's who we work for every single day.

Marc S. Lipschultz: As an investor in the <unk> stockpile again remember we get paid fees to manage these funds. So ultimately that's not really a question that bears on the shareholder and blew out in any meaningful way matters to us and it matters a lot to our Lps and Thats, who we work for every single day. So we're intensely focused.

Marc S. Lipschultz: So we're intensely focused on it, but it's not really an earnings question. Last point, you know; I think this also gets lost in the conversations about credit. I absolutely do understand and agree that, you know, people can, we can say, hey, we just don't know, because there's this new thing called private credit, not so new, and hasn't been fully tested. But, it has gone through its tests. But it is a good way of just creating, for those who wish to, uncertainty. There's a lot of data, a lot, right?

Marc S. Lipschultz: But it's not really a earnings question last point I think this is what also gets lost in the conversations about credit I, absolutely do get and agree that people can't we can say hey, we just don't know because there is this new thing called private credit also new and Hasnt been fully tested well has gone through with <unk>.

Marc S. Lipschultz: But it is a good way of just creating for those who wish to uncertainty. There's a lot of data a lot Brian I. Just told you our data on nearly 100 billion of loans and it hasn't exactly been smooth sailing to the land of Covid and wars and runs on banks and again it hasn't been as deep dark risk.

Marc S. Lipschultz: I just told you our data on nearly 100 billion loans, and it hasn't exactly been smooth sailing through the land of COVID and wars and runs on banks. But again, it hasn't been a deep, dark recession. But actually, deep, dark recessions have happened in the land of leveraged credit. This isn't new. We're making loans to the same companies, except with tighter documents and lower loan-to-values than the syndicated market did back in the 2000s, and we actually do know what that looked like.

Marc S. Lipschultz: But actually deep dark recession have happened in the land of leveraged credits. This isn't new we're making loans to the same companies, except with tighter documents and lower loan to values than the syndicated market did back in the 2000, and we actually do know what that looks like and frankly, if it was that even that bad soda.

Marc S. Lipschultz: And frankly, if it was that, even that bad, so to speak, think about the returns. We're starting with unlevered returns today, depending on, again, which spread we're all using, but 10 to 12%. You can take pretty meaningful changes in defaults and still have one heck of a risk return. So we think about it all the time.

Marc S. Lipschultz: Think about the returns we're starting with Unlevered returns today, depending on again with spread we're all using 10% to 12%.

Marc S. Lipschultz: You can take pretty meaningful changes in default and still have one heck of a risk return. So we think about it all the time, but I really think that's sort of a propensity. If you will say hey. This market is just fantastic actually is extremely well tested it just hasnt been tested frankly in this more durable format and I think what you will find one that test comes in.

Marc S. Lipschultz: But I really think this sort of propensity will say, hey, this market's just untested. It actually is extremely well tested. It just hasn't been tested, frankly, in this more durable format.

Marc S. Lipschultz: This exact format I think youre going to find out that loan losses are lower.

Operator: And I think what you will find when that test comes in this exact format, I think you're going to find out that low losses are lower because you have parties in bilateral arrangements with very aligned incentives, which is, you know what? We all want this company to do well. We all want this company to thrive and pay back its capital. There aren't any games. There aren't any tricks. There aren't any credit default swaps. There aren't any credit on creditor violence.

Operator: Cause you have parties and bilateral arrangements with very aligned incentives, which as you know what we all want this company to do well, we all want this company to thrive in payback its capital Bernd games aren't treks, our credit default swaps. There are credit on creditor violence all of that stuff will happen in the syndicated market. So yeah youll live that stuff.

Operator: All that stuff will happen in the syndicated market. So yeah, you'll live that stuff again. Private credit, I would proffer that you're going to see a better experience when that version of days comes again. Thank you. Question comes from Patrick Davitt from Autonomous Research, Reliance Now. Hey, good morning, everyone.

Patrick Davitt: Again, private credit I would proffer that youre going to see a better experience when that <unk>.

Patrick Davitt: Version of days comes again.

Patrick Davitt: Thank you.

Operator: Yes.

Operator: The next question comes from Patrick Davitt from the Autonomous Research Alliance in Malibu.

Operator: Question comes from Patrick Davitt from Autonomous Research your line is now.

Patrick Davitt: Hey, good morning, everyone.

Patrick Davitt: My question is on <unk> could you help us frame, maybe how much run rate organic flow you expect from the insurance entity post close maybe how fast that has been growing and then more broadly contrast, how you see aus insurance Tam versus others given your app.

Patrick Davitt: Asset classes are generally outside of the lower fee quote unquote fixed income replacement assets most of the other alts are focusing on thank you.

Operator: Sure.

Marc S. Lipschultz: So, I don't want to speak on behalf of Couvert, the insurance company, which, remember, we are buying the asset manager, and we're an asset manager, an asset balance sheet light provider of management services, and they are a really strong insurance originator. So that's, you know, that's their side of the equation. I don't mean that in a lack of partner way.

Operator: No.

Patrick Davitt: I don't want to speak on behalf of <unk>, The insurance company, which remember we are buying the asset manager and we're a asset manager as your balance sheet light provider of management services and they are really strong assurance originator. So that's that's their side of the equation I don't mean that in a lack of partner way we're very.

Marc S. Lipschultz: Partner, but I want to understand that they are the insurance company. We are their partner asset manager with that said, we know that for example last year. They did they grew their book by $5 6 billion.

Marc S. Lipschultz: We're very much partnered, but I want to understand that they are the insurance company; we are their partner asset manager. With that said, we know that, for example, last year, they grew their book by $5.6 billion. So part of this whole exercise was to get more capital freed up and focused on supporting the growth of their insurance company, including our $250 million preferred investment. So, you know, last year was 5.6 billion; they were looking for more capital to continue to grow and to expand. I think we'll continue to see very healthy growth.

Marc S. Lipschultz: So part of this whole exercise was to get more capital freed up and focused on supporting the growth of their insurance company, including our $250 million preferred investment.

Marc S. Lipschultz: So last year was $5 6 billion. They were looking for more capital to continue to grow and to grow I think we'll continue to see very healthy growth. They have a great origination business I've mentioned this before but.

Marc S. Lipschultz: They have a great origination business. I've mentioned this before, but you know, they punch way above their weight. Here's a firm of their size that is in the Japanese market, which is one of the most discerning markets, as I understand it, for these types of annuity products. And they're right in there with the very biggest and the very best, and I think it's a real credit to what they've done on the insurance origination and management side.

Marc S. Lipschultz: So, you know, I don't want to forecast their numbers for them, but I think it's safe to say that given the growth they've had in the past, we expect to see that kind of growth continue. That's why they want the capital.

Marc S. Lipschultz: They punch way above their weight, here's a firm of our size that is in the Japanese market, which is one of the most discerning markets as I understand it for these types of annuity products and Theyre right in there with the very biggest and the very best and I think it's a real credit to what they've done on the insurance origination and management side. So.

Marc S. Lipschultz: What forecast there are a number for that but I think it is safe to say that given the growth they've had in the past we expect to see that kind of growth continue that's why they want the capital.

Marc S. Lipschultz: And the vast majority of that growth is going to come from assets that we manage. Yeah, and remember, we have now acquired the whole of their asset management business, which means we do have all the product knowledge.

Marc S. Lipschultz: And the vast majority of that growth is going to come for assets that we manage going forward. Yes, remember, we now have required the whole of their asset management business, which means we do have all the product capability is built out.

Marc S. Lipschultz: Yeah, and remember, we now have acquired the whole of their asset management business, which means we do have all the product capabilities built out that you just described. So this brings us the ability to deliver the comprehensive solution you just postulated about others. So we do have all that now; our focus isn't on the low-fee products, but we have the capabilities now. And it's not like we dismiss having that or just having the comprehensive set of solutions; they'll be part of our growth profile going forward, too. So we do have that full range today.

Marc S. Lipschultz: That you just described so with this brings to us the ability to deliver the comprehensive solution you just postulated about others. So we do have all that now our focus isn't on the low fee products, but we have the capabilities now.

Marc S. Lipschultz: Not like we dismiss habit patterns, just having the comprehensive set of solutions that will be part of our growth profile going forward too. So we do have that full range today in terms of the addressable market. It's actually a really interesting question. We all know this is evolving and the interrelationship between.

Marc S. Lipschultz: In terms of the addressable market, it's actually a really interesting question. We all know this is evolving the interrelationship between insurance and asset management or alternative asset managers, and there are different models.

Marc S. Lipschultz: And I don't think there's one singular right model, I will say that, you know, our model is built around staying very focused on being really good at asset management, and letting insurance companies be really good at insurance, and being a partner to them, as opposed to a competitor with them, which is very consistent with our model, we are a capital solutions provider, where the picks and shovels, right, we do that we provide capital solutions to GPs themselves, with our GP solutions business, to help them grow their businesses, we provide capital solutions to corporate owners of real estate, to help them grow their businesses, we provide financing solutions to PE portfolio companies. And now with our blue on strategic equity, we provide GP continuation capital, all of those are solutions to, for example, a private equity firm, not competition with a private equity firm.

Marc S. Lipschultz: Sure.

Marc S. Lipschultz: And asset management.

Marc S. Lipschultz: The alternative asset managers, and there's different models and think Theres, one singular right model I will say that.

Marc S. Lipschultz: Our model is built around staying very focused on being really good at asset management and led to an insurance company to be really good at insurance and being a partner to them as opposed to a competitor with them, which is very consistent with our model where capital solutions provider, where the picks and shovels right. We do that we provide capital solutions to.

Marc S. Lipschultz: GP in themselves with our <unk> solutions business help them grow their businesses, we provide capital solutions to corporate owners of real estate to help them grow their businesses, we provide financing solutions to pay portfolio companies and now with our <unk> strategic equity, we provide GP continuation capital all of those are.

Marc S. Lipschultz: Solutions to for example, a private equity firm not competition with the private equity firm. So I think we've got a very clear focus and same thing in insurance. We are now we are their partner and we're here to help them grow and not try to take growth from.

Marc S. Lipschultz: So I think we've got a very clear focus. And same thing insurance, we are now their partner, and we're here to help them grow and not try to take growth from them. All right, moving forward to our next question from Crispin Love from Piper Sanford. Your line is now open.

Marc S. Lipschultz: Okay.

Operator: Alright, moving forward to our next question from Crispin Love from Piper Sandler, your line is now open.

Crispin Elliot Love: Alright moving forward.

Crispin Elliot Love: Alright, our next question from Christian Ludwig from Piper Sandler Your line is now.

Crispin Elliot Love: Thanks. Good morning, I. Appreciate you taking my question you hit on this a little bit with a prior question, but just with the announced acquisition of frame you.

Crispin Elliot Love: Can you explain why you did the deal and how you do the credit work, but can you discuss what opportunities you're most interested in once the deal closes will you.

Crispin Elliot Love: We expect to be active in distressed areas such as deals in office or deactivate multifamily or kind of other areas like see MBS. In addition to the deals more related to your triple net lease product, but on the debt side. Just curious your thoughts here and where you might add capital in this part of the business when the deal closes.

Marc S. Lipschultz: Upshore. Well, let me start with this observation about every acquisition we make. Our mission is to have a best-of-class team as a part of that. And we have that with Prima, which also means our first job is to make sure we only enhance doing well what they already do, we, once combined. And that's been true.

Crispin Elliot Love: Offshore well, let me start with this observation on every acquisition we make our mission is to have a best of class team as a part of that and we have that with prime up which also means first job is to make sure we only enhance doing well what they already do.

Marc S. Lipschultz: Once combined and Thats been true look at look at our Oak Street business now the real estate business. That's a business that has thrived in because they're great at what they do now.

Marc S. Lipschultz: Look at our Oak Street business, now the real estate business. You know, that's a business that has thrived because they're great at what they do. Again, now we, but in this phrasing, I'm purposely trying to be intentional about this idea of not ever disrupting but only enhancing the investment process. So our first job is to continue to do a fantastic job for Prima LPs in the products they have. Now, with their capabilities and ours, there are opportunities for us to deliver great results to their existing or new investors and do so well for our shareholders.

Marc S. Lipschultz: Crazy on purposely trying to be intentional about this idea of not ever disrupted only enhance and invest in the process. So our first job is to continue to do a fantastic job for prima Lps and the products. They have now with their capabilities and ours there are opportunities for us to deliver great results.

Marc S. Lipschultz: <unk> to their existing or new Lps and do so well for our shareholders.

Marc S. Lipschultz: When you think about where we'll go, remember we also have now brought on a world-class real estate finance professional, Jesse Hom. Hom, who's quite well-known in the world of real estate finance, having led this at GIC, will be joining us to lead this overall initiative. So Prima comes on board, we'll keep doing Prima really well, and then we will extend. To answer your question, again, remember our DNA and our comfort. Our idea is to go into a market and find ways to take a risk out and earn really attractive, stable returns.

Marc S. Lipschultz: When you think about where we'll go remember we also have now brought on a world class real estate finance professional Jesse hump Jess Yahoos.

Marc S. Lipschultz: Yes, it's quite well known in the World of real estate finance, having led this GIC will be joining us to lead. This overall initiative. So Primo comes on board, we will keep doing prima really well and then we will extend to answer to your question again remember our DNA and our comfort our idea is to go into a market and find ways.

Marc S. Lipschultz: To take risk out and are really attractive stable returns so that would tend toward leaning our mindset not toward opportunistic distressed let's go find messy office building rather it is hey, this is a dysfunctional market now we can go in and do very high quality sites that are much lower level.

Marc S. Lipschultz: So that would tend to lean our mindset not toward opportunistic, distressed, let's go find a messy office building, but rather, hey, this is a dysfunctional market now. We can go in and do very high-quality things that are much lower leverage, much less deep in the cap stack and earn a very attractive return by providing that capital. So I think that frame of reference is likely to be more where we live than all of a sudden trying to move out to the periphery of return seekers. That's not our mission. Our mission is to have sleep-at-night-well money for our investors and deliver a really good return.

Marc S. Lipschultz: <unk> much less deepen the cap stack and earn a very attractive return providing that capital. So I think that frame of reference is likely to be more where we live then all of a sudden you're trying to move out to the periphery of of return seekers that thats not our mission. Our mission is to have sleep at night, while money for our investors.

Marc S. Lipschultz: And deliver really good returns for us.

Marc S. Lipschultz: Thank you, Marc. I appreciate you taking my question. Of course. Our next question comes from Brian McKenna. Your line is now open. Great, thanks. Good morning, everyone. Most questions have been asked, but just a quick one for me.

Speaker Change: Thank you Mark I appreciate you taking my questions.

Brian J. McKenna: Of course, thank you.

Operator: Our next question comes from Brian McKenna. Your line is now open. Great, thanks. Good morning, everyone. Most questions have been asked.

Brian J. McKenna: Our next question comes from Brian Mccanless. Your line is now open.

Brian J. McKenna: Great. Thanks, Good morning, everyone. Most questions have been asked but just a quick one for me. So you clearly been active on the M&A front and you've also made a number of senior hires as well. So I think integration of all these businesses and people will be important until longer term growth and success of blew out. So what are you doing today to make sure the integration of all.

Brian J. McKenna: All of this is successful over time and I guess, what I'm getting at is how do you make sure one plus one equals more than two.

Marc S. Lipschultz: That is exactly right and exactly what we focus on and exactly where I think we've developed now our muscles to do it well. We think integration is critical. And that is part of again, the benefit here is not to disrupt anything about the strong investment performance and practices of businesses but enhance them with the intellectual capital and capabilities that we have, and bring the backbone that we have operationally to each of these companies to help support them doing an even better job in the investment business.

Speaker Change: That is exactly right and exactly what we focus on and exactly where I think we've developed now I'd say, our muscles to do it well.

Marc S. Lipschultz: You know, I want to make sure we say this, we've talked a lot about M&A here, but the vast preponderance of our growth is organic, and the M&A is actually pretty moderate when you get down to the number of people and the impact on business. I just talked about Prima, it's a wonderful business, it comes with a wonderful team. It does something very specific, though. It's not, you know, this isn't some grand, complex integration; actually, it's pretty straightforward.

Marc S. Lipschultz: We think integration is critical and that is part of again the benefit here is don't disrupt anything about the strong investment performance and practices of businesses, but enhance them with the intellectual capital and capabilities that we have bring the backbone that we have operationally too.

Marc S. Lipschultz: Each of these companies to help support them doing an even better job at the investment business.

Marc S. Lipschultz: I want to make sure. We say this we've talked a lot about M&A on here the vast preponderance of our growth is organic and the M&A is actually pretty moderate when you get down to a number of people impacted our business Mark just talked about Primo. It's a wonderful business. It comes with a wonderful NIM. It does something very specific though.

Marc S. Lipschultz: And that's not to take it lightly; it's just to say we have to distinguish between complicated integrations and acquisitions, not something that we pursue with any great vigor, and relatively simple ones like a Prima. So, you know, an acquisition is not an acquisition in the generic sense. That said, I think we feel very, very good about our pathway. And let me just point back to real estate. So Oak Street, when we acquired Oak Street, now our real estate business, I believe it had about $70 million in FRE.

Marc S. Lipschultz: Yes. This isn't some grand complex integration actually it's pretty straightforward.

Marc S. Lipschultz: And that's not taken lightly it is just to stay with a distinguished between complicated integrations and acquisitions not something that we pursue with any great vigor and relatively simple ones like a premium so an acquisition does not an acquisition in the generic sense that said I think we feel very very good about our pathway.

Marc S. Lipschultz: Let me just point back to real estate, So Oak Street, when we acquired Oak Street now our real estate business I believe it had about $70 million in FRE.

Marc S. Lipschultz: And today, we're running at about $200 million of FRE.

Marc S. Lipschultz: And today we're running at about $200 million of FRE, triple, tripled that business. And Mark Czar and his team, you know, and Jared and others have been phenomenally effective as an integrated part of this firm. Michael Ryder, who comes in as operational integrator for our operations, has been an absolute case study for us of how we can do this. And so, you know, we learn our lessons. Again, we're not saying we're perfect by any measure.

Marc S. Lipschultz: Ripple.

Marc S. Lipschultz: Rippled that business and and March Saar.

Marc S. Lipschultz: His team chair and others have been a nominally effective integrated part of this firm Michael Rider, who comes in as operational integration of our operations that has been a absolute case study for us and how we can do this and so we learned our lessons.

Marc S. Lipschultz: But I think we feel very, very good that we can handle these acquisitions, and we'll be very, very careful as we look, and we'll continue to look at organic and inorganic growth. But let's not lose track of the fact that most of our growth has been and likely will be organic growth, up and to the right, the boring blue streak up to the right.

Marc S. Lipschultz: We're not saying we're perfect by any measure, but I think we feel very very good that we can handle these acquisitions and we will be very very careful as we look and we will continue to look at organic and inorganic growth of let's not lose track of the fact that most of our growth has been and likely will be organic growth up into the right.

Marc S. Lipschultz: The boring blue streak up to the right.

Speaker Change: Great Thanks, Mark and congrats.

Marc S. Lipschultz: With all the momentum.

Speaker Change: Thank you thanks, Brian.

Operator: We don't have any questions at the moment. I'd now like to hand it back over to Marc for his final remarks.

Marc S. Lipschultz: We don't have any question, Sam Amit I'd now like to hand back over to Mark Burford Aman.

Marc S. Lipschultz: Great. Thank you all very much. I really appreciate the time and your patience and your interest, and we're going to go away.

Marc: Great. Thank you all very much really appreciate the time and your patience and your interest in <unk>, we're going to go away and.

Marc: B credit animals and tried to do some more boring quarters for you, but we do appreciate it very much and back to it.

Operator: Thank you for attending today's call. We hope you have a wonderful day. Stay safe.

Marc: Great. Thank you on today's call. We hope you have a wonderful day.

Operator: Thanks.