Q1 2025 Blue Owl Capital Inc Earnings Call
Operator: Good morning and welcome to the Blue Owl Capital First Quarter 2025 earnings call. During the presentation, your lines will remain on listen only. I'd like to advise all parties that this conference is being recorded.
Good morning, and welcome to the Blue our capital first quarter 2025 earnings call.
During the presentation your lines will remain on listen only I'd like to advise all parties that this conference is being recorded.
Ann Dai: I will now turn the call over to Ann Dai, Head of Investor Relations for Blue Owl. With that, let me turn it down for our financial results. Thank you, Marc. And good morning, everyone. We are very pleased with the results we reported this course.
I will now turn the call over to Ann Dai.
Ann Dai: Investor Relations for Blue Owl same this time around with the benefit of an even more scale and diversified business.
Alan: With that let me turn it to Alan for our financial results.
Alan: Thank you Mark and good morning, everyone. We are very pleased with the results we reported this quarter.
Operator: Good morning and welcome to the Blue Owl Capital's first quarter.
Alan: Good morning, and welcome to the Blue Arrow capital first quarter.
Alan: 2025 earnings call during the presentation your lines will remain on listen only.
Operator: I'd like to advise all parties that this conference is being recorded.
Alan: I do it by all parties.
Speaker Change: It is being recorded.
Ann Dai: I will now turn the call over to Ann Dai, Head of Investor Relations for Blue Owl. Please go ahead. It was another quarter of results right on top of where we expected and right on track.
Ann Dai: I'll now turn the call over to Ann Dai.
Speaker Change: Mr Relations for Blue Owl. Please go ahead, marking our 16th consecutive quarter of management fees and FRE growth.
Speaker Change: With another quarter of results right on top of where we expected and right on track.
Speaker Change: Okay.
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Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Marc Lipschultz: Thanks, Operator, and good morning to everyone.
Speaker Change: Thanks, operator, and good morning to everyone joining.
Marc Lipschultz: Joining me today are Marc Lipschultz, our 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 foreboding statements, which are not a guarantee of future performance or results, and involve a number of risks and uncertainties that are outside the scope of the call. 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 Owl Capital's filings with the Security Company assumes no obligation to update any.
Speaker Change: Joining me today are Mark <unk>, our co Chief Executive Officer, and Alan Kirshenbaum, Our Chief Financial Officer.
Speaker Change: 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.
Speaker Change: 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 is low capital filings with the Securities and Exchange Commission. The company assumes no obligation to update any forward looking statement.
Marc Lipschultz: We'd also like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled GAAP figures in our earnings. available on the shareholder section of our website at Blue Owl.
Speaker Change: 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 shareholders section of our website at <unk> Dot Com. Please note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any blue All fund.
Operator: Please note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase and interest in any Blue Owl.
Marc Lipschultz: This morning, we issued our financial results for the fourth quarter of 2024, reporting fee-related earnings, or FRE, of $0.23. and Distributable Earnings, or DE, of $21,000. For the full year 2024, we reported FRE of 86 cents per share and DE of 77.
Speaker Change: Good morning, we issued our financial results for the fourth quarter of 2024 reporting fee related earnings or FRE of <unk> 23 per share and distributable earnings or D. E. F. 'twenty, one seven per share.
Speaker Change: Full year 2024, we reported FRE of <unk> 86 cents per share and D. E of 77 cents per share.
Marc Lipschultz: We declare the dividend of $0.18 per share for the fourth quarter payable on February 28th to holders of record as of February 9th.
Speaker Change: We declared a dividend of <unk> 18 per share for the fourth quarter payable on February 28th to holders of record as of February 19th and we also announced an annual fixed dividend of 97 for 2025 or 22, and a half cents per quarter, starting with our first quarter 2025 earnings up 25% from the prior year.
Marc Lipschultz: And we also announced an annual fixed dividend of $0.90 for 2025, or $0.225 per quarter, starting with our first quarter 2025. up 25% from the prior During the call today, we'll be referring to the earnings presentation, which we posted to our website. So please have that on hand follow along.
Speaker Change: Yeah.
Speaker Change: During the call today will be referring to the earnings presentation, which we posted to our website. This morning. So please have that on hand follow along.
Marc Lipschultz: With that, I'd like to turn the call over Great, thank you so much, Ann.
Mark: I'd like to turn the call over to Mark.
Mark: Great. Thank you so much and we capped off by a highly successful year for blue all with a record quarter of fund raising reflecting the ongoing diversification of our business and our high levels of investor interest in our differentiated products. This brings our total equity raised in 2024 to $27 5 billion.
Marc Lipschultz: We capped off a highly successful year for Blue Owl with a record quarter of fundraising, reflecting the ongoing diversification of our business and high levels of investor interest in our differentiated This brings our total equity raise in 2024 to $27.5 billion, about 75% higher than 2023. And including debt, we raised over $47 billion, also a record for us. On top of our robust fundraising, we deployed substantial amounts of capital across the business, including a record $52 billion in gross deployment and credit, driving 26% FRE growth for the year. Taking a step back, we have now grown FRE at least 25% each year since we've been public, despite highly inflationary periods, geopolitical events, rate volatility, and a significant slowdown in capital markets.
Mark: About 75% higher than 2023, and including debt, we raised over 47 billion.
Mark: Also a record for us.
Mark: On top of more robust fundraising we deployed substantial amounts of capital across the business, including a record $52 billion of gross deployment at credit driving 26% FRE growth for the year.
Mark: Taking a step back we have now grown FRE at least 25% each year since we've been public just by highly inflationary periods geopolitical events rate volatility can have a significant slowdown in capital markets to us. This has been an incredible test of the durability of our business and the power of permanent capital.
Marc Lipschultz: To us, this has been an incredible test of the durability of our business and the power of permanent capital.
Marc Lipschultz: We've had a very active year across the business with some simple themes that defined our direction of travel, innovation, diversification, and scale. And thinking about what we've accomplished this year, I'd like to call out a few highlights that exemplify the on innovation. We've been very aligned with the ongoing evolution of the alternatives industry focused on asset classes such as direct lending and GP stakes that have expanded to meet the financing needs of the private market. net lease has followed a similar trajectory, becoming a truly institutional category.
Mark: We've had a very active year across the business with some simple themes the defined our direct search rapid innovation diversification and scale.
Mark: And thinking about what we've accomplished this year I'd like to call out a few highlights that exemplify these themes.
Mark: On innovation, we have.
Mark: <unk> been very aligned with the ongoing evolution of the alternatives industry focused on asset classes, such as direct lending and GP Stakes that have expanded to meet the financing needs of the private markets net leaves US followed a similar trajectory, becoming a truly institutional cabinet.
Mark: Okay.
Operator: This is the operator. I apologize, but there will be a slight delay in today's call. Please hold and we will resume momentarily. Thank you for your patience.
Speaker Change: This is the operator, I apologize, but there will be a slight delay in todays call. Please hold and we will resume momentarily. Thank you for your patience.
Mark: Please wait the conference will begin shortly.
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Mark: I'd like to turn the call over to Mark.
Ann Dai: Thank you, Ann.
Speaker Change: Thank you and let's let's start with the obvious good news we are much better investors that apparently are conference call company is managing call. So the good news will continue as we carry forward.
Marc Lipschultz: Let's start with the obvious good news. We are much better investors than apparently our conference call company is at managing calls. So the good news will continue as we carry forward.
Marc Lipschultz: Look, we're very pleased with the strong results we continue to report each quarter, reflecting the stable and predictable nature of Blue Wallet's business in what is yet again an uncertain and volatile market backdrop. The past five years have presented a continuous series of challenges across COVID, persistent inflation, geopolitical tensions, and now global tariffs. In contrast, Blue Owl has consistently demonstrated strong business performance through periods of upheaval, with management fees growing over a 35% annual growth rate since we listed as a public company. This growth has been underpinned by the defensive nature of our permanent capital and FRE-centric business and propelled by the strong levels of interest we've for investors for our differentiated investment strategies.
Speaker Change: Look we're very pleased with the strong results. We continue to report each quarter reflected a stable and predictable nature of <unk>.
Speaker Change: Business in what is yet again, an uncertain and volatile market backdrop. The past five years have presented a continuous series of challenges across COVID-19 persistent inflation geopolitical tensions and now global tariffs. In contrast, blue all has consistently demonstrated strong business performance through periods of upheaval with management fees.
Speaker Change: Growing over a 35% annual growth rate since we listed as a public company. This growth has been underpinned by the defensive nature of our permanent capital on FRE centric business and propelled by the strong levels of interest we've seen for investors for our differentiated investment strategies. Our business model is very simple its core we're keep them.
Marc Lipschultz: Our business model is very simple at its core. We keep the vast majority of our AUM we raise. We continue to raise valuable new capital from an increasingly diversified set of sources across an increasingly broad spectrum of strategies, and our earnings are highly predictable because they're management fee driven. Today, we're facing another shock to the system where the flow of global trade and the price of that trade may be substantially altered going forward. There are many questions regarding inflation, economic growth, consumer demand, potential recession, and more for which investors don't have concrete answers and may not for some time.
Speaker Change: Majority of our AUM, we raise we continue to raise valuable new capital from an increasingly diversified set of sources across an increasingly broad spectrum strategy and our earnings are highly predictable because they are management fee driven.
Speaker Change: Today, we are facing another shock to the system, where the flow of global trade and the price of that trade may be substantially altered going forward. There are many questions regarding inflation and economic growth consumer demand the potential recession, and more which investors don't have concrete answers and may not for some time.
Marc Lipschultz: So we're reminded once again of the transitory nature of perceived liquidity and the benefits of permanent capital. We're fortunate to have a business model that is quite defensive during periods like these. In fact, we've said this before, we think our products are built precisely to give investors greater certainty and comfort during challenging and volatile markets. Our strategies focus on downside protection, income generation, and inflation protection. These characteristics are less exciting in boom markets, but act as structural guardrails for portfolios when markets are dislocated. Similarly, Blue Owl has been purpose-built to be steady, stable, and predictable through various environments.
Speaker Change: So we were reminded once again, well the transitory nature of perceived liquidity liquidity and the benefits of permanent capital.
Speaker Change: We're fortunate to have a business model that is quite defensive during periods like these in fact, we've said this before we think our products are built precisely to give investors greater certainty and comfort during challenging and volatile markets. Our strategy focus on downside protection income generation and inflation protection.
Speaker Change: Characteristics are less exciting and boom markets, but act a structural guardrails for portfolios when markets are dislocated.
Speaker Change: Similarly blew out has been purpose built to be steady stable and predictable through various environments. So let me quickly highlight a few factors that contributed to this stability.
Marc Lipschultz: So let me quickly highlight a few factors that contribute to this stability. First, approximately 90% of our management fees come from permanent capital, so our revenues are highly resilient. Our business is also very U.S. centric. The vast majority of our borrowers or tenants are domestically based and primarily serve domestic customers, which substantially limits any direct impact from tariffs. And we'll spend some time on the numbers around this in just a little bit. To add to that, we have over $23 billion of AUM that will begin to pay management fees once capital is deployed, which will drive an incremental $290 million of revenue or 13% growth off our current management fees over the last 12 months.
Speaker Change: First approximately 90% of our management fees come from permanent capital. So our revenues are highly resilient.
Speaker Change: Our business is also very U S centric the vast majority of our borrowers or tenants are domestically based and primarily serve domestic customers were substantially limits any direct impact from tariffs and we'll spend some time on the numbers around this in just a little bit.
Speaker Change: To add to that we have over $23 billion of <unk> that will begin to pay management fees. Once capital is deployed which will drive an incremental $290 million of revenue or 13% growth off our current management fees over the last 12 months. In addition, we successfully completed the merger of OTI and OTF two in March.
Marc Lipschultz: In addition, we successfully completed the merger of OTF and OTF-2 in March. Upon a listing, OTF will be the largest technology-focused BDC in the public market and will drive another approximately $135 million of incremental annual management fees for Blue Owls. So we have pretty good visibility into revenue growth just from deployment and fee step-ups, not counting any incremental fundraising. And we intend to be very front-footed about opportunities that arise in this current environment. So we've observed that during periods of elevated volatility, market share accrues to solutions providers like us, and people are willing to pay more for our valuable capital.
Speaker Change: Upon a listing OTI will be the largest technology focused BDC in the public market and will drive another approximately $135 million of incremental annual management fees for blowout.
Speaker Change: So we have pretty good visibility into revenue growth just from deployment and fee step ups not counting any incremental fundraising and we intend to be very front footed about opportunities that arise in this current environment.
Speaker Change: So we have observed that during periods of elevated volatility market share accrues to solutions providers like us and people are willing to pay more for our valuable capital. We expect the same dynamic to play out this time around if this uncertainty continues.
Marc Lipschultz: We expect the same dynamic to play out this time around if this uncertainty continues. In fact, we have already started to see instances of companies that had looked to issue public debt now exploring direct lending solutions. Similarly, we are seeing elevated inbounds in alternative credit as market participants express concerns about the availability of capital in traditional securitization markets. And the last point I want to make, which is something we've said often, but I think it carries even more weight today, is that our business is management fee and FRE driven. Our investors don't have to figure out whether carry or capital markets fees will be up or down over the next year.
Speaker Change: In fact, we have already started to see instances of companies that had to look to issue public debt now exploring direct lending solutions.
Speaker Change: Similarly, we are seeing elevated imbalanced in alternative credit as market participants expressed concerns about the availability of capital and traditional securitization markets.
Speaker Change: And the last point I want to make which is something we've said often but I think it carries even more weight today is that our business is management fee and FRE driven our investors don't have to figure out whether carry our capital markets fees will be up or down over the next year that predictability it should be worth a premium during ordinary markets and becomes <unk>.
Marc Lipschultz: That predictability should be worth a premium during ordinary markets and becomes even more valuable today. So to bring this home through our financial results, we have grown our management fees by 31%, our FRE by 23%, and our DE by 20% on an LTM basis. Reflected in this growth are the significant investments we have continued to make globally across the private wealth and institutional channels, which have resulted in equity fundraising of nearly $30 billion over the last 12 months, an increase of over 75% over the prior year. Over that same period, we capitalized on constructive syndicated markets to raise an incremental $19 billion of debt for our funds and vehicles, primarily in credit and real assets.
Speaker Change: When more valuable today.
Speaker Change: So to bring this home through our financial results, we have grown our management fees by 31%, our FRE by 23% and our D E by 20% on an LTM basis.
Speaker Change: Reflected in this growth are the significant investments we have continued to make globally across the private wealth and institutional channels, which have resulted in equity fund raising of nearly $30 billion over the last 12 months, an increase of over 75% over the prior year over that same period, we capitalized on construct the syndicated markets to raise.
Speaker Change: An incremental $19 billion of debt for our funds and vehicles, primarily in credit and real assets.
Marc Lipschultz: Add it up. The nearly $50 billion of equity and debt capital we've raised over the last 12 months is approximately 30% growth off our AUM over a year ago. During the first quarter, we raised over $6.5 billion with $4 billion raised in private wealth, primarily across our perpetually distributed products and GP states. As we look further into 2025, we're seeing an increasingly diversified and global base of investors contributing to evergreen product flows, with nearly $1 billion of capital closed on April 1. We're also making good progress on the launch of our alternative credit product focused on the wealth market and expect to be in a position to close out the private phase fundraise for this product at some point this summer.
Speaker Change: Added up the nearly $50 billion of equity and debt capital. We have raised over the last 12 months is approximately 30% growth off our AUM over a year ago.
Speaker Change: During the first quarter, we raised over $6 $5 billion with $4 billion raised in private and private wealth, primarily across our perpetually distributed products and GP Stakes.
Speaker Change: As we look further into 2025, we're seeing an increasingly diversified and global base of investors contributed to evergreen product flows with nearly $1 billion of capital closed on April 1st.
Speaker Change: We're also making good progress on the launch of our alternative credit products focused on the wealth market and expect to be in a position to close out the private phase fundraise for this product at some point this summer.
Marc Lipschultz: On the institutional side, we raised capital across a number of strategies, including digital infrastructure, net lease, direct lending, insurance solutions, and alternative credit.
Speaker Change: On the institutional side, we raised capital across a number of strategies, including digital infrastructure net lease direct London insurance solutions and alternative credit.
Marc Lipschultz: Generally, we anticipate that institutional fundraising will step up over the course of 2025 given the expected timing of next vintage launches and ongoing fundraising.
Generally we anticipate that institutional fund raising we will step up over the course of 2025, given the expected timing of next vintage launches add ongoing fundraising.
Marc Lipschultz: Turning to business performance, in direct lending, gross origination was nearly $13 billion and net was over $4.5 billion for the quarter, more than double our net origination in the prior quarter, reflecting robust add-on activity across our portfolio and a declining level of refinancing. As I alluded to earlier, current market volatility is accruing to the benefit of private lenders, and we're having a fairly robust level of discussion. Well, it's hard to say what I've been able to look like over the short term, we have plenty of capital put to work and feel well positioned for whatever is ahead.
Speaker Change: Turning to business performance indirect lending gross origination with nearly $13 billion and that was over $4 5 billion for the quarter more than double our net origination in the prior quarter, reflecting robust add on activity across our portfolio and a declining level of refinancings.
Speaker Change: As I alluded to earlier current market volatility is accruing to the benefit of private lenders and we're having a fairly robust level of discussions well, it's hard to say what I have been able to look like over the short term, we have plenty of capital to put to work and feel well positioned for whatever is ahead. Our direct lending strategy was built for these types of market volatility and uncertainty.
Marc Lipschultz: Our direct lending strategy was built for these types of markets, volatility and uncertainty. We feel very good about the credit quality of our portfolio. We've had a 13 basis point average annual realized loss rate, validating our rigorous underwriting standards. As I mentioned earlier, we have a philosophical preference for larger, domestically focused, services-oriented portfolio companies with high customer retention and re-up rates, which we think are more resilient business models. And remember, a portfolio is not a microcosm of the U.S. economy.
Speaker Change: Yeah.
Speaker Change: We feel very good about the credit quality of our portfolio. We've had a 13 basis point average annual realized loss rate validating our rigorous underwriting standards as I mentioned earlier, we have a philosophical preference for larger domestically focused services oriented portfolio companies with <unk>.
Speaker Change: High customer retention and re up rates, which we think are more resilient business models and remember our portfolio is not a microcosm of the U S economy, rather we think our loan book will prove out to be quite defensive if we are facing a paradigm shift in global trade.
Marc Lipschultz: Rather, we think our loan book will prove out to be quite defensive if we are facing a paradigm shift in global trade.
Marc Lipschultz: In alternative credit, our funds announced a sizable commitment to SoFi, representing their largest loan platform business arrangement to date. We also entered into a significant forward flow agreement with Pagaya as a growing source of funding alongside Pagaya's ABS program. Below scale and capital flexibility are proven to be a great asset as we enter into these arrangements providing essential financing at an opportune time.
Speaker Change: In alternative credit our funds announced a sizable commitment to sulfide representing their largest loan platform business arrangement today.
Speaker Change: We also entered into a significant forward flow agreement with <unk> as a growing source of funding alongside <unk> ABS program.
Speaker Change: <unk> scale and capital flexibility are proven to be a great asset because we enter into these arrangements, providing the central financing at an opportune time.
Marc Lipschultz: Furthermore, as we highlighted during our recent Investor Day, we think this is a highly defensive strategy for investors as the amortizing nature of the assets creates enhanced downside protection with principal returned on an accelerated basis relative to even corporate credit strategies. Another layer of protection comes from our ability to turn the flow of financing on and off quickly. Similar to direct lending, we have very little direct exposure to tariffs in this strategy as we are generally U.S. focused, and we see an opportunity to accelerate market share as an alternative to securitization markets. To date, we have not seen any adverse changes in consumer credit and feel very good about the resilience of our portfolio.
Speaker Change: Furthermore, as we highlighted during our recent Investor day. We think this is a highly defensive strategy for investors as the amortizing nature of the assets creates enhanced downside protection with principal returned on an accelerated basis relative to even corporate credit strategies.
Speaker Change: Another layer of protection that comes from our ability to turn the flow of financing on and off quickly similar.
Speaker Change: Similar to the direct lending we have very little direct exposure to tariffs and the strategy is we are generally U S focused and we see an opportunity to accelerate market share as an alternative to securitization markets to date, we've not seen any adverse changes in consumer credit and feel very good about the resilience of our portfolio.
Marc Lipschultz: Now this resilience carries over into our GP stakes strategy, where our funds own stakes in a highly diversified group of quality alternative asset managers. Over the past decade, the alternatives industry has grown AUM by roughly 10% annually. On the other hand, the managers in which we own stakes have grown their AUM by approximately 17% on average, 70% higher than industry growth. In keeping with the philosophy of our other businesses, we're providing valuable capital growth to a growth industry. And the scale and certainty of capital we offer is an even shorter supply during periods of market instability.
Speaker Change: Now this resilience carries over into our GP stake strategy, where our funds on stakes and highly diversified group.
Speaker Change: Quality alternative asset managers over the past decade, the alternatives industry has grown by roughly 10% annually on.
Speaker Change: On the other hand, the managers of which we own stakes have grown their AUM by approximately 17% on average 70% higher than industry growth.
Speaker Change: In keeping with the philosophy of our other businesses, we're providing valuable capital growth to a growth industry and the scale of uncertainty of capital we offer isn't even shorter supply during periods of market instability.
Marc Lipschultz: During the quarter, we made our first investment out of the latest large cap vintage into a prominent asset manager with whom we've had a long stand-in relationship. In real assets, we continue to benefit from an inflationary environment and higher rates as companies look to optimize their own balance sheets.
Speaker Change: During the quarter, we made our first investment out of the latest large cap vintage into a prominent asset manager with whom we've had a longstanding relationship.
Speaker Change: In real assets, we continue to benefit from an inflationary environment and higher rates as companies look to optimize their own balance sheets that this remains the best setup for deployment, we've seen in a very long time.
Marc Lipschultz: This remains the best setup for deployment we've seen in a very long time. Our net lease strategy offers tenants crucial capital flexibility, while providing our investors attractive income with highly predictable cash flows, driven by investment grade and credit worthy counterparties, all with a tax advantage. We continue to see significant demand for this strategy and we're looking forward to providing updates on the path towards our next vintage drawdown fund in the near future. On the real estate credit strategy, we've been on offense during recent periods of dislocation, finding opportunities to upgrade the portfolio into market weakness for insurance and managed clients.
Speaker Change: Our net lease strategy offers tenants crucial capital flexibility, while providing our investors attractive income with highly predictable cash flows driven by investment grade and credit worthy Counterparties, all with a tax advantaged attributes.
Speaker Change: We continue to see significant demand for this strategy and we're looking forward to providing updates on the path towards our next vintage drawdown fund in the near future.
Speaker Change: On the real real estate credit strategy, we've been on Opex straight recent periods of dislocation finding opportunities to upgrade the portfolio into market weakness for insurance and manage clients.
Marc Lipschultz: In digital infrastructure, we continue to see this as a once in a generation opportunity to deploy with demand for capital and our differentiated technical expertise far surpassing supply. We held our final close for Fund 3 in April, reaching its hard cap of $7 billion, nearly double the size of the prior fund. And we remain on track to launch the next flagship, Vintage, in 2026, along with a wealth-dedicated product. Looking across real assets, we see substantial opportunities to harness the power of scale, flexible structuring, and diversified pools of capital to construct bespoke, differentiated solutions for our counterparties.
Speaker Change: The digital infrastructure, we continue to see this as a once in a generation opportunity to deploy with demand for capital in our differentiated technical expertise far surpass it supply.
We held our final close with one three in April reaching its hard cap of $7 billion nearly double the size of the prior fund and we remain on track to launch the next flagship vintage in 2026, along with the wells dedicated product.
Speaker Change: Looking across real assets, we see substantial opportunities to harness the power of scale flexible structuring and diversified pools of capital to construct the spoke differentiated solutions for our Counterparties. This wasn't thesis in bringing these businesses together and it is absolutely playing out in real time.
Marc Lipschultz: This was the thesis in bringing these businesses together, and it is absolutely playing out in real time.
Marc Lipschultz: So bringing the conversation back to where we started, this is the type of environment where our business is highly defensive on an absolute basis and where we should outperform even more on a relative basis. Every time we've seen a market dislocation, Bloll has demonstrated remarkable strength and consistency, and we have continued to march towards our long-term strategic goals. I expect we will do the very same this time around with the benefits of an even more scaled and diversified business.
So, bringing the conversation back to where we started.
Speaker Change: This is the type of environment, where our business is highly defensive on an absolute basis, and where we should outperform even more on a relative basis.
Speaker Change: Every time, we've seen a market dislocation <unk> has demonstrated remarkable strength and consistency and we have continued to march towards our long term strategic goals.
Speaker Change: Expect we will do the very same this time around with the benefits don't even more scaled and diversified business.
Alan Kirshenbaum: So with that, let me turn it over to Alan to discuss our financial results. Thank you, Marc, and good morning, everyone. We are very pleased with the results we reported this quarter, marking our 16th consecutive quarter of management fee and FRE growth. It was another quarter of results right on top of where we expected and right on track with our long-term goals. I think it's important to reiterate some of the key points Marc raised in his remarks, which I'll do in a few moments. To start with our financial results, over the last 12 months, management fees increased by 31%, and approximately 90% were from permanent capital vehicles.
Speaker Change: So with that let me turn it over to Alan to discuss our financial results. Thank.
Alan: Thank you Mark and good morning, everyone. We are very pleased with the results. We reported this quarter, marking our 16th consecutive quarter of management fee and FRE growth. It was another quarter of results right on top of where we expected and right on track with our long term goals I think it's important to reiterate some of the key points Mark raised in his remarks.
Speaker Change: Which I'll do in a few moments.
Speaker Change: To start with our financial results over the last 12 months management fees increased by 31% and approximately 90% were from permanent capital vehicles FRE was up 23% <unk> was up 20% and as you can see on slide 13, we raised $6 $7 billion of equity in the first quarter and 20.
Alan Kirshenbaum: FRE was up 23%, DE was up 20%, and as you can see on slide 13, we raised $6.7 billion of equity in the first quarter, and $29.4 billion over the last 12 months, an increase of 76% from the prior year. And inclusive of debt, we raised nearly $50 billion over the last 12 months. To break down the first quarter fundraising numbers across our strategies and products, in credit we raised $4 billion. $2.9 billion was raised in direct lending, of which nearly $2.5 billion came from our non-traded BDCs, OCIC and OTIC. This includes approximately $250 million closed in channels that are not on a monthly closing The remainder was raised across liquid credit, alternative credit, investment grade credit, and our GP-led secondary strategy.
Speaker Change: $9 4 billion over the last 12 months, an increase of 76% from the prior year and inclusive of debt, we raised nearly $50 billion over the last 12 months.
Speaker Change: To break down the first quarter fundraising numbers across our strategies and products and credit we raised $4 billion $2 9 billion was raised in direct lending of which nearly $2 5 billion came from our non traded Bdcs OCI C. N O T. I C. This includes approximately $250 million closed in <unk>.
Speaker Change: Those that are not on a monthly closing cadence.
Speaker Change: The remainder was raised across liquid credit alternative credit investment grade credit and our GP led secondaries strategy subsequent to quarter end, we raised an incremental $540 million for our GP led secondaries strategy, bringing it to over $1 $5 billion in total.
Alan Kirshenbaum: Subsequent to quarter ends, we raised an incremental $540 million for our GP-led secondary strategy, bringing it to over $1.5 billion in total. In GP's strategic capital, we raised over $550 million during the quarter, of which roughly $450 million was attributable to our large-cap stakes strategy, bringing the latest vintage to $7.3 billion. As we've said in the past, we expect the fundraise here to be back-end loaded, heading towards our $13 billion goal. And in real assets, we raised $2.2 billion primarily from O-Rent, digital infrastructure, and co-investors. Subsequent to quarter ends, we held the final close for Digital Infrastructure Fund 3, bringing in an incremental $360 million and hitting our $7 billion hard cap, as Marc noted earlier.
Speaker Change: And J P strategic capital, we raised over $550 million during the quarter of which roughly $450 million was attributable to our large cap stake strategy, bringing the latest vintage to seven $3 billion as we've said in the past we expect to fund raise here to be backend loaded heading towards our $13 billion.
Speaker Change: <unk>.
Speaker Change: And in real assets, we raised $2 $2 billion, primarily from Orad digital infrastructure and co investments subsequent to quarter end, we held the final close for digital infrastructure fund three bringing in an incremental $360 million and hitting our $7 billion hard cap as Mark noted earlier and OS.
Alan Kirshenbaum: And overall, for our wealth-dedicated products, flows to OCIC, OTIC, and O-Rent during the quarter were 55% higher than flows into those funds in the first quarter of last year. As we have seen, our March flows for the April 1st close were strong, with over $920 million in total fundraise tracking well against March 1st flows, excluding channels that do not hold monthly closes. And our April flows for the May 1st close are tracking well.
Speaker Change: We're all for our wealth dedicated products flows to OCI C. O T. I C. N O ran during the quarter were 55% higher than flows into those funds in the first quarter of last year.
Speaker Change: As we have seen our March flows for the April 1st close were strong with over $920 million in total fundraise tracking well against March 1st flows excluding channels that do not hold monthly closes an.
Speaker Change: In our April flows for the May 1st close are tracking well.
Alan Kirshenbaum: Turning to our platforms, in credit our direct lending portfolio gross returns were 3.1% in the first quarter and 13.3% over the last 12 months. Our direct lending funds are well positioned and constructed to withstand the economic pressures likely to be caused by tariffs or a possible recession. Our direct lending funds are comprised of primarily first lien senior secured loans. We focus on larger borrowers that we believe will be well suited to withstand uncertainty and volatility with an average EBITDA of over $250 million. Weighted average LTVs are in the high 30s across direct lending and in the low 30s specifically in our software lending portfolio.
Speaker Change: Turning to our platforms in credit our direct lending portfolio gross returns were three 1% in the first quarter and 13, 3% over the last 12 months Howard.
Speaker Change: Our direct lending funds are well positioned and constructed to withstand the economic pressures likely to be caused by tariffs or a possible recession. Our direct lending funds are comprised of primarily first lien senior secured loans, we focus on larger borrowers that we believe will be well suited to withstand uncertainty and volatility with an average year.
Speaker Change: But out of over $250 million weighted average ltvs are in the high thirty's across direct lending and in the low 30, specifically in our software lending portfolio.
Alan Kirshenbaum: This creates a high level of protection for our investors as sponsor equity and more junior debt provide significant cushion. Private equity firms typically take a long term view to protecting their investments during periods of disruption and have the dry powder and resources to support their business. We consistently work with the largest sponsors with strong expertise in their sector. As Marc mentioned earlier, our portfolio continues to perform extremely well. We have not seen a deterioration in credit quality, which we know has been an area of focus for investors in recent weeks. To elaborate on this point, we focus on U.S.-based borrowers in non-cyclical, defensive, and service-oriented industries.
Speaker Change: This creates a high level of protection for our investors as sponsor equity and more junior debt provides significant cushion.
Speaker Change: Private equity firms typically take a long term view to protecting their investments during periods of disruption and have the dry powder in resources to support their businesses.
Speaker Change: We consistently work with the largest sponsors with strong expertise in their sectors as Mark mentioned earlier, our portfolio continues to perform extremely well we have not seen a deterioration in credit quality, which we know has been an area of focus for investors in recent weeks.
Speaker Change: To elaborate on this point, we focus on U S based borrowers in non cyclical defensive and service oriented industries five sectors software insurance business services, food and beverage and health care services constitute approximately 70% of our direct lending portfolio.
Alan Kirshenbaum: Five sectors, software, insurance, business services, food and beverage, and health care services constitute approximately 70% of our direct lending portfolio, which is well diversified with an average position size of approximately 20 bases. Sitting here today, we estimate that portfolio companies that have a material manufacturing capacity outside the U.S. represent only a mid-single-digit percentage of our overall direct lending portfolio. However, most of these companies generally have significant global reach, diverse sourcing capabilities, and experienced management teams that have successfully navigated previous tariffs and supply chain disruptions before. And as a reminder, Our portfolio is comprised of directly originated loans negotiated with tighter covenant packages than public market deals.
Speaker Change: <unk>, which is well diversified with an average position size of approximately 20 basis points sitting here today, we estimate that portfolio companies that have a material manufacturing capacity outside the U S represent only a mid single digit percentage of our overall direct lending portfolio. However, most of these companies.
Speaker Change: Generally have significant global reach diverse sourcing capabilities and experience management teams that have successfully navigated previous tariffs and supply chain disruptions before.
Speaker Change: And as a reminder.
Speaker Change: Our portfolio is comprised of directly originated loans negotiated with tighter covenant packages than public market deals.
Alan Kirshenbaum: Between this modest exposure and the defensive characteristics I just highlighted, we feel that our direct lending portfolio is relatively recession-resistant and should perform well on an absolute basis and even more on a relative basis. And remember what Marc said earlier, our portfolio is not a microcosm of the U.S. economy. We set a very high bar when underwriting a loan and generally do not make loans to companies with high energy exposure, high commodity exposure, retail fashion, acid-heavy businesses, melting ice cube industries. We aim to avoid product and geographic concentration and get to choose among the biggest, highest quality businesses that are among the best in their industry backed by the biggest PE sponsors to make loans to.
Speaker Change: Between this modest exposure in the defensive characteristics I just highlighted we feel that our direct lending portfolio is relatively recession resistant and should perform well on an absolute basis and even more on a relative basis.
Speaker Change: And remember what Mark said earlier, our portfolio is not a microcosm of the U S economy, we set a very high bar when underwriting alone and generally do not make loans to companies with high energy exposure high commodity exposure retail fashion asset heavy businesses melting ice cube industries, we aim to avoid product.
Speaker Change: Geographic concentration and get to choose among the biggest highest quality businesses that are among the best in their industry backed by the biggest PE sponsors to make loans to.
Alan Kirshenbaum: On average, underlying revenue and EBIT of growth across our portfolios was in the high single digits to low teens with no material increase in signs of stress, such as increased non-accruals, stress amendments, pick conversion requests, or watch listening.
Speaker Change: On average underlying revenue and EBITDA growth across our portfolio as was in the high single digits to low teens with no material increase in signs of stress such as increased non accruals stress amendments pick conversion requests or watch list names.
Alan Kirshenbaum: Turning to alternative credit, our portfolio gross returns were 6.1% in the first quarter and 15.2% over the last 12 months. Echoing what Marc mentioned earlier, we are seeing very resilient performance across asset base categories. In GP's strategic capital, we are nearing the finish line in deploying our fifth vintage by our flagship GP stake strategy, and have made our first investment out of the sixth vintage. Performance across these funds remains strong, with a net IRR of 22.5% for Fund 3, 37.7% for Fund 4, and 15.4% for Fund 5. And in real assets, as you heard, we had a record quarter of commitments in net lease, bringing our drawdown fund in that strategy to nearly 90% committed.
Speaker Change: Turning to alternative credit our portfolio gross returns were six 1% in the first quarter and 15, 2% over the last 12 months echoing what Mark mentioned earlier, we are seeing very resilient performance across asset base categories.
Speaker Change: And J P strategic capital, we are nearing the finish line and deploying our fifth vintage via our flagship GP stake strategy and have made our first investment out of the six vintage performance across these funds remained strong with a net IRR of 22, 5% for fund 337, 7% for fund four.
Speaker Change: And 15, 4% for fund five.
Speaker Change: And in real assets as you heard.
Speaker Change: We had a record quarter of commitments and net lease, bringing our drawdown funds in that strategy to nearly 90% committed.
Alan Kirshenbaum: Even with robust deployment, our net lease pipeline continues to grow with nearly $28 billion of transaction volume under letter of intent or contract to close. Trends across deployment and monetization cap rates in net lease have remained quite stable, reflecting the structural advantages of our scale and position. During the first quarter, we had a record quarter of commitments, totaling $3.8 billion, bringing commitments over the last 12 months to $8 billion at a roughly 8% cap rate on average. As a reminder, many of these opportunities are bill-to-suit arrangements, which can take between 18 to 24 months to fully deploy.
Speaker Change: Even with robust deployment, our net lease pipeline continues to grow with nearly $28 billion of transaction volume under letter of intent or contract to close.
Trends across deployment and monetization cap rates and net lease have remained quite stable, reflecting the structural advantages of our scale and positioning.
Speaker Change: During the first quarter, we had a record quarter of commitments totaling $3 $8 billion, bringing commitments over the last 12 months to $8 billion at a roughly 8% cap rate on average as a reminder, many of these opportunities are build to suit arrangements, which can take between 18 to 24 months to fully deploy.
Alan Kirshenbaum: We will earn incremental management fees as this capital is deployed. Concurrently, we monetized over $700 million over the past 12 months, generating a 24% net IRR, demonstrating how we can continue to generate opportunistic returns in a strategy that we believe is indicative of investment grade and core risk. With regards to performance, gross returns in net lease were 1.2% for the first quarter and 3.1% for the last 12 months, comparing favorably to the broader real estate market over this time period. In real estate credit, we invested $1.3 billion in public securities at a nearly 9% yield, increasing our market share in single-asset, single-borrower CMBS and showcasing our team's ability to be opportunistic in dislocated markets.
Speaker Change: Earn we will earn incremental management fees as capital is deployed concur.
Speaker Change: Concurrently, we monetized over $700 million over the past 12 months generating a 24% net IRR demonstrating how we can continue to generate opportunistic returns and a strategy that we believe is indicative of investment grade and core risk.
Speaker Change: With regards to performance gross returns and net lease were one 2% for the first quarter and three 1% for the last 12 months comparing favorably to the broader real estate market over this time period.
Speaker Change: In real estate credit, we invested $1 $3 billion in public securities at a nearly 9% yield increasing our market share in single asset single borrower see MBS and showcasing our team's ability to be opportunistic in dislocated markets. We also had our most active quarter in private loans targeting double digit Roe.
Alan Kirshenbaum: We also had our most active quarter in private loans, targeting double-digit returns for clients. Turning to digital infrastructure, we're thrilled with the running start that we've taken with this business. The tenants are incredible credits, and we love the mission criticality of the assets. We're operating with a combination of scale, relationships, and technical expertise that we don't think anyone else has, and the demand-supply imbalance is massive. We'll have a lot more to say about this business in the coming quarters.
Speaker Change: Turns for clients.
Speaker Change: Turning to digital infrastructure, we're thrilled with the running start that we've taken with this business. The tenants are incredible credits and we love the mission criticality of the assets were operating with a combination of scale relationships and technical expertise that we don't think anyone else has and the defense and the.
Speaker Change: Man supply imbalances massive we'll have a lot more to say about this business in the coming quarters.
Alan Kirshenbaum: I want to pause for a moment to make sure the pattern is obvious to everyone. Our products across Blue Owl have performed very well, as they are designed to do, during periods of uncertainty. These are products that are geared towards this environment, and combined with our permanent capital, this makes Blue Owl uniquely positioned versus our peers. So to wrap up here, I'd like to reiterate the contrast between the volatility and uncertainty we are seeing in global markets today and the stability of Owl's business. We are 100% FRE and mostly permanent capital. Every dollar of capital we raise drives three times more FRE than our peers because we have less capital heading out the door, a higher blended fee rate, and a high FRE margin.
Speaker Change: I want to pause for a moment to make sure. The pattern is obvious to everyone. Our products across blue al have performed very well as they are designed to do during periods of uncertainty. These are products that are geared towards this environment and combined with our permanent capital. This makes blue our uniquely positioned versus our peers.
Speaker Change: So to wrap up here I would like to reiterate the contrast between the volatility and uncertainty we are seeing in global markets today and the stability of alloy business, we are 100% FRE and mostly permanent capital every dollar of capital we raise drives three times more FRE than our peers, because we have less capital heading.
Speaker Change: Out the door, a higher blended fee rate and a high FRE margin I really think it's difficult to find a better structural setup than blue al for the markets and macro environment that investors face today.
Alan Kirshenbaum: I really think it's difficult to find a better structural setup than Blue Owl for the markets and macro environment that investors face today. I mentioned at the beginning of my remarks that we've now posted 16 consecutive quarters of management fee and FRE growth, a period that encompassed runaway inflation, 500 basis points of rate increases, massive supply chain disruptions, a shutdown of the capital markets, and accelerating geopolitical instability. Blue Owl, each year, up and to the right, consistent growth, consistent, predictable cash flows. Blue Owl was built for this market. Our products were built for this market.
Speaker Change: I mentioned at the beginning of my remarks that we've now posted 16 consecutive quarters of management fee and FRE growth a period that encompassed runaway inflation 500 basis points of rate increases massive supply chain disruptions are shut down to the capital markets and accelerating geopolitical instability blew out.
Speaker Change: Now each year up into the right consistent growth consistent predictable cash flows blue al was built for this market. Our products were built for this market Mark talked about our products downside protected income oriented these characteristics may be less exciting and up into the right markets, but in markets like now.
Alan Kirshenbaum: Marc talked about our products, downside protected, income oriented. These characteristics may be less exciting and up and to the right markets, but in markets like now, that's when they really stand out. Each time we have been through dislocation, we come through the other side with investors having an even deeper appreciation for how differentiated our products and business model are, and we look forward to proving this out again.
Speaker Change: That's when they really stand out each time, we have been through dislocation we come through the other side with investors, having an even deeper appreciation for how differentiated our product and business model are and we look forward to proving this out again.
Marc Lipschultz: Thank you very much for joining us this morning.
Speaker Change: Thank you very much for joining us. This morning, operator can we please open the line for questions.
Operator: Operator, can we please open the line for questions? Absolutely. And everyone, if you would like to ask a question today, please press star one on your telephone keypad. We do ask that you limit yourselves to one question and please requeue for additional questions.
Speaker Change: Absolutely and everyone. If you would like to ask a question today. Please press star one on your telephone keypad, we do ask that you limit yourselves to one question and then please re queue for additional questions. Our first question today will come from Glenn Schorr Evercore ISI.
Glenn Schorr: Our first question today will come from Glenn Schorr, Evercore ISI. Hello there. Hello, Glenn. I like where you ended that in terms of the differentiation, the mostly. Downside Protection. You've bought yourself into some very Growth in AUM and FRE.
Speaker Change: Hello there.
Speaker Change: Hello, Glenn.
Speaker Change: Hello, There I like where you ended that in terms of the differentiation that mostly primary capsule.
Speaker Change: And the predictability and downside protection you you've bought yourself into some very key growth markets and we've seen some of it.
Speaker Change: Growth in AUM and FRE.
Douglas Goldstein: Fan of all that, when we get down to the earnings per share. Growth Rates Aren't As Good As They Used To Be.
Speaker Change: And I'm a fan of all of that when do we get down to the earnings per share.
Speaker Change: The growth rates aren't as big and we've talked about some of this in the past, but maybe we could talk about.
Douglas Goldstein: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio podcast. He is a licensed financial professional both in the U.S. and Israel. Sure.
Speaker Change: How do we bridge the gap from whats very stable now and when that diversification starts to kick into better earnings per share growth over the next say year or two that get that we get into that 20% or so growth that youre, hoping for.
Speaker Change: Thanks, so much.
Speaker Change: Sure. Thanks, Glenn I appreciate the question.
Douglas Goldstein: Thanks, Glenn. I appreciate the question. What you're seeing this year, as we've talked about on last quarter's call, is with the acquisitions rolling through, in particular for IPI, we have a small gap between our FRE growth and FRE per share growth. And that's going to narrow as we go through.
Speaker Change: What youre seeing this year as we've talked about on last quarter's call is with the acquisitions rolling through in particular for Ipi, we have a small gap between our FRE growth and FRE per share growth and that's going to narrow as we go through we talked about at Investor day that we are expecting over the next five years about 20%.
Douglas Goldstein: We talked about at Investor Day that we are expecting over the next five years about 20% growth in FRE per share. So I would fully expect as we get into 26 and 27, you're going to see that gap narrow very quickly.
Speaker Change: <unk> growth in FRE per share so I would fully expect as we get into 'twenty six 'twenty seven youre going to see that gap narrow very quickly.
Brian McKenna: Our next question will come from Brian McKenna.
Brian McKenna: Our next question will come from Brian Mckenna citizens.
Brian McKenna: Thanks, Good morning, everyone. So a question on private wealth, it's great to hear that flows has held up quite well even with the pickup in volatility.
Brian McKenna: Good morning, everyone. So a question on private wealth. It's great to hear that flows have held up quite well, even with the pickup in volatility. But two questions here.
Brian McKenna: Two questions here, one have you seen any evolution in the behavior of retail investors and how they allocate to alternatives specifically during periods of volatility and then two given that retail investors are a lot more familiar today with the <unk> brand and the types of products. You offer is there the potential for adoption timelines to be.
Brian McKenna: One, have you seen any evolution in the behavior of retail investors and how they allocate Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host And then two, given that retail investors are a lot more familiar With the Blue Owl brand and the types of products you offer, is there the potential for adoption timelines to be accelerated? Yeah, thanks, Brian. Yeah, look, private wealth in this environment, and obviously these are all evolving, evolving marketplaces. But we have to keep in mind is how much just secular growth and opportunity there is in the private wealth channel, that even when you get into sort of individual investor questions of does this person X make an investment or not make an investment in a given quarter, there's so many new participants joining.
Brian McKenna: <unk> for future products like an alternative credit.
Brian McKenna: Yes, Thanks, Brian.
Brian McKenna: Yes look private wealth in this environment and obviously these are all evolving.
Brian McKenna: Evolving marketplaces, but we have keep in mind is how much just secular growth opportunity. There is in the private wealth channel that even when you get into sort of individual investor questions of does this person X, making investment not making an investment in a given quarter. There's so many new participants joining let me give you.
Marc Lipschultz: Let me give you just a live example. As of yesterday, you know, take a firm, Edward Jones, Edward Jones manages $2.2 trillion. And you know what share of that is in alts? Zero. And they are now just launching alts. And we are one of their premier launches as part of that. So here's an example of I mean, talking about white space, talking about Greenfield, whatever you want to call it. So I think a couple of things I would observe. One, the addressable market is gigantic and penetration is very low. Penetration is rising, we see it, we have multiple new platforms that are rolling out our products.
Leo: A live example, Leo as of as of yesterday.
Leo: Our firm Edward Jones, Edward Jones, Vantage is $2 two trillion dollars and what share of that is in alts zero and they are now just launching <unk> and we are one of their premier launches as part of that so here's an example up let me talk about white space talk about Greenfield whatever you want to call it.
Leo: So I think a couple of things I would observe one the addressable market is gigantic and penetration is very low penetration is rising we see it we have multiple new platforms that are rolling out our products had an example, like that they are big and they present really substantial opportunities number one number two during <unk>.
Marc Lipschultz: And you know, an example like that, they're big. And they present really substantial opportunities, number one. Number two, during times of volatility and uncertainty, I expect that we are going to see again, let's say that short term perturbations when people just get scared for a week, and they're, you know, hiding under the covers. The reality is people then realize the benefits. This is the exact conversation I had with a group of individual FAs yesterday. This is when people realize the benefits of the stability and predictability, particularly in blue oil products. So this is not an alt-generic statement.
Leo: <unk> of volatility and uncertainty I expect that we're going to see again, let's set short term perturbations when people just get scared for a week and they're hiding under the covers the reality is people that realize the benefits. This exact conversation I have with a group of individual.
Leo: Individual Fas yesterday. This is what people realize the benefits of the stability and predictability, particularly in blue are products. So there is not all generic statement I mean, clearly theres a different tone. These days toward private equity for example, but income oriented inflation protected downside protected strategies.
Marc Lipschultz: I mean, clearly, there's a different tone these days toward private equity, for example. But income strategies resonate loud. And it's exactly in this environment where those strategies for individual investments, individual investors, and their FAs shine. When everything is rosy, everything looks rosy. When things are volatile, all of a sudden there's a reason to pay attention. And guess what? Our products performed great during this last quarter. Our products continue to perform great. We continue to deliver great income every month to our investors. So I think we're actually quite optimistic, just like in institutional markets, frankly. After a period of dislocation, we tend to come out ahead.
Leo: Resonated loud and its exactly in this environment, where those strategies for individual investments individual investors and their Fas shine when everything is rosy everything looks rosy when things are volatile all of a sudden there is a reason to pay attention and guess what our products performed great. During this last quarter our products continue to perform.
Speaker Change: Greg we continue to deliver great income every month to our investors. So I think we're actually quite optimistic just like an institutional markets frankly after a period of dislocation we tend to come out ahead again I'm not trying to guess what happens in a week in a month, but I am saying this kind of environment.
Marc Lipschultz: Again, I'm not trying to guess what happens in a week, in a month. But I'm saying this kind of environment, I want to say this with the right words, we don't want the world to look like this. But this is a very good time for us. We win coming out of environments like this.
Leo: <unk>.
Leo: I want to say this was the right words, we don't want the world to look like this but this is a very good time for us we win coming out or in environments like this.
Martin: Super helpful. Thanks Martin.
Bill Katz: Bill Katz from TD Cowen is Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. He is a licensed financial professional both in the U.S. and Israel, and works with financial He is also the co-founder and chief financial officer of Profile Investment Services, Inc., and is a licensed financial professional both in the U.S. and Israel, and works with financial Sure.
Martin: Bill Katz from TD Cowen is that Max.
Speaker Change: Okay. Thank you very much having some difficulty on my end as well just men I might have missed a little bit of this I think during your prepared comments you had mentioned that.
Speaker Change: Do you expect the institutional business to accelerate a little bit as the year unfolds. I was wondering if you can unpack and talk about some of the drivers underneath that.
Speaker Change: With the by product of some of the more recent platforms. You picked up I think maybe be curious about ipi and <unk>, respectively, and then just a technical question.
Speaker Change: On the transaction fees.
Speaker Change: Pointing that it sort of dropped sequentially, despite the originations being pretty durable quarter to quarter I was wonder if you could help unpack what the drivers are there as we look ahead. Thank you.
Speaker Change: Sure. Thanks, Thanks, Bill just on the latter point I guess I'd call out we've talked about in previous quarters, that's going to ebb and flow depending on the nature of what's in the gross origination number and so that will move up and down a little quarter to quarter.
Marc Lipschultz: Thanks, Bill. Just on the latter point, I guess I'd call out we've talked about in previous quarters that that's going to ebb and flow depending on the nature of what's in the gross origination number. And so that will move up and down a little quarter to quarter. I don't think there's much to read through in that. And just to note, gross originations actually were lower this quarter than last. Net originations were higher. So there's a couple of different dynamics to unpack in there. I mean, obviously, net originations and capital going to work are a good thing.
Speaker Change: I don't think there's much to read through in that and just to note from a gross originations actually were lower this quarter than last net originations were higher so there's a couple of different dynamics on pack and Theyre, obviously not originations in capital going to work or a good thing.
Marc Lipschultz: Gross originations would be the number that would drive potential transaction fees. But, you know, if I could just for one moment, you look, our transaction fees are less predictable, just like everybody else's. But they're a tiny piece of our business, and we're not minimizing that they were lower. Like, I prefer they'd be higher, too. They were lower this quarter than last. I don't know what they'll be this quarter, the next quarter. It's clearly the part of our business in the grand scheme of things that's least predictable. But that's the part of our business that's least predictable.
Speaker Change: Gross originations would be the number that would drive potential transaction fees up.
Speaker Change: If I could just for a moment you look our transaction fees are less predictable just like everybody else's, but there are tiny piece of our business and we're not minimize it and that they were lower preferred they'd be higher too. They were lower this quarter than last I don't know what there'll be this quarter next quarter. It's clearly the part of our business in the Grand scheme of things its lease.
Speaker Change: Predictable, but that's the part of our business, that's least predictable I mean, we're talking about a tiny piece of our business around the edges. Every one of our peers have massive amounts of capital and transaction fees, which is introducing that volatility into a huge and im not trying to say there is a majority of them say in our model is so different so we're not not ignore.
Marc Lipschultz: I mean, we're talking about a tiny piece of our business around the edges. Every one of our peers has massive amounts of capital in transaction fees, which is introducing that volatility into a huge, and I'm not trying to say that as a pejorative, saying our model is so different. So we're not ignoring your point. Yeah, we prefer them to be a little bit higher, too.
Speaker Change: And your point, yes, we prefer them to be a little bit higher too, but in the scheme of our business and the trajectory over the next five years. The transaction fees are a side show they will be out there will be down but actually the number. If you took a step back does logically fall out of the gross origination pattern.
Marc Lipschultz: But in the scheme of our business and the trajectory over the next five years, the transaction fees are a sideshow. They will be up. They will be down. But actually, the number, if you took a step back, does logically follow the gross origination.
Marc Lipschultz: On the institutional flows, I guess I'll start by saying we expect to have, as we've been expecting as we approach the year, flagship funds in the market. We have GP Stake 6, as we've talked about, that we've told will be back-end loaded. We've talked about Real Estate 7, which we expect to be out in the market and fundraising and doing closes in the second half of the year. We have some other adjacent opportunities, some new products, real estate credit, and some others that we are out fundraising, talking to folks about. Our expectation was 1Q would be a little lower, and we would have stronger 2Q, 3Q, 4Q, because of the timing of some of our more flagship-sized funds.
Speaker Change: On the institutional flows I guess I'll start by saying, we expect to have as we've been expecting as we approach the year.
Speaker Change: Flagship funds in the market, we have GP stake six as we've talked about that we've told will will be backend loaded we've talked about real estate, seven which we expect to be out in the market and fund raising and doing closes in the second half of the year, we have some other adjacent opportunities some new products real estate.
Speaker Change: Credit.
Speaker Change: And some others that we are out fundraising talking to folks about and so our expectation was <unk> was be it would be a little lower and we would have stronger two Q3 Q4 Q because of the timing of some of our more flagship size funds and I'll unpack one other dimension of that.
Marc Lipschultz: I'll unpack one other dimension of that. Look, we're winning new LPs. We're winning in new markets. Yell, this is obviously look, it's a harder overall fundraising environment. That's just an obvious fact around the world. However, where we are winning of the new of the LPs that invested in this quarter. Half were new to us. Half were first-time commitments to this firm. I mean, think about that. That's a tremendous opportunity for us. That's a tremendous win. We are now deeply penetrating, for example, the Middle East. Middle East, which had, of course, not been a meaningful market for us five years ago, has become a very, very powerful partner for us, particularly driven by real assets.
Speaker Change: Look we're winning new Lp's, we're winning in new markets.
Speaker Change: This is obviously look it's a harder overall fundraising environment Thats, just an obvious fact around the world. However, where we are winning all of the new <unk> invested in this quarter.
Speaker Change: Half were new to us half were first time commitments to this far and we.
Speaker Change: Think about that that's a tremendous opportunity for us that's a tremendous win we are now deeply penetrated for example, the middle East Middle East, which had not been a meaningful market for us five years ago.
Speaker Change: Has become a very very powerful partner for us, particularly driven by real assets. So as you just noted like Ipi brings with it a whole new geographies and partnerships.
Marc Lipschultz: So as you just noted, IPI brings with it whole new geographies and partnerships. So look, we've been investing for years in building the wealth channel and the institutional channel. And we are harvesting the benefits of those now, and we'll see that harvest, we think, continue to grow through the year. So we like where we sit. Again, we're not trying to be a headwinds collectively for the industry, but I think we like our position.
Speaker Change: Look we've been investing for years in building the wealth channel and the institutional channel.
Speaker Change: And we are harvesting the benefits of those now and we will see that harvest. We think continue to grow through the year. So we like we like where we said again, we're not trying to be a pollyanna.
Speaker Change: And this overall world there is no doubt that institutional fundraise. It has its own headwinds collectively for the industry, but I think we like our position.
Craig Siegenthaler: Next, Craig Siegenthaler from Bank of America has the next call. Craig you there? Craig, your line is open. Please check your mute button.
Craig Siegenthaler: Next Craig Siegenthaler from Bank of America has the next question.
Speaker Change: Okay.
Speaker Change: Thank you there.
Speaker Change: Greg Your line is open please check your mute button.
Craig Siegenthaler: Can you guys hear me okay? again and more importantly, help us with the 2Q Runder.
Speaker Change: Can you guys hear me okay.
Eric: Yes, again, hey, Greg out Eric Okay. So.
Mark: Good morning, Mark Hope everyone's doing well.
Speaker Change: Question is on GP Stakes, so matching fees and GP Stakes look a little light relative to fee, earning AUM growth. So I was hoping you could explain what drove the decline and more importantly help us with the <unk> run rate.
Alan Kirshenbaum: Sure, why don't I do the last part there, Craig? So two things I think is what you're seeing in the 1Q numbers. We had some small catch-up fees in 4Q that folks may have run-rated last quarter. And we had, if you recall, the GP Stakes Fund IV had a fee step-down last quarter. It was at the end of October. So it was two months' worth of a fee step-down, and obviously this quarter it's a full quarter, so three months. What I'll tell you is not just for GP Stakes, but this quarter is a very clean quarter from a management fee perspective.
Speaker Change: Sure why don't I do the last part there Craig So two things I think is what youre seeing in the <unk> numbers, we had some small catch up fees in <unk> <unk>.
Speaker Change: That folks may have run rated last quarter and we had if you recall the GP Stakes fund four had a fee step down last quarter. It was at the end of October. So it was two months worth of a fee step down and obviously this quarter. It is a full quarter. So three months.
Speaker Change: What I'll tell you is not just for GP Stakes, but this quarter was a very clean quarter from a management fee perspective, so a very good run rate no real catch up fees in our numbers across our business.
Alan Kirshenbaum: So very good run rate, no real catch-up fees in our numbers across our business.
Speaker Change: Okay.
Steven Chubak: We'll take the next question from Steven Chubak, Wolf- Hi, good morning.
Speaker Change: Thanks, Alan will take.
Speaker Change: We'll take the next question from Steven <unk> Wolfe Research.
Speaker Change: Okay.
Steven: Hi, good morning.
Steven Chubak: Unknown Speaker Good morning. I hope you're both doing well. So I wanted to ask just on some of the spread in pricing dynamics that you're seeing in the market, just given the recent widening in high yield credit spread. What have you seen in terms of spreads in the private markets, the types of returns you're generating on new origination activities? and how you see competition evolving versus the BSL market.
Good morning.
Speaker Change: I Hope you got hope you're both doing well so I wanted to ask just on some of the spread and pricing dynamics that you're seeing in the market just given the recent widening in high yield credit spreads.
Speaker Change: What have you seen in terms of spreads in the private markets. The types of returns youre generating on new origination activity.
Speaker Change: And how you see competition evolving versus the BSL market is there any evidence of bank retrenchment.
Marc Lipschultz: Is there any evidence of bank Sure. So look, dislocated environments, you know, we all know are good for us and good for our business in terms of originations and things like spreads.
Speaker Change: Sure. So look dislocated environment. We all know are good for us and good for our our business in terms of originations and things like spreads.
Marc Lipschultz: It's very early, so I can't give you a meaningful statistical answer yet, right? This reset takes some time to roll through a private market versus the public market. But let's start with a couple of facts. The syndicated market, you know, is essentially shut down. So in terms of competition with the BSL market, you know, that is exactly what happens rather instantaneously. And we've been making this point about the sort of on and off nature of public markets and the durable, longer cycle nature of private credit, which, by the way, is really good for the economy, but certainly good for our business, too.
Speaker Change: Very early so I can't give you a meaningful statistical answer yes, right. Just this reset it takes some time to roll through a private market versus the public market well, let's start with a couple of facts the syndicated market.
Speaker Change: Essentially shut down so in terms of competition with the BSL market.
Speaker Change: That that is exactly what happens rather instantaneously and we've been making this point about the sort of on and off nature of public markets and the durable longer cycle nature of private credit, which by the way is really good for the economy.
Speaker Change: But certainly good for our business too. So I believe there was the longest stretch of time.
Marc Lipschultz: So I believe there was the longest stretch of time, 15 days without a single deal being launched, which is the longest period of time in something like decades, 10 years, that we've gone, 10 years without 15 days of launching a deal. So, I mean, look how abrupt these markets are. It's exactly the reason the BSL market, it's important we have a BSL market. I really mean that. We don't wish it to be unhealthy, but it's so on again, off again. It's only proven the reason people should partner with private credit. We will come out of this period of time, I expect, with yet again, more market share and more firms committed to using the private market because they see the value.
15 days without a single deal being launched which is the longest period of time and in something like decades.
Speaker Change: But that 10 years that we've gone 10 years without 15 days of launching a deal. So I mean look how abrupt. These markets are it's exactly the reason the BSL market. It's important we have a BSL market I really mean that we don't wish it to be unhealthy.
Speaker Change: It's sell on again off again, it's only proven the reason people should partner with private credit we will come out of this period of time, I expect with yet again more market share and more firms committed to using the private market because they see the value yes. They pay more yes. They have a more stringent document yesterday, a more invasive due diligence those are.
Marc Lipschultz: Yes, they pay more. Yes, they have a more stringent document. Yes, they have more invasive due diligence. Those are all the things that go with doing our job well to protect the capital, but we give something. We give the predictability, the privacy, and the partnership, and this market proves it. In terms of spreads, I would expect spreads will start to widen back out again. We always kind of operate in this band. If you look over many years now, when the BSL market goes away, it's a factor when people, there's more dependence on private capital, more value and predictability and partnership.
Speaker Change: All the things that go with doing our job well to protect the capital, but we give something we give the predictability the privacy of the partnership in this market proves it.
Speaker Change: Spreads I would expect spreads will start to widen back out again, we are always kind of operate in this band. If you look over many years now when the BSL market goes away. Its a factor when people are there's more dependence on private capital more value and predictability in partnership we rise to the higher end of that band whenever.
Marc Lipschultz: We rise to the higher end of that band. When everything is wide open, we move to the lower end of that band. And I think we'll now start to migrate back up.
Speaker Change: Anything is wide open we move to the lower end of that band and I think we will now start to migrate back up okay.
Marc Lipschultz: I can't prove it yet. It's awfully early. We're starting to see it. We certainly think our capital is more valuable in this environment, and we certainly expect to see spreads start to widen, but it'll potentially take a little bit of time for that to roll.
Speaker Change: Yes, it's awfully early we're starting to see it we certainly think our capital is more valuable in this environment and we certainly expect to see spreads start to widen, but it'll it'll it'll potentially take a little bit of time for that to roll through.
Speaker Change: That's great color. Thank you for taking my question.
Unknown Speaker: Unknown Speaker. Thank you.
Alexander Blostein: We will take the next question from Alex Blostein, Goldman Sachs. Hey, guys, good morning. Another question for you around just retail. It is super encouraging to see that retail flows are holding up well for you guys and the industry broadly. Definitely a bit counter perhaps to what people used to thinking about when it comes to retail and volatility. I thought you guys said retail is tracking well, I was hoping you can characterize that just in a little bit more detail how April is shaping up relative to last couple of months.
Alex Blaustein: The next question from Alex Blaustein Goldman Sachs.
Speaker Change: Hey, guys good morning.
Other another question for you around just retail.
Speaker Change: Super encouraging to see that in retail flows are holding up well for you guys in the industry broadly definitely bit counter perhaps to what people are used to thinking about when it comes to retail and volatility.
Speaker Change: I thought you guys said retail is tracking well I was hoping you can characterize that just been a little bit more detail. How April is shaping up relative to last couple of months and bigger picture question just around strategy. We've seen a number of the large alternative managers now partner in heavy GV with very sizable traditional firms.
Alexander Blostein: And bigger picture question just around strategy.
Marc Lipschultz: We've seen a number of the large alternative managers now partner and have a GV with very sizable traditional firms. Curious how you guys are thinking about that and how big of a part of the strategy and a go forward basis you think that needs to be in order to succeed in this Thanks, Alex. I'll take the first part.
Curious how you guys are thinking about that and how big of a.
Speaker Change: Part of the strategy on a go forward basis, do you think that needs to be in order to succeed in this channel.
Speaker Change: Thanks, Alex.
Alan Kirshenbaum: And then on the partnerships, I'll hand that over to Marc. We're tracking well against prior prior months. So what that means is we're about 20% down from where we saw flows last month. Last month, if you recall, was kind of what I would call a regular way month, we didn't have, you know, we have some distributors now that will do quarterly closes, and we see that in March. And so April was a very clean month from from a run rate perspective. And we're seeing that about 20% down for the May 1st close. So feel very good about that.
Speaker Change: I'll take the first part and then on the partnerships I'll I'll hand that over to Mark.
Speaker Change: We're tracking well against prior prior months. So what that means is we're about 20% down from where we saw flows last month last month. If you recall was kind of what I would call regular way months. We didn't have we have some distributors now that will do quarterly closes and we see that in March and so April was a very clean month.
Speaker Change: From a run rate perspective, and we're seeing that about 20% down for the may 1st close so feel very good about that you certainly couldnt imagine a scenario, where it's down much more meaningfully than that but again because we've got in our products are really performing extraordinarily well in these markets and their various NAV stable type.
Marc Lipschultz: We you know, you certainly couldn't imagine a scenario where it's down much more meaningfully than that. But you know, again, because we've got, you know, our products are really performing extraordinarily well in these markets. And they're very NAV stable type products, income oriented products. So we feel good about where we are today. And we'll see, we'll see how that continues.
Products income oriented products. So we feel good about where we are today and we'll see we'll see how that continues yes with regard to partnerships between traditional asset managers and alts firms look we're very very happy to see these seedlings being planted at the moment, they're seedlings there.
Marc Lipschultz: Yeah, with regard to partnerships between traditional asset managers and alts firms, look, we're very, very happy to see these seedlings being planted. You know, at the moment, they're seedlings, they're ideas, mostly announcements, you know, if you look in terms of kind of what is it really at the moment, they're mostly, they're actually really not all that new. They're a kind of liquid loan products with a little bit of private sprinkled in to try to create some incremental return. I don't say that to diminish it, but it's, it's not a very earth shattering development yet. People have not really cracked any meaningful codes.
Speaker Change: Ideas, mostly announcements if you look in terms of kind of what does it really is at the moment, they're mostly they are actually really not all that new there are kind of liquid loan products with a little bit of private sprinkled in to try to create some incremental return I don't say that to diminish it but it's.
Speaker Change: It's not a very earth shattering development, yet people have not really cracked any meaningful codes were absolutely working on some meaningful partnerships, we'd prefer to have something.
Marc Lipschultz: We're absolutely working on some meaningful partnerships, we, we prefer to have something, you know, that really has kind of a tangible output, and really is more about delivering true private solutions into these broader channels. You know, these, these liquid solutions are fine with a smattering of private, that's not ultimately a high margin business, and it's not really particularly new. But we're very happy to see the kind of creative work that our peers are doing. And, you know, over the long term, I would expect these will be useful partnerships for our industry and give us additional access to a broader set of individual investors.
Speaker Change: Really as kind of a tangible output at.
Speaker Change: It really is more about delivering true private solutions into these broader channels.
Speaker Change: These liquid solutions are fine with a smattering of private.
Speaker Change: Ultimately a high margin business and it's not really particularly new.
Speaker Change: We're very happy to see the product creative work.
Speaker Change: Our peers are doing in over.
Speaker Change: Over the long term why would expect these will be useful partnerships for our industry and give us additional access to a broader set of individual investors and yes. You can you can certainly safely assume we've been deeply engaged in those conversations and over time I expect we will have strategies of of our own to discuss with you all.
Marc Lipschultz: And yes, you can, you can certainly safely assume we've been deeply engaged in those conversations.
Patrick Davitt: And over time, I expect we will have strategies of, of our own to discuss with Very well, thank you.
Speaker Change: Yes.
Speaker Change: Alright, well thank you.
Patrick Davitt: Your next question comes from Patrick Davitt, Autonomous Research. Hey, good morning guys, quick follow up on that last answer.
Speaker Change: Your next question comes from Patrick Davitt Autonomous research.
Patrick Davitt: Hey, good morning, guys.
Speaker Change: Let me pass the quick follow up on that last answer.
Alan Kirshenbaum: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host He is a licensed financial professional both in the U.S. and Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, at www.profile-financial.com, or can be ordered at www.profile-financial.com. That that's our current expectation. Yeah, yeah. Okay, cool.
Speaker Change: To be clear you mean may 1st was 20% lower than April 1st.
Speaker Change: That's our current expectation, yes, Okay cool and then my high level question was.
Alan Kirshenbaum: And then my higher level question was, you mentioned that the non US sleeves coming online, and adding, you know, 250 million to the baseline in March, is that 250 million a baseline we should expect each quarter? And then do you have studies on the pipeline of other non US sleeves like that coming online and layering on through the rest of the year?
Speaker Change: You mentioned that the non U S leaves coming online.
Speaker Change: $250 million to the baseline.
Speaker Change: And March is that $250 million of baseline, we should expect each quarter and then you updates on the pipeline of other non U S leaves like that coming online and layering on through the rest of the year. Thank you.
Alan Kirshenbaum: Thank Sure, I'll take that, Patrick. So, look, we continue to, we're really excited about this. We continue to broaden the existing relationships we have, both domestically and globally. We continue to try to think about unique and differentiated ways to grow our wealth distribution platform. And this is exactly one of those areas where we can create local feeders for local geographies. They can come into usually on a monthly basis, sometimes on a quarterly basis. It's up to the local distributor to decide whether they turn it on on any given quarter. But we're optimistic that we can continue to see whether it's the one we have in place, some new ones that we come on line over time.
Speaker Change: Sure I'll take that Patrick so.
Speaker Change: Look we continue to we're really excited about this we continue to broaden the existing relationships. We have both domestically and globally. We continue to try to think about unique and differentiated ways to grow our wealth distribution platform and this is exactly one of those areas, where we can create local theaters.
Speaker Change: Core local geographies they can come into usually on a monthly basis, sometimes on a quarterly basis.
To the local distributor to decide whether they turn it on on any given quarter, but we are optimistic that we can continue to see whether it's the one we have in place some new ones that would come on line over time, but we're excited about what we're doing here and we think that will continue to grow and these are so.
Alan Kirshenbaum: But we're excited about what we're doing here, and we think that it'll continue to grow. And these are, and so some of them, like the ones you saw with March, these are recurring quarterly close partnerships. So, yes, which is to say, yes, you'll continue to see a final month of each quarter will have a boost in it that comes from the quarterly closer.
Speaker Change: Some of them like the ones you saw with March these are recurring quarterly close partnerships. So yeah.
Speaker Change: Yes, which is to say, yes, youll continue to see a final month of each quarter, we will have a boost and it comes from the quarterly closer so as we add the international distribution in this case that brings a quarterly rhythm as opposed to a monthly rhythm.
Crispin Love: So, as we add the international distribution in this case, that brings a quarterly rhythm as opposed to a monthly rhythm. Great, thanks.
Speaker Change: Great. Thanks.
Crispin Love: We'll go next to Chris Katowski Oppenheimer. Yeah, good morning. Thanks.
Speaker Change: We will go next to Chris Kotowski Oppenheimer.
Speaker Change: Yes. Good morning. Thanks, most of mine were that been asked but.
Mike Brown: Most of them have been asked, but just looking at page 26 and the gap between The fee-related earnings and the distributable earnings was larger this quarter. primarily the tax rate and Thinking there must be a seasonal component to that and what should we expect kind of for a full year tax rate or Sure. Thanks, Chris. So We had our TRA payment in 1Q. We had our, you know, that's a normal cadence for us. We've hit our TRA payment in 1Q of 2024 as well. So what you're going to see consistently from us is we have a very low effective tax rate.
Speaker Change: Just looking at page 26, and the gap between.
Speaker Change: Fee related earnings and the distributable earnings was larger this quarter and it looks like it was primarily the tax rate.
Speaker Change: I'm thinking there must be a seasonal component to that and what should we expect kind of for a full year.
Speaker Change: Radar expense.
Sure Thanks, Chris So.
Speaker Change: We had our TRA payment in <unk>, we had our normal cadence for US we paid our tier TRA payment in <unk> of 2024 as well so what youre going to see consistently from US is we have a very low effective tax rate I've given guidance for 2025 that that will be we.
Alan Kirshenbaum: I've given guidance for 2025 that that will be, we expect, mid to high single digits.
Speaker Change: <unk> mid to high single digits, and so what youre going to see is a meaningfully higher effective tax rate in <unk> call. It 17, 17 and change percent and then it's going to come significantly down and that will be low to mid single digit percent.
Alan Kirshenbaum: And so what you're going to see is a meaningfully higher effective tax rate in 1Q, call it, you know, 17 and change percent, and then it's going to come significantly down and that will be, you know, low to mid single digit percent effective tax rate for 2Q, 3Q and 4Q. Same pattern next. Yeah, and we have disclosure in our K. When we file our K in February each year, we put what we estimate to be the TRA payments each year for the next number of years. So we try to put that information out there for everyone to see.
Speaker Change: Effective tax rate for <unk>.
Speaker Change: Okay and same pattern next year I assume yes, yes, and we have disclosed or in our in our K.
Speaker Change: When we file our K in February each year, we put what we estimate to be the TRA payments each year for the next number of years. So we are we try to put that information out there for everyone to say.
Alan Kirshenbaum: Okay.
Alan Kirshenbaum: And then finally, did you give an indication of an expected timeline to the final close on the GP Stakes flagship fund?
Speaker Change: And then finally.
Finally did you give.
Speaker Change: <unk> indication of an expected timeline to the final close on our the GP Stakes flagship fund.
Marc Lipschultz: So we expect it'll probably drift into early 2026 total. You know, we'll see. Look, our GP stakes won.
Speaker Change: So we expect it will.
Speaker Change: It will probably drift into early 2026 total.
Speaker Change: Well, we'll see look our GP Stakes one I think you all know this but let me say that allowed because I think.
Marc Lipschultz: I think you all know this, but let me say it out loud because I think. for reasons I'm not clear on, people have not modeled it this way, but we've set it this way. We expect it to be back and loaded just like it was last time, just like it's been before. Look, we're off to a very strong start. It is true that people then often like to see some of the deal activity, some of the investment activity.
Speaker Change: Reasons I'm not clear on people not model that this way, but we've said it this way we expect it to be back end loaded just like it was last time just like it has been before look we're off to a very strong start it.
Speaker Change: It is true that people that often like to see some of the deal activity. Some of the investment activity. We've actually now done the first investment in that product, making that investment can veritas, which is something we have a long partnership with so it's a great example, aas and a plus firm.
Marc Lipschultz: We've actually now done the first investment in that product, making an investment in Veritas, which is something we've had a long partnership with. So it's a great example, A, it's an A-plus firm, great firm doing a great job, and B, it demonstrates the power, again, of incumbency and being the go-to partner. And so we have a pretty nice active pipeline. So as those roll through, I expect that we'll continue to contribute to people accelerating or gaining traction on finishing up the fund.
Speaker Change: Great for them doing a great job at be it demonstrates the power again of incumbency and being the go to partner and so we have we have a pretty nice active pipeline. So as those roll through I expect that we'll continue to.
Speaker Change: Contribute to people accelerating or gaining traction on finishing up the funds. So but we should assume that it will probably go into early 2020 in terms of wrapping it up.
Alan Kirshenbaum: But we should assume that it'll probably go into early 2026 in terms of wrapping it up. Okay, and then you don't recognize the catch-up fees up front, but amortize them over the remaining life of the fund, right? That's generally right, Chris.
Speaker Change: And then you don't recognize the catch up fees upfront, but amortize them over the remaining life of the fund right.
Chris: That's generally right Chris Okay alrighty. Thanks, that's it for me.
Alan Kirshenbaum: Okay. Alrighty. Thanks. That's it. Thank you.
Speaker Change: Thank you.
Crispin Love: And the next question is Crispin Love, Piper Sandler. Thanks. Good morning.
And the next question is Crispin Love Piper Sandler.
Crispin Love: Thanks, Good morning.
Crispin Love: Alan, in the past, I believe you've talked about 2025 FRE margins in the 57 to 58% range. Margins were a little softer in the first quarter. So can you talk to your expectations and what type of cadence you'd expect for margins throughout the year and if that 57 to 58% level? Sure. Thanks for the question, Crispin. We do expect, we continue to expect, and we posted this quarter, an FRE margin between 57 and 58 percent. And we still stick with that guidance. We still fully expect that we'll come in 57 to 58.
Speaker Change: Outlined in the past I believe you've talked about 2025 FRE margins in the 57% 58% range.
Speaker Change: We're a little soft in the first quarter. So can you talk to your expectations and what type of cadence you would expect for margin throughout the year and if that 57% 58% level still stands.
Speaker Change: Sure. Thanks for the question Kristen.
Speaker Change: And we posted this quarter.
Speaker Change: And FRE margin between 57% 58%.
Speaker Change: And we felt we still stick with that guidance, we still fully expect that will come in $57 58.
Mike Brown: The next question is from Mike Brown, KBW. Oh, hi, this is Mike Brown. Thank you. Thank you for taking my question. It's just a high level question for me.
Speaker Change: The next question is from Mike Brown, K B W.
Speaker Change: Yes.
Speaker Change: Oh, Hi, this is Mike <unk> from Wells Fargo.
For taking my question.
Speaker Change: Yeah, just a high level question for me I wanted to ask on the non traded BDC market. So.
Mike Brown: I wanted to ask on the non traded BTC market. So if the Fed cuts come through As the market expects, it seems like The Dividend Yields The Dividend Yields likely move lower. What are the potential offsets that could kind of mitigate that base rate pressure? And then in a scenario of lower dividend yields, Investor behavior shifts at all? Like, do you think flows hold up?
Speaker Change: If the fed cuts come through.
Speaker Change: As the market expects it seems like the for the industry the dividends likely move lower.
Speaker Change: What are the potential offsets that could kind of mitigate that base rate pressure and then in a scenario of lower dividend yields do you think investor behavior shifts at all or do you think flows holdup.
Speaker Change:
Speaker Change: Okay.
Speaker Change: Do they hold up because again I guess, you would still have a high relative yields and maybe if it's 8%, 9%. They can still slow well or just curious how you think about that versus the kind of 10% plus yield that.
Marc Lipschultz: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. 8% or 9% they can still flow well, or just, you know, curious how you think about that versus the kind of 10% plus yield.
Speaker Change: <unk> run at today.
Marc Lipschultz: So let me, I want to emphasize something just to make a point, and then I'll get right into the details of your question. You said, well, if it turns out rates go lower, you know, like now the market expects, I mean, think about the volatility in that statement, and expectations. That really is the heart of why our products are so great. And this particular product, the direct lending product for Blue Owl is so great. It's about downside protection, about inflation protection, which by the way, inflation numbers look higher, right, not lower yesterday. And about interest rate, you know, flow through.
Speaker Change: So let me I want to emphasize something just to make a point and then I'll get right to the details of your question is that well if it turns out rates go lower like now the market expect I mean think about the volatility in that statement and expectations, but that really is the heart of why our products are so great and in this particular.
Speaker Change: The direct lending product for Bell wireless so Greg it's about downside protection about inflation protection, which by the way inflation numbers look tire right lower yesterday.
And about interest rate flow through so.
Marc Lipschultz: So, you know, what happens in a lower rate environment? Well, sure, the base, yeah, the base rate goes lower. But of course, what we're really delivering is incremental return. And in fact, you know, in the environment you're describing, and probably the environment we're in right now, a choppier public market, as we just talked about, more value on predictable capital, I would expect spreads come up. So actually, all things equal, the net of that, hard, of course, to say. But you probably actually take incremental spread with a lower rate than a higher rate with lower spread, because that's actually incremental value added from the manager.
Speaker Change: What happens in a lower rate environment for sure yes.
Speaker Change: Yes, the base rate goes lower but of course, what we're really delivering as incremental return and in fact, when the environment, you're describing and probably environment. We're in right now are choppy or public market as we just talked about more value on predictable capital I would expect spreads come up so actually all things equal.
Out of that hard of course to say.
Speaker Change: But you would probably actually take incremental spread with a lower rate than a higher rate with lower spread because that's actually incremental value add from the manager but fund flows.
Marc Lipschultz: But fund flows, you know, and we've been in that environment. Remember, we operated in a 0% rate environment. Fund flows have been extremely strong through multiple years, low rates, high rates. So no, we don't, we don't think that does anything meaningful for flows, because really, we're going to deliver in that case, you know, an even incrementally sort of better return than the risk free rate, so to speak. So I, I think we feel very good about, about that kind of environment for our products. And in fact, probably last thing I'd say, if we want to deduce that lower rates must correlate with some kind of slowing economy or fear about the economy, then people should move defensive, they should move into this product even more, because that's where most importantly of all, our products are about principle, predictability, and stability and preservation.
Speaker Change: We've been in that environment remember, we operated in a zero percent rate environment fund flows have been extremely strong through multiple years low rates high rates. So no. We don't we don't think that does anything meaningful for flows because really we're going to deliver in that case, you don't even incrementally sort of better return.
Speaker Change: The risk free rate so to speak so I.
Speaker Change: I think we feel very good about about that kind of environment for our products and in fact, probably last thing I would say if we wanted to do that lower rates must correlate with some kind of slowing economy. Our fear about the economy, then people should move to fast so they should move into this product even more because thats, where most importantly of all.
Speaker Change: Our products are about principal predictability and stability and preservation and Thats exactly when people phase, but didn't want to pay even more attention to that question and let me just flash back a couple of years, we built our business on the on the credit side in zero rate environment with Super tight spreads and so that comment mark.
Marc Lipschultz: And that's exactly when people that are FAs, they're going to want to pay even more attention to that question. And let's just flash back a couple years, we built our business on the on the on the credit side in zero rate environments with super tight spreads. And so that that comment Mark made on a relative basis is really important. And I'm sure folks would kind of like the lack of volatility in the non-traded product. without a doubt.
Speaker Change: Made on a relative basis is really important.
Speaker Change: And I'm sure folks have kind of like the lack of volatility in the non traded product as well right.
Speaker Change: How did that absolutely listen there are people that are our products today are getting there.
Speaker Change: In monthly payments right and right now we're typically doing what 10, 11% yields I mean, it's if it works, which is why it's working compelling.
Mike Brown: Thank you, Mike. Thank you for taking my question.
Speaker Change: Thank you Mike.
Speaker Change: Thank you for taking my question.
Benjamin Budish: We'll take the next question from Benjamin Budish, Barclay. Hey, good morning. I was wondering if you could talk a little bit about your near-term expectations.
Speaker Change: We'll take the next question from Benjamin Boudeuse Barclays.
Benjamin Boudeuse: Hey, good morning, Thanks for taking the question.
Speaker Change: Just wondering if you could talk a little bit about your near term expectations for deployment.
Speaker Change: What's on the pipeline how should we think about gross versus net and curious if you could provide any color on any changes youre seeing in terms of loan documentation L. P. Protect protections portability pick utilization it seemed like last year when things got more competitive we are seeing at least more headlines about things like take utilization. So what sort of trends are you seeing got with borrowers.
Marc Lipschultz: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host and I'm curious if you could provide any color on Changes you're seeing in terms of loan documentation, LP protections, portability. Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered Thank you for listening to the Goldstein on Gelt radio show. If you did, please visit us at www.profile-financial.com. What sort of trends are you seeing with borrowers and housing?
Speaker Change: And how is the pipeline kind of shaking out on a gross versus net basis. Thank you.
Marc Lipschultz: Sure. I think maybe let me hit deployment in, we already talked about what was happening with GP6. Let me hit deployment in credit and real assets. I appreciate the questions you raised were more particular to private credit. So there's two intersecting lines or two moving pieces. And I can't tell you the net of it in the short term. I think I can give you a pretty good read in the medium term. In the short term, the negative is just lower M&A. That's obvious to all of us, there's just less M&A in the world right now, given the uncertainties.
Speaker Change: Sure.
Speaker Change: Maybe I'll, let me, let me hit deployment and we.
Speaker Change: We already talked about what was happening with GPC. So let me hit deployment in credit and real assets I. Appreciate the questions. You raised we're more particular to private credit.
Speaker Change: So theres two intersecting lines there are two moving pieces and I can't tell you the net of it in the short term I think I can give you a pretty good read in the medium term in the short term. The negative is just lower M&A. That's obvious all of US right Theres just less M&A in the world right now given the uncertainties.
Marc Lipschultz: The other side is market share. Market share comes to us during these kinds of environments. In fact, there really is no meaningful syndicated market. Someone could sign up for it, but I don't know what they think they might get. So at the end of the day, those two are going to be moving in opposite directions. The net of it all is a little hard to say, but they are offsetting.
Speaker Change: The other side is market share market share comes to us during these kind of environments. In fact, there really is no meaningful syndicated market someone can sign up for it but I don't I don't know what they think they might get so at the end of the day. Those two are going to be moving in opposite directions. The net of it all is a little hard to say.
Speaker Change: But they are offsetting over the medium term here is the structural reality, if we're going to have more people come to our market more people see that it's worth using and then the p/e firms are going to eventually spend that capital.
Marc Lipschultz: Over the medium term, here is the structural reality. We're going to have more people come to our market, more people see that it's worth using, and then the PE firms are going to eventually spend that capital. And we, like everybody else, thought first quarter might have been that unlock. Obviously, that didn't happen. But those trillions of dollars in dry powder and PE hands are going to work eventually. So if we pick up our market share, which I expect we will through this volatile time, and then those dollars go to work, that's a net benefit for us in terms of putting capital to work.
Speaker Change: We like everybody else thought first quarter might have been that unlock obviously that didn't happen, but those trillions of dollars in dry powder and p/e hands are going to work. Eventually so we pick up our market share, which I expect we will through this volatile time and then those dollars go to work that's a net benefit for us in terms of putting capital.
Marc Lipschultz: So again, short term, let's all acknowledge the uncertainty of what's the offset between market share versus just M&A activity. And we'll monitor that, of course, closely. It doesn't really matter to our business model. At the end of the day, we can pay these fixed fees. In fact, our net originations are higher this quarter than last. So there's a lot of variables, none of which matter much to the performance of our Blue Owl business. But to answer your question on the specifics of the market, we have offsetting variables, TBD, what that exactly means. In terms of, and also on those other dimensions you described, let me spend just a minute on, look, the attributes of the loans continue to be really, this is the thing we've been trying to emphasize and always will matter to us most, quality of borrower is paramount.
Speaker Change: Torque. So yes short term lets all acknowledge the uncertainty of what's the offset between market share versus.
Speaker Change: Just M&A activity.
Speaker Change: We will monitor that of course closely isn't really matter to our business model at the end of the day, we can pay these fixed fees.
Speaker Change: In fact, our net originations were higher this quarter than last so there's a lot of variables, none of which matter much to the performance of our blue our business, but to answer your question on the on the specifics of the market. We are offsetting variables TBD what that exactly means.
Speaker Change: In terms of.
Speaker Change: So almost all of the dimensions you described let me spend just a minute on look the attributes of the loans continue to be really this is the thing we've been trying to.
Speaker Change: To emphasize as always will matter to us most quality of borrower is paramount and our quality has continued to be extremely high you mentioned a series of different attributes.
Marc Lipschultz: And our quality has continued to be extremely high. You mentioned a series of different attributes of loans. And as you point out, there's a long list of different things that go into a bespoke solution each time. But let me observe this. Our overall loan book continues to perform great. Our non-accruals, in fact, the number of companies on non-accrual went down this last quarter, not up. And so we continue to sit in a really healthy place and the new credits we're doing, we very much like.
Speaker Change: Of loans.
Speaker Change: And there as you point out there's a long list of different things that go into a bespoke solution each time, but let me observe this our overall loan book continues to perform great.
Speaker Change: Our non accruals in fact, a number of companies on non accrual went down this last quarter not up.
Speaker Change: And so we continue to sit in a really ltvs and the new credits were doing we very much like.
Marc Lipschultz: And the last thing I want to emphasize is something about PIC, because it does tend to come up in the financial world, but also in the press. There's two kinds of PIC. We've said this before. There's the PIC by design, because it's an extremely durable, low LTV cap structure with a huge equity check and a really great business. And it's about giving the company by design ability to invest in its own growth, i.e. software companies. And then there's PIC not by design. And you have to, you have to draw the distinction. And let me say with great and equal clarity, PIC by design is actually from our point of view, usually an extremely good sign.
Speaker Change: And lastly, I want to emphasize is something about pet because it does tend to come up in the.
Speaker Change: In the financial World, but also in the press.
Speaker Change: There are two kinds of Peck, we've said this before.
Speaker Change: There is a pick by design because thats, an extremely durable low LTV cap structure with a huge equity checks and a really great business and it's about giving the company by design ability to invest in its own growth Ie software companies and then there is pick not by design and you have to you have to draw the distinction.
Speaker Change: And let me say with great at equal clarity pick by design.
Speaker Change: Is actually from our point of view using an extremely good side, we do that in our strongest credits those tend to be our lowest loan to value biggest businesses. So picked by design and our software product is a good thing that means we add the sponsors see that as a particularly strong credit with particularly big opportunities ahead of it.
Marc Lipschultz: We do that in our strongest credits, those tend to be our lowest loan to value biggest businesses. So PIC by design in our software product is a good thing. That means we and the sponsor see that as a particularly strong credit with particularly big opportunities ahead of Pick because you had to go from cash pay to pick is a bad thing. There's no other way to describe that. That's not a healthy development. So watch people's portfolios, watch migration from non-pick to pick, not helpful. We have some of those. We always will. That's part of it.
Speaker Change: Because you had to go from cash pay to pick is a bad thing.
Speaker Change: Theres no other way to describe that there's not a healthy development, So watch people's portfolios watch migration.
Speaker Change: Rob non pick to Pik.
Speaker Change: Not helpful.
Speaker Change: We have some of those we always will that's part of a 400 companies and we equally hold ourselves to that standard, but don't use the blunt instrument I'll pick as a share of our portfolio that is meaningless in point of fact picked as a share of our portfolio is higher than our software business and say this is the right way.
Marc Lipschultz: We have 400 companies, and we equally hold ourselves to that standard. But don't use the blunt instrument of pick as a share of a portfolio. That's meaningless. In fact, pick as a share of a portfolio is higher in our software business. And say this the right way, isn't everyone who's invested in software credits today, we've been saying this for years, thrilled that that's where they are. Take a look at what's happening. Supply chain? Don't have one. Exposure to China? Don't have any. I mean, think about the things that are now a risk for most companies in the world, not a risk for our software businesses.
Speaker Change: Isn't everyone is invested in software credits today, and we've been saying this for years thrilled that that's where they are taking a look at what's happening supply chain don't have one exposure to China don't have any I mean think about the things that are now a risk for most companies in the world not a risk for our software businesses.
Marc Lipschultz: So we're sitting here with our tech portfolio is exactly where you want to be. And yet, it does have a higher percentage pick by design. So sorry to go deep on that, but I think it's quite important to unpack these variables and avoid sort of the blunt instrument usage.
Speaker Change: So we're sitting here with our tech portfolio is exactly where you want to be and yet it does have a higher percentage pick by design. So sorry to go deep on that but I think it's quite important to unpack these variables.
Speaker Change: Avoid sort of the blunt instrument usage lastly, let me talk about as real estate on deployment deployment is excellent and real assets both in real estate and in Ipi. These markets are really the best we've seen and we are seeing very strong deployment. So let me give you example, real estate fund six.
Marc Lipschultz: Last thing let me talk about is real estate on deployment. Deployment is excellent in real assets, both in real estate and in IPI. These markets are really the best we've seen, and we are seeing very strong deployment. So let me give you an example. Real Estate Fund 6 is now 41% called and 90% committed. that fund is basically wrapped up. And objective statistics, it's the best set of statistics in a fund we've ever had in real estate. Right now we that fund has an average of a 7.8 cap rate, 17 year average lease duration, with 2.7% average built in rent growth.
Speaker Change: Is now 41% call it 90% committed.
Speaker Change: That bond is basically wrapped up and objective statistics, it's the best set of statistics in our fund we've ever had in real estate.
Speaker Change: Right now we that fund has an average of a seven eight cap rate.
Speaker Change: 17 year average lease duration.
Speaker Change: With two 7% average built in rent growth think about those attributes for a minute. Those are the best objective statistics, we've had in the history of our Triple net lease real estate thoughts.
Marc Lipschultz: think about those attributes for a minute. Those are the best objective statistics we've had in the history of our triple net lease real estate fund. So, you know, in an IPI, we've clearly talked about, I mean, that product, this demand so far exceeds the supply of combination of capital and skills. We are one of the very few people that have both. It's a very complicated business to build, once you build it, couldn't be a better asset to own. It's these types of attributes, except in that case, in every instance, you're talking about companies with trillion dollar market caps and, you know, very, very strong investment grade rates.
Speaker Change: And Ipi, we've clearly talked about I mean that product the demand so far exceeds the supply of combination of capital and skills. We are one of the very few people that have both.
Speaker Change: A very complicated business to build once you build it couldnt be a better asset to own.
Speaker Change: These types of attributes except in that case in every instance, youre talking about companies with.
Speaker Change: Trillion dollar market caps, and very very strong investment grade rating case, Microsoft <unk> better than the U S government.
Marc Lipschultz: In the case of Microsoft, a rating better than the US government.
Ken Worthington: Alright, thank you for the And we'll take a question from Ken Worthington, J.P. Morgan. Hi, good morning, thank you for seeking the question.
Speaker Change: Alright, Thank you for the color Mark.
And we'll take a question from Ken Worthington Jpmorgan.
Ken Worthington: Hi, good morning, Thanks for taking the question.
Speaker Change: Yeah.
Marc Lipschultz: Unknown Speaker. I'm going to put on my mask. You're pretty muffled. Sorry. Let me let me let me try anyway. And if I can, I'll recue. Blue Owl has been building and diversifying its business, wealth, real estate, insurance and others. The expansion has been large. Since changes in the value of the dollar in the Treasury suggest increased interest outside the U.S. What are your thoughts about global expansion of the franchise? I know you have a lot on your plate, but does it make sense to expand outside the U.S.? And is this something in your line of vision?
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Speaker Change: Youre pretty muscle.
Speaker Change: Sorry.
Speaker Change: Let me, let me, let me try it anyway.
Speaker Change: Ill re queue blew out has been building and diversifying its business wealth real estate insurance and others.
Speaker Change: Expansion has been largely domestically focused.
Speaker Change: Since changes in the value of the dollar and the Treasury suggest increased interest outside the U S. What are your thoughts about global expansion of the franchise and I know you have a lot in your plate, but does it make sense to expand outside the U S. And is this something in your line of vision.
Marc Lipschultz: Well, let's let let's take that a couple ways. So we're very fortunate that we raise capital from all over the world. And in fact, That's an accelerating opportunity for us. So I mentioned before, the Middle East has been, you know, a tremendously growing market from our point of view. So that's been, you know, so our global footprint for capital is large. Our global footprint for deployment in select areas is strong. We, in fact, we just announced our first triple net lease real estate Europe deal for our triple net lease Europe product, which again, brand new product to the to our array, and one that we think is going to be very successful.
Speaker Change: Well, let's let's take that a couple of ways. So we're very fortunate that we raise capital from all over the world and in fact.
Speaker Change: That's an accelerating opportunity for us So I mentioned before the middle East has been a tremendously growing market from our point of view so thats been.
Speaker Change: Our global footprint for capital is large our global footprint for deployment in select areas is strong. We are in fact, we just announced our first triple net lease real estate Europe deal for our Triple net lease Europe product, which you get brand new product.
Speaker Change: Our array and one that we think it can be very successful.
Marc Lipschultz: IPA, IPI operates globally, because IPI is working with global enterprises, and they have data centers all over the world. And we work with them all over the world to do it. The key here is really risk and return. We love the fact that 90%, and it is 90% of our firm's capital is deployed in the US, because we're in the downside protection business. You can have a wide range of opinions about current policies and trajectories in the US and the global economy. But in terms of safety and security, and where you put your money, you'd much rather be inside Fortress USA than outside Fortress USA.
<unk> operates globally, because ipi is working with global enterprises, and they have data centers all over the world and we work with them all over the world to do it.
Speaker Change: The key here is really risk and return we love. The fact that 90% is 90% of our firm's capital is deployed in the U S. Because we're in the downside protection business. We can have a wide range of opinions about current policies and trajectories in the U S and the global economy, but in terms of safe.
Speaker Change: And security and where you put your money you'd much rather be inside fortress USA and then outside fortress USA everyone for reasons. We understand are very anxious of all its happening in Asia and the dynamics between China and the US 1% of our capital is in APAC.
Marc Lipschultz: Everyone, for reasons we understand, are very anxious about what's happening in Asia and the dynamics between China and the US. 1% of our capital is in APAC. I appreciate that has maybe been an exciting story for some people over time, doesn't seem so exciting right now. We're not about excitement. We're about delivering really steady results. So we'll follow the right kind of users of our capital wherever they wish to be, as we have. We'll raise capital around the world. And where there are markets that are stable and attractive, and we can earn incremental return without taking incremental risk or more than proportionate to incremental risk, absolutely.
Speaker Change: I appreciate that has maybe been an exciting story for some people over time doesn't seem so excited right now we're not about excitement we're about delivering really steady results. So we'll follow the right kind of users of our capital wherever they wish to be as we have we'll raise capital around the world and where there are markets that are <unk>.
Speaker Change: Stable and attractive and we can earn incremental return.
Without taking incremental risk or more than proportionate to incremental risk absolutely, but we have no grand ambition to just go around the world to go around the World I think sitting here today, you can see why going around the world just to go around the World May I'll now introduce a tremendous amount of risk that frankly below those now.
Marc Lipschultz: But we have no grand ambition to just go around the world to go around the world. I think sitting here today, you can see why going around the world just to go around the world may now introduce a tremendous amount of risk that frankly, Blue Isle doesn't have.
Speaker Change: Okay.
Marc Lipschultz: And everyone, that is all the time we have for questions today. I'd like to hand things back to Mr. Marc Lipschultz for any additional or closing remarks. Thanks, everybody, for the time. We know how busy it is. It is a volatile time. You know, this, like, almost silly statement, the new certainty is uncertainty. I think that's true. I mean, so as we march through, I guess the last two things I want to come back to are this.
And everyone that is all the time, we have for questions today I'd like to hand things back to Mr. Marc Lipschultz for any additional or closing remarks.
Speaker Change: Thanks, everybody for the time, we know how busy it is it is a volatile time.
Speaker Change: Like almost silly statement, the new certainty as uncertainty I think that's true I mean, so as we March through I guess, the last two things I wanted to come back to this.
Marc Lipschultz: There's two things about Blue Owl that you should remember in this environment. Our products are built to thrive in times of uncertainty. That's when our investors truly benefit from the durable, predictable strategy to Blue That puts us in a better position to win. Second, Blue Owl as a firm, the Owl stock, which we're here talking about, was built to be predictable and durable through, again, times of volatility and uncertainty, and you saw it again. We had a great quarter. Our quarter and our march toward our strategic goals is, as you can see, we continue to pace along.
Speaker Change: There's two things about <unk> that you should remember in this environment. Our products are built to thrive in times of uncertainty that's what our investors truly benefit from the durable predictable strategy to <unk> that puts us in a better position to win.
Blue all as a firm to our stock, which we're here talking about was built to be predictable and durable through again times of volatility and uncertainty and you saw it again, we had a great quarter, our quarter and our March toward our strategic goals is as you can see we.
Speaker Change: Two pace along we do not have carry we don't have all the volatility other people have and that's a purpose built model and I think in this volume I hope it's already coming through Wildblue al is just fundamentally a different business model in the world of vaults and candidly, we're quite excited about where we are and where we're going so anyway.
Marc Lipschultz: We do not have carry. We don't have all the volatility other people have, and that's a purpose-built model, and I think in this environment, I hope it's already coming through, why Blue Owl is just fundamentally a different business model in the world of alts. And candidly, we're quite excited about where we are and where we're going. So, anyway, thank you all very much for the time today.
Speaker Change: Thank you all very much for the time today.
Operator: Once again, ladies and gentlemen, that does conclude today's conference. We would like to thank you all for your participation today. You may now disconnect. Please wait, the conference will begin shortly.
Speaker Change: Once again, ladies and gentlemen that does conclude today's conference we would like to thank you all for your participation today you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
Speaker Change: Okay.
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Speaker Change: [music].
Speaker Change: Okay.