Earnings call transcript Q4 2022

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Operator

Good morning. My name is Chris, and I will be your conference operator today. At this time, I would like to welcome you to the Blue Owl Q4 2022 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will a question-and-answer session. Instructions] [Operator

Dai, Relations. Ann of Head you. Investor Thank

You may begin.

Ann Dai

to operator, and morning good Thanks, everyone.

are Chief Kirshenbaum, Ostrover, Lipschultz me Doug Joining today our Officer. Rees, Co-Presidents; Financial and our Executive and Chief Alan our Michael Marc Officer;

may from time-to-time I'd the control. like remarks at the future to materially to not a GAAP may uncertainties that differ call, presentation call we'll of no and performance are assumes obligation reconciled are Securities in listeners to Actual measures or forward-looking earnings the which available which involve on refer guarantee update that are those section made to blueowl.com. risks number our remind in the a everyone non-GAAP Resources statements, statements. Blue on like number described during Capital's those contain with a forward-statements remind of any the to figures result Commission. our results of also company that of website company's filings results, including Exchange outside factors, from and our and of The forward-looking as Investor in Owl We'd a

of of nothing as constitutes XX $X.XX to to or starting to for our on a XXXX first of Earnings, first $X.XX We quarter with FRE for shareholders financial to share an Fee-Related or quarter dividend our X $X.XX solicitation fourth payable per or $X.XX XXXX and a share dividend and of for and this total note the of sell quarter full-year per Owl quarter declared offer per on $X.XX share. distributable fixed the announced in February full-year per earnings. record share, or reported share, DE the purchase and XXXX, DE, of per morning, also of per offer an any FRE, earnings, interest we March we issued of Please a $X.XX any bringing fourth Blue that This call of fund. $X.XX results quarter for

referring to morning. earnings be we'll today, posted to call website which this the we presentation, the During our

follow So, please have that hand on along. to

turn With to call the like that, I'd to Doug. over

Doug Ostrover

FRE Ann, you, quarter our good we have year, as by capital Owl. AUM the entrance Since including very markets, we our management growth the driven extraordinary fundraising achieved fees, and XXX% has Blue challenging the been Blue of have despite AUM growth deployment, maintained off industry Capping XX%. metrics a an business, anchored by strong largely XX% past capital. reported of to and full-year on markets. growth for to This the another in in period by key fee-paying first public and our And robust morning, Today, have Thank company. use over everyone. over and by margin XXX%, DE, evaluate Owl’s permanent grown we public a we leading

the third provide billion some color to private We we entire and XXXX. for Notably global that XXXX raised quarter our more fundraising fundraising billion raised and drove XXXX, the quarter across year integrated me of that alone, halfway platforms fee-paying goal XXXX we this of increasingly in Let of in our us achievements expanding the than in institutional equity power of channels. robust demand reflecting and had wealth AUM $XX XXXX bringing $XX on and our growth.

asset manager appeal interest rates, protection, strategies space. looking downside generation to the the alternative trends positive leverage with access hedging and for rising positive secular across investors income Our to inflation to

flows, or less minimis managed tenders products the received $XXX remained of billion on funds that strong AUM offer have our see these into than products close Private to tenders investment redemptions of Blue relationships more $X.X de to the continue with built we and have remains only characteristics. with same the we during market trends, A demand but By billion attractiveness healthy our fee-paying we've for space. in market testament were contrast, Not for had million a X.X%. a fundraising the Owl $XX.X quarterly just And those successful quarter. inflows wealth despite strong to the challenging of products by those environment. from

decline and In of today U.S. environment direct our Blue U.S. the decline and or in created year, for originations the Volatility capital, lenders transactions. leverage other This speaks today's greatly M&A had a lending, slightly to to gross direct loan XX% increasing we attractive Owl’s billion year, breadth we that platform, of volumes off a unwilling scale in just participants in marketplace. well prior of very present from market lend benefiting unable the despite an are and dynamic. despite $XX pace XX% and importance where from have the opportunities uncertainty the as as announced are

managers In Veritas $X GP KPS, us with committed such class Fund Capital as bringing V. of XX% PAI and we Solutions, Dragonair, deployed transactions for capital and to world billion completing about

a period the our across fourth XX% nearly held industry described have fundraising the $X that billion than a we During many quarter, over target $XX difficult close billion as at V for Fund environment. higher final during a

we're product across approximately multiple estate, and are in the In yield and start. great our of hedging, this advantaged confident that the are $X a offerings fundraising our during current inflation tax have first what closed billion environment, off We the real safety, strategy this XXXX. of drawdown in resonated quarter for fourth investors. lease now our And characteristics and during product reaching seeing are fundraising market is with target we half to net for we strategy

experience our differentiated for gatherers, a and AUM assets all has our with our the very time, over substantial We're margin of relative resonated on growth achieved asset we not Blue investors. can public short markets to the very has attractive is to And period Owl companies. with created is proud goal dated and be raising where long the of the not capital asset equal of is focus provide cost fee characteristics, but

That substantial And time. drive is way to and of and earnings we growth should permanent capital do is we for wide look meaningful to base to our we a over and and our dividend why range FRE-centric value conditions, market that shareholders look so translate resilient which model predictable so in believe that is how a into are important.

difficult May, of our XXXX view Day Owl analyst’s earnings for Since expectations interest steadily across earnings to expectations group were Investor peer adjusted and Blue for predict in street sell-side declined unchanged. trends. the our In its as contrast, carried other growth

reaching we revenue of do. billion XXXX. would to differentiated we on and we Achieving in said delivered what Speaking financial our goal profile, of our $X.X

generated headwinds DE and leading XX%, the notable of Owl impacted maintaining throughout Blue year, which year, growth This sector. FRE the market while XX% the margin. XX% of larger financial given the present especially For FRE is growth industry an

are We over have greater nearly we time. we detail highlight later, doubled our will in dividend And Alan last moving a six over grow that fixed as quarters. dividend to now the meaningfully to expect

we the is It's peers must compared fund, on new permanent capital Our to larger monetize a assets and capital, asset base assets on who our based fund we hopefully hold resilient. very have. turn to generally and with raise

model. This deployed start providing paying earnings incremental assets that This our capital call the raised of we our over that, billion is once visibility is of On have $XX growth Cake what is embedded dollar fees the top the base. Layer will business. earnings incremental each what capital of to of we we into call ahead. So additive AUM power is our

know of Blue who you sound familiar already to this Owl the All should story. those of

out swiftly outlined been changed. at volatile, have markets the public getting May credit high, the the and the potential and we to goals not year equity has Investor that core and and this us, corporate have And you in weighing significantly our moved although GDP as know inflation think public rose the although just on have that Although quarters those the many rates predictability, company persistently the stability, business. have for growth remained interest Day a earnings, past for resiliency and of back we seven are proven

the challenging runway market environment. in Looking to excited see ahead we the XXXX, spite about we're of

goals the shareholders Investor out towards progress for laid to continue Day. we We financial at our

and investors. We committed attractive downside providing returns performance, our are income solutions fund protected to strong for

have ahead wealth and to we many deepen our partners to build new And the We we of continue the and our with stay shareholders. and growth competition to continue current innovate institutional ones. for relationships drive

environments significantly has changed was such seeing we purpose from these raise value the have increases backdrop and benefits are it firm these our continues these. say not incredible deploy But together. testament employees fund businesses the as the we we're type and we've environments to proposition market or been across truly And invaluable ship. to That's of our efforts during to Owl’s Blue since this of the market. The that public through built business To capital expertise to a think into, easy is to bringing navigate. for

think is Essentially way the whether it's asset model I about an Ultimately, thinking with about and business light fee supported operate a very profile fee to earnings few not of is earnings. capital the years, going management many our driven we're next as over for the growing focused base. substantial annuity and and question by is shareholders, how return capital the value we'll grow, companies, fast for a to on permanent growth it That capital in grow. this. our us and stable We is

an to businesses. update like estate I'd our over to turn call you on that, direct lending to Marc? real give Marc With and the

Marc Lipschultz

has Owl an provider where in Thanks capital as Great. the fourth so quarter, been a a to Doug. integral play to continued scarce. sponsors role much, Throughout liquidity market Blue

spreads continue to values see loan high-quality wider than large at and year attractive financing We companies. and a to lower opportunities ago,

just volume. that XXXX at investments exceeding lending originations XXXX. facility we off looked the In in were over deals meaningful of direct our XXXX, billion and well originations with XX in XX sizes of X% $X below in despite drop evaluated excess industry a billion, nearly $XX We size gross

we and considerations a until a of originations the origination funded for and in XXXX second billion volume deployment the $X.X pace continue $X.X to the M&A deployment net half volumes. look remain investment. of repayments. to see pipeline We there's a recovery and quarter, billion, XXXX, constructive Though were early anticipate slower about In the robust like months moderate don't timing that broader gross fourth environment from slowdown reflected our year-to-date and was

our in standards been stringent for closing the Credit us quality on X% one, always focus remains have since day key approximately inception. from evaluated deals underwriting we've we and very of a

end companies on that players are strategic We financing of have lending the been markets. respective key in their direct market, focused the larger

we've and carrying largely good has in cyclical we've our benefited portfolio investors as risk. businesses believe gains, greater annualized realized actually had $XX very X the originated basis loan addition, we loans that sectors funds over less In And We points. view of of we of shape. billion than have basis Since stayed remains in inception, X with realized away our net points. this of annualized realized from gains selectivity inclusive in losses

remains our companies, in average of across at in the portfolio. to low-XXs across the and weighted and see portfolio inflation. with portfolio underlying value ongoing revenue the direct growth lending in Our We've positive low-XXs loan resiliency continued our the EBITDA tech headwinds the despite

Now the performance, portfolio fourth to the by points appreciation X.X% quarter and points achieved Leverage X for lending direct year. X.X% XX the the the turning index by approximately outperforming of high gross yield over Loan XXXX, and Index for for

real to moving estate. Now

of pipeline under $X.X contract robust of potential volume. lease opportunities high from elevated of and net or near-term of lease With the a choppier, billion see borrowing financing in markets strategy transaction and our resonated about our costs with and pipeline and We of volume of a intent companies levels corporate close lot solution XX.X attractiveness continue net of remains a to alike. billion has interest investors roughly

for solely lease acquisition announced for other taxes high we've hedging fund. nearly driving of by of strategy desirable the and demand fifth of owning closed borne investors the in equity remains net or activity, many a inflation with Inclusive are the invested end expenses characteristics all as inflation tenant. estate our maintenance, committed Persistently CapEx, focus a real

expect quarters. first And and on XXXX. our forward syndicate platform billion warehouse coming product, the through the sometime has wrap fund over strategy reached fundraising to we $X the Lease approximately up our we for primarily open-end look net continuing in sixth on of the Net raised to expand half close to lease just Our one latest of billion drawdown first at and large Trust, capital $X

long XXXX. contractual duration We by gross achieved estate the leases. protection and fourth underlying the are portfolio and noteworthy for real across portfolios. the of of the We for quarter very credit the streams income for these X% strong profile adjusted presented returns Particularly appreciation XX.X% our given think these downside risk

In summary, lending we continue work. to continue to real from protected our we demand direct businesses attractive estate find opportunities for investors and strategies generating very strong to and see across capital income our put downside

GP With that, let discuss to turn Solutions. me to Capital Michael

Michael Rees

year XXXX above Thank as it our fund Capital was GP over XX% the a Mars. at you, we a closed business fund space. Solutions our for initial in largest billion very record ever Making raised target. successful fifth our the $XX.X

During capital private partner today. across Dyal ever. nine managers. managers and V from now world that into grow benefit markets growth believe have market billion we consistent one a XX the shape Fund diversified of and year, most transactions makes the deployed most managers partner of $X opportunities, trends class constituting in and and active years existing V, and XXXX We we that will about deployment share substantially This with group our long-term objectives closing new of our is attractive

we the continue where share alternatives Given And are firms and that our fundraising to largest challenging. environment lion's capital accelerate the more the those scale, retail within and is dynamic on managers we raise of the institutional remain during see years universe. this the focused

capital remains will that the principles, strong billion forward committed opportunities evaluate XXXX, quarter V $X.X across quite years. raise of $X were Dyal greater roughly of industry, to the numerous up total we pipeline of bring billion Through from two-thirds including continue three roughly V, than of are funds and capital prior XX% agreements and fund. commitments the quarters received in the to invested attractive. Fund or The Total third

as and them supported across managers initiatives new services which among BSP our assisting platform, with advisory partner value-added growth projects managers provides strategy, areas transformation recruitment others. product business management, services our on ESG and year. active businesses, during remained working such partner The across to strategic corporate M&A science key talent team digital on their and Our with launches efforts, data with at very the advising

which a with Performance for at XX% equity vintages. funds Fund Fund Dyal of for XX% remained and favorably the across to compare III, for Fund returns private of same XX% for strong the net median all IRR funds IV V,

minority the multiple. minority strategy, Phoenix Moving attractive in sold we at our to sports professional have stake Suns our investment an

hold Solutions demonstrated fundraise remains stake investor In on for commitment $XXX the addition, very closed recent LP about base GP for demand forward the we to with optimistic funds. breadth to the of our next strategy. look have to-date, we Capital We're and over million even the business. V XX-months as expanding by GP what the further Dyal next our high of

strategy. benefits partnerships to deployment continue From later our investors asset Fund investor to this are forward alternative managers. a look our see in strategic educating robust interest scaled conversations further. a we as expand VI on We on actively and LP with working and additional and wealth base relationships perspective, to combined and from Exploring institutional the GP launching well-known base solutions of year

things turn results. to our will I financial over discuss that, With Alan to

Alan Kirshenbaum

through by I'll XXXX, want you, everyone. few be numbers a items and along. pages Good available morning, full-year earnings in I I'm touch off have I'll to to and start fourth for to Michael. the free the follow our cover references then to quarter feel presentation, making on please walking so the to going that today. Thank other

results. XXXX pleased To and with quarter very fourth start full-year are off, our we

our be. achieved of see goals can We And for revenue, we where of you our are we As out XXXX. we have on ourselves billion goal we set our slide the $X.X in right goal of said five, we end markets achieved would XXXX, fee-paying of $XX AUM towards achieved in pathway billion goal XX% year and the raised our by nicely $XX of billion raising XXXX with the and tough very margin FRE by a completing against goal. of we volatile track

up highlights revenues were is key is XX% include up other total year-over-year GE XX% up Some FRE year-over-year, year-over-year. and XX%

a capital this of foundation was of our flows. built business with we permanent predictable built business because our peers. All management fee than steady our differently and cash We

cover results. Okay, our full-year and quarterly let’s

quarter $XX.X was strong million by year-over-year. growth GP Our you in XX% from million strategy, are up $XX.X for $X.X Solutions. for one-time and fees last direct management Capital up and or business. Capital quarter adjust of Solutions last catch-up from year-over-year. Management fees or XX% from fees up X% million Broken lending and management quarter GP catch fees down up another or fourth are XX% last year-over-year, quarter excluding fees. up XX% our up When quarter X% are up

or XX% X% last revenue. expense line G&A expectations are million our also in expectations And up quarter. quarter. our expense Compensation fees million $X.X came real to with at at line came management in the $XX comp from with in for estate

XXXX, million, costs of approximately $XX costs came being full-year placement G&A excluding $XXX expense approximately placement and million costs that regular $XXX the total G&A about in For million. at wage being

think about expecting higher our from with slightly year-over-year. slightly X% up XXXX, roughly FRE and and $XX.X overall is a growth the of or higher of we maybe As placement business. G&A overall we're driven level quarter down similar by wage XX% up regular costs G&A last million expense

on margin came spoken we've of XX% calls. right FRE top Our about the level on in that previous all

per our quarter announced of a share a we from ago, share a last dividend resulting $X.XX for year $X.XX in per quarter the year-over-year. share the and quarter XX% per fourth fourth dividend increase And in $X.XX in up

last what All in of and our call quarter. is Day with our XXXX at Investor we in this on noted May of line expectations and earnings

to quarter, considering the our months. efforts. and I'd headwinds We last markets our the were the particular a results spend challenging six strong fundraising pleased Now on in with like moment for

now XXXX, raised of $X.X As break of our we can the and as you XX, products. I'll the $X.X a quarter across down billion. raised in strategies slide quarter we and this billion fourth fourth reminder, in on XXXX, see

million almost Fund our our in we $X.X strategy over diversified completed In BDC, the V. and core distributed we million billion for Capital income approximately our including million raised we raised lending GP as $XXX direct raised retail billion In raised $X fundraise Solutions, $XXX tech lending, strategy, in $XXX in almost lending CIC. OR raised

$XXX In Capital as guidance terms GP would of rate of for I number for run think revenue overall, the around Solution that strategy a XXXX for million.

of we we And Fund here. net in fundraising for $X.X real our this new Investor In our for trust wrap to with $X.X new goals up our year billion, this estate, first and $XXX estate raised expect million for product billion fundraising track VI. generally half product, We in Day real remain lease non-traded REIT. on the our

billion relates total our AUM XX, metrics, it As AUM billion, AUM billion and last $XXX.X year grew a a slide from was as billion, we X% and yet permanent from increase fees XX% $XXX.X $XXX.X paying December of billion. increase fourth of XX. on to to billion fee capital of AUM paying not reported AUM quarter quarter of the $XX.X a $XX.X ago. $X.X

$XX.X GP ago, AUM $X.X CLO deployment raise addition at in of Fund quarter a raise the and the year real direct quarter a paying lending, looking Fund in fourth our increase capital business. V, the year to stakes and ago. billion capital driven in VX grew Fee when capital X% and Both a raise a from from estate by primarily REITs last growth XX% the billion, metrics increase in from

increase quarter fourth last year billion XX% from a from $XXX.X Permanent billion, increase a grew X% and a capital quarter the to $X.X ago.

$X.X these over once billion increase Solutions in vehicles. AUM capital are management real annual reminder, AUM yet $XX.X billion lending, This $X.X paying deployed. from Capital expected GP billion, an XX% corresponds in estate. fees our including not direct $X and million management in fees billion totaling to $XXX of permanent fees in a was As

to direct deployment. earlier, strategy, highlighted billion the our deployment gross and $XX.X billion. of $X.X with in for quarter our billion originations originations of had Marc we billion months for net gross brings XX net of the funded $X.X funded As lending This last $XX

XX net billion us it take slower on it of pace yet would to our months over not pace funded AUM little deployment the last is paying two relates deployment based a the fully $X.X although deploy our direct average than quarters fees to as in current about that. this So lending,

Turning we capital a sheet, to position. balance our to strong continue be in

slide billion on with have cost of we you of and can average currently X.X% $X borrowing. As an maturity about see XX-year low XX, liquidity

revenue, move about Now about P&L let's talking goal dividend. revenues stated P&L, both XXXX our we a $X.X XXXX. was few for minutes a we from would think and growth to XX% spend XXXX XXXX, to have our of double fixed a our When our represent generate our previously and billion

fee-paying our over and stated XXXX. previously the course $XX goal to have billion raise was AUM of of XXXX We

our The I seeing mix incredibly XXXX. earlier, As is through challenging we're the backdrop of of halfway mentioned And what we market a there a are little though. shift towards end pressure channels, is on to but billion continue fundraising. clearly it’s interest. but bit are goal. institutional With $XX continued update fluid, a we we're you, the some retail We'll tracking seeing in

of And goal stated generate be XXXX. approximately increase for was importantly, very And in we which now. of environment living from through have most our XXXX are despite an remain earnings, distributable XX% $X our these expectations market the right challenging to we billion would previously

XXXX, our Now for focus dividend our turning through how we thought here's it. to fixed

allocation approximately shares. $X earnings prudent at to That such per program, capital XXXX XXXX. from potential dividend we fix feel GP and XXXX. math We $X.X kicks policy flexibility currently in for post buyback it's as outstanding allocation in I noted, We share a acquisitions. of DE our have to just of uses $X.XX allow perspective As roughly quarter for for per our expect share capital $X.XX billion commits billion strategic to distributable $X.XX funding out or

increase our maximizing $X.XX ratio a XX% our over earnings healthy dividends an a year-over-year. comes with policy our year's on of in this current dividend and that price. And $X.XX XXXX, payout on based X% share in yield to rate, Based distribution in our line our distributable represents of out in XX% dividend

per of towards share. our our an to basis expect significantly goal progressing annual $X increase we XXXX forward, on Looking dividend

buying items to shares there up update I getting are other final XXXX. So back few a Q&A, on to cover. for to want wrap before A here,

approximately shares for total the and separate year, Over the impact the $XX potential year in the course million back have on I throughout a million. have note, of could rate about On environment our bought it the a approximately we rising X.X commented business. we're of

in guidance, our another our previous Part increase fees the in with we line As saw X previous from quarter. and expected,

the Part In interest fee our and like our increased AUM line, some growth fourth from quarter, third $XX.X portion newer in was in and A BDCs our or from included X large CIC quarter. from of fees this management million the BDCs XX% OR was higher it rates driven of our ORTFX. by

modest are as XXXX. expecting albeit large in fees the some our We begin see increases to in to in X a more increases in stabilize rates XXXX, at much XXXX interest additional Part level from

Now taxes. shift to to gears

a for shareholders, XXXX? to the be taxable best an like to for hard will Owl certain mid-single-digits. To a number structure, benefits year-to-year the what of transaction with Owl you to those rate tax here, we should has largely as that formation in you Blue give benefits certain are what It's able So taxes tax years. everyone because some in assume overall predict about look XXXX, the use of Blue it's guidance to remind our now

you on what may Again, now, predict, teens like. through tax As go taxes rates and suggest future to a update ‘XX for tax low using we but are we as to rate. ‘XX the hard year, we'll for look would continue

an and to voting change over which shareholder our drive for us. XXXX, remain enabled time for we structure value. to made believe focus fixed will a And shareholder will that We be Russell of Earlier Indices we value initiatives the in to XXXX. these finally, this dividend help us and today a added announced area driving

summing AUM, year paying all We the key up fees, it delivered year-over-year permanent with DE of capital, each over with our strong pleased how these AUM, management in fee all So we and FRE very are of metrics metrics: XX%. growth up, wrapped up.

remarks, in volatility, the I about model. through strong and my market As I strong, them a as I times see all high just about demonstrate continue we message think very growth. overall In prepared of predictable, ran items dislocation, these margin to headwinds, our of strong business

who again has to questions? on call everyone, us Thank for joined line can open today. the please With that, you you operator, the

Operator

is Thank from Blostein First you. [Operator question Instructions] Alex Goldman with Sachs.

is Your open. line

Alex Blostein

Hi, everybody. the for Thanks morning, good question.

we you question around the little for maybe So level guys. higher the just bit off XXXX confidence targets a given can on start first

but So, markets retail obviously trends also kind of, see that ups and be bit backdrop to to were There your, a both, recoup step retail of the day? the not waivers questions incorporated around the that's ability capital of the fee some of, softer helpful. is are fee think the from originally and to investor back some just in numbers, might I get kind walk

and sort help gap hit that you guys So maybe outlined what the what of some bones put can you the we now goals the bridge the are? meat around on of have are from kind gives to that where you confidence targets

Alan Kirshenbaum

for Sure. Thanks, question. Alex. It's the Alan. Thanks

of retail I In softness little comment refresh to quarter. to we did or So are retail it little your bit through We a retail XXXX, $XX than at billion that, a more of seeing raise $XX was and final billion. which billion the other in the institutional that what forecast, thinking we're a we continue and think. inverse shift today is raise side, the we're out a we go institutional seeing And more we question that is here on it every quarter. than little of $XX mix look raised. XXXX we we our raised about mention saw every what that of retail that where

I on mix in a shift are that, commented that. we So seeing

any up of as have of IPO that don't fees know, we capital every or of in because permanent lights We of the the year, our permanent management capital. what we markets to turn know you products But from when base full the markets terms are hold on fees. stepping XX% our

We have a business. very steady predictable cash flowing

billion so of $X for And the us revenue, we inputs of $X.X fee-paying to into on that all $XX billion are the our raise. go the DE billion of hit the AUM expecting based forecast and

Doug Ostrover

Hey, in about -- raised We're feel know challenging is important as but a Alex, saying look, that have we this, assets think ‘XX. but but want take focus a I year I retail at both through feel $XX and market. good know just I $X institutionally, look comment. in we and this of really you one and earnings. just about this, DE as choppy billion market a we clearly we very think hitting the remind we billion what everybody would describe demand to go and you good last mentioned that to and going our easy, are be not But us, I just assessment, pretty Alan what really ultimate to number. do And hitting it's on

Alex Blostein

both. Great. Thank you,

Doug Ostrover

Thank you.

Alan Kirshenbaum

Alex. Thanks,

Operator

the question Evercore from is with Glenn ISI. next And Schorr

open. line is Your

Glenn Schorr

Hello there?

Alan Kirshenbaum

Hey, Glenn.

Glenn Schorr

-- So hello.

I the wish direct like Because lending look, had pretty powder. good. landscape you more it dry investing even particularly side the is So sounds on

So in wonder the us? that that direct backdrop, a lending. you would for to of on I on talk in if in better availability think digestion obviously institutional unlevered base land is Thanks. is and the into like how lending lot a given known. demand -- yields talk the in I for much But you And confidence think out side talk it can we there. package I Could could about feeds well PE -- of your LPs There'd put of be the state XXXX?

Marc Lipschultz

Glenn. Absolutely,

a question. So great it's

And importantly, as world, well intersecting continues itself we is more XXXX an had also in play. share First the direct dry all good terms, credit in powder the sort intersection We lending. the of your components XXXX, time. and in a is global of exceptional lending direct we've seen. wishes. as to quality, most ultimately of really played in roll as It all, spreads, reflects wish ever I as

at take almost look done lead quite a of a of take one of You direct about in were transactions private the the every we year, half, frankly those them. all them of largest half lenders. were by And

incremental tremendous. a opportunity really and We is about one rates between then year on think over some loan. we base And half looking an year, incremental think and a spread gets today the just

a the lead unlevered XX% are of about making fact particularly senior these where to were an to of you a making values and X% we secured take from risk loan software, in you go You unlevered many specialize XXs. low which know, in, and talking to in world

market, So the observation a to way very for deploy attractive what think time capital. I all the your about of us reinforcing it’s

And say institutions get I that. would

are cap from a returns see lot they uncertain world double-digit net in able in We generate is the return, risk interest appealing. an of stack extremely risk high pretty because to being seeing institutions. take to But the

see seeing interest of a So side. interest we on institutional to And side. a on of lot lot continue we retail the the are

see the As institutional regards, you and bit reflects now. some shift, toward an than many as class probably asset a of retail as there's mix that but anything the yes, mix of but strength more Alan it that about in people shift said, talking asset this in turbulence market, drive class exactly

it an wasn't class asset For many before. people, even

for class that year this very, very the we're and So again, beyond involvement asset this, in matter. positive on institutional for outlook

Glenn Schorr

Okay. Thanks.

fan. to you're Sorry a hear KB not

Doug Ostrover

Glenn. Thanks,

Operator

Autonomous question next Davitt with from The is Patrick Research.

is open. line Your

Patrick Davitt

Good you. morning. Thank

in far trying look group And like on understand the can gross think year, so visible online your cadence for flows for update about this is the maybe then and investors. requests coming what of and it retail be of those how volatile redemption adding And guess of look a could Just new sales what -- for is XQ? us big the the pipeline products? what's each the platforms? three secondly, best Could I to wealth how you

Alan Kirshenbaum

we redemption I'll the syndicates. are talk to how side Sure. what our Thank you, and and the building Doug are will pulling Patrick. we back cover seeing lens then

the the on redemptions much others we lighter space. seeing in side, So are than redemption

our half we're so through X% come that and redemptions. quarters in of levels of way three about seeing quarter have similar the pretty docks, We last actually row. consistent by a that's or the in per And been

net more net still flow on very the are side, positive seeing And importantly, we strong flows.

Doug, coming the So gross redemption in, do flows the our each you products. levels want? net flows of significantly the are in above

Doug Ostrover

Sure. Thanks, Patrick.

still the going exact time, I alternative volatile. going fair the time, from right. but opportunity. I line about flowing space. we And that our And -- than uniquely over we positioned got of weren't were the amount of We dollars excited wealth time, seven, never tell straight when really over of look, we're money it thought that trillions are down in. institution, ago, into you to So wealth we still markets believe I can up the are into during this share can't slow go we channel to capture eight think tell to to really was a as see flows be And surprised ’XX. incredibly the to The you, an years that I more

only had comments, of quarter, from commented and Alan across in redemptions. we our billion think the I the $XXX we platform $X.X channel, wealth his during of inflows fourth had million

billion me time, one think a done million of us. probably it's Let couple that's think And the redemptions. I inflows, remain things. guarantees, you volatile, but good. think about as $X.X good if forward, or point were We $XXX they to what for say going pretty we've is No starting markets a more of that choppy of

it's One, with their pulling just chance breath. to catch market a everybody back, the given

we out, wire And year? they want also sense But time what distributors, all are the other a redemptions. think early so to minimize spending have met this of education, we've and the lot helped with that's products RIAs, think a gotten houses, bring they next of been year, later on we've I

syndicate wealth two, you into that in numbers products our give the I currently market. XX And the things us significantly increase will for that, I differentiated exact introduce products. a see of number pretty maximum feel are And tell you can the about. I and see the us timing, you XX, next One, two you good months, will and over can't space,

how we're we with market. unbelievably and pleased So difficult this performing net-net, still in are bullish, we're

Patrick Davitt

Thank you.

Operator

with from is Securities. Brian question next The McKenna JMP

line Your open. is

Brian McKenna

Great, thanks.

color appreciate dividend payout around I ratio. So the and the

assume I ultimately will some maybe if underlying or get on that you of could So of an So drivers EPS about about EPS talk XX% and payout XXXX? $X, implies annually growth XX% XXXX in just XXXX you the dividend of $X.XX ratio your that to these figures?

Alan Kirshenbaum

I Sure, of through. a Brian. we appreciate spent time Look, the you. going Thank lot question.

We for we XXXX. over level we in up down that rate. in we As I and around -- XXXX, from refreshed I but XX% mentioned that an XXXX, expect wouldn't time I move earlier, will on in distribution the certainly were the forecast, XX% at lock particular,

XX%. So this to we're lower a little year, going do

in on want see so much could going depending table, one. XX% certainly It XX%-plus You we're the from years. future us about we that's things capital hold management allocation, talking at to higher to really how depends on back

Michael new And Marc on have call Doug about that doing Fund exciting products look, have and lot Stakes the on previous talked VI. lot and of a we like this in and Fund Estate something a have Estate calls, product GP Real We're number then Real Lending we Direct REIT and VI new of we well. year. in now, business business, rollouts just launched And the for right both the last as later a that

expect talked would that we substantial XXXX. to to continue dollar that grow So at we've up put our to about pretty able dividend rates year-over-year and growth be share business in all

Brian McKenna

Helpful. Thanks, Alan.

Alan Kirshenbaum

Of you, Brian. course. Thank

Operator

next from with UBS. Beatty is question Adam The

Your line is open.

Adam Beatty

Thank you and good morning.

of that and A portfolio, give the recognize of some et loss concerns EBITDA the terms of performance had de or some performance support in anything just you gains, we just ask guys by have Direct companies underlying Thanks. around color But the in Lending you growth book. the underlying the lot rates is sort wanted around from else offset and it's the or questions Just of years, give over portfolio portfolio? to really rates nonaccrual quality cetera. of and maybe about whether credit minimis could the the investors to have of

Marc Lipschultz

than it. into to on the that what have do before world-class we vanilla tremendous a Owl has us. you to. feed-only doesn't paid And Blue say focus to for get fluid we I will intensely. live answers strategies, breathe. central Credit business, matter. capital. and More to the amount results want permanent happy always fee-only Owl it that's actually be it quality question, shareholder, in for Blue from focus jump credit deliver tank the a really and been business and Look, matters your to I Remember, fees, a We

breathe and depending in to But just I us to we is Now said, this exactly we With what as that impact us, remains on credit you. deliver case -- our matters want a Blue and sit very again, quality doesn't LPs. where it strong. remind for our shareholder, it this because actually lot and how Owl live you

across at to strong on revenue portfolio average. portfolio very look That growth we performance. the see to it continue and is EBITDA We if to strong year-over-year, very say, continues be

any seen not request. in have increase We material amendment

a request. increase seen amendment have in material not We

continue on it portfolio, the We to continues well. to average monitor very but perform

an it's course, of Look, environment. uncertain

here as indeed and if, that's spending every don't it spend of not performance sitting say I portfolio what spend happens time about where that happens thinking our what seeing we the we in So not should the companies we're are or because day our time. if we if the But where underlying today.

large three I on only have platform. very our think companies we across non-accrual total

about from feel it cap and think the that very got on about points. less pull we of today, And good rate at there. to we run the the the X up here billion off we've place underwriting inception. sitting than average here basis we in sit annualized performance of the continue $XX look, So all back since an portfolio look I as numbers, us and first continue, in loss And originated you loans if here, to just to

those account points. And we have basis in of a fact, in when into portfolios realized well, actually gain as you gains take net X

continue strength, really head place to So and our darker we'll be days, for and continues a we but as be plan vigilant, good that. to we'll we're to continue into in

Adam Beatty

Marc the for the Excellent. detail Appreciate context. and it. you, Thank

Marc Lipschultz

you. Thank

Alan Kirshenbaum

Thanks, Adam.

Operator

with Ken from JPMorgan. is Worthington question next The

is open. line Your

Ken Worthington

Hi, good morning.

closed that XXXX? along did how on reengagement second And -- close in you as terms closed we I guess, did One gave what of the you of you've of the lines, you'd in on you it or that the Lending you've lending? between for then more inception. And X% general is versus that statistic Direct year? deals vary half same seeing the XXXX? since say, X% banks the And the lending tech see are stats what expect looked to from start look at of is in, how

Marc Lipschultz

higher. will lot variances quarter-to-quarter, perfectly but observed but amount say higher. pattern number attention of great, deals listen, will the of be maybe happy certainly be look, was there's year-to-year, tremendous be and The selective. we extremely note mean, maybe It's a of the recently. be to always was steady. obviously is no would pay we've going narrow say this, that I statistic, we'd days lower, would to Look, I we're mix generally of see to. do opportunity it, key I if investment so a been days

lands activity they whatever that. to earlier down, PE than we is course, volume -- doubt continue when And we're QX, to as M&A so are mathematically obviously, my were like There's and enter at our times new is originations down. that defy comparable is we obviously, that in look output you volume, And what of comments, we're year this said I in going not year this lower ago. originations And if therefore earlier than no course, input. a to M&A really seeing. more, of an

out but quality originating having at underwriting in of every spend and and a that relationships. don't people and the So by and apply what built these we of sort still looking the can live XXX vacuum, having selectivity we seeing we're day

there's We a that just great forces a benefit are -- in as so firms to an partner when we've someone really incumbent now be known get our reliable to companies. of system. They're at great proven companies likely in have to that us work our There's stay system credits and that's and even those lot many sold.

So kind selectivity. the to second say, the of the of that's question? what part I'd -- all was context, The

Ken Worthington

banks? the On

Marc Lipschultz

about world a the a it's It's a credit banks of private lenders. there, that It's multi-trillion-dollar The stories a big and I versus market, the listen, banks. lot Yes, out world both. are so right? needs know

think are a today, the arc public of commercial And of and come frankly, XX-years, we lenders lenders, for is the private which during interesting ourselves that stabilizing real force scale, private the available to to proved ones this markets of COVID, is and the Now others users. the consistently go. And change are and market. if about today, couple be the the an

in they tens and billions are markets the through. stabilize we in actually on the used economy public The of of syndication. Today, capital sitting to obviously dollars work need paper, markets to. of the a a So way they many banks role play frankly, that,

It in nonexistent we active quarter. not to so do market. meaningfully nearly really of the So was speak see syndicated a fourth

of this been world we've a lot slack So taking room therefore, the and that up there'll both where be but in certainly for time. plenty has a time of share, over

Ken Worthington

Okay, great. Thank you.

Alan Kirshenbaum

Thanks, Ken.

Operator

The Bedell next Deutsche Brian Bank. question from with is

open. Your is line

Brian Bedell

back Good or Do we on of environment, in risk quarters people the can tougher Obviously, appetite? positive thanks. improving do but retail, Great, you risk characterize folks. zoom think the morning, remaining sensing you're markets. that you If we can how have maybe a that couple near-term appetite of is are cautious?

on on -- rolling those, know be to I might you if are next then including that you your to color the And XX of comment any Estate? some months. to with products, products differentiated the be over gatekeepers kind of don't you don't know XX you're new also out having I more the or that likely but of you're cautious with they Real if that some embrace of platform, comment conversations great? any the And would mentioned able contrasting can

Doug Ostrover

a That's right. All me to lot for hit. try to

roll of announce So terms we'll in products, new them we them out. unfortunately, as

with gatekeepers allow the themselves want. that reason risk appetite particular, client want the at firms, strategies. their to really of to wire customers interesting, They firms, the differentiated what type them want allow they terms bases. the differentiate things the houses, of that's in because will it In end want And new, the

receptive. have been very they So

Now out. announce on. hopefully, two, these or of the that we'll next be maybe working But one rolled quarter two at and we'll think, haven't I in any we least

In year-to-date. risk up too the it's say appetite, early retail terms market of to the investor, with the

to market to the seen see really haven't should mindset. -- appetite Our a flows if I we flows downtick. the are hard will you still increase decent, going the up. but expect stays But predict robust, or with would and my we guess big risk market increase be, But uptick

focus thinking we said bullish on as very tell those talk We're year-over-year. on unbelievably opportunity. go are out gatekeepers want I And just and in to you particular will this quarter-over-quarter, I there's advisers, the back But to all we're some we I the all. to about they and go largest what but know earlier. of focused I

right think more we're would in We're earlier, in space. situated, as I continue than share our said and I So I anticipate get place. we fair the well to the

Marc Lipschultz

headline, retail individual I products And have There's this even or lot by idea could same a it's in a thing these monolith, the access of if from products, they far add, names. difference one points. of

performance mean, the place very Blue system, stability, how the we thought. call classes before, products, raising people the our returns mean than asset also common XXXX about in of many know Blue that I all rates. been you investors Owl have how and saying, we've products, products in Remember, credit the around yields. which talked I about is credit been the I let strength in are a that's predictability not where be to are distribution brand, many want products, Our within threat. the built Owl strong better you to the going and

where it a market. the you take expenses when even model Triple-net is you high quality from in your very, about strategy lease, we else not estate, of real remember, costs very long-dated what is talk extremely and definitely all to commitments estate our our if vacancies trying counterparties, different operating None from hope real credit And the better and about expenses a to that through buy cap part with of talking stays and and of model. and or therefore hope them not it for pass and you're is And deal leased and re-lease rate. a tenant. building

XX, is leases critical model clients. on XX-year Our to critical assets

investors. X% attributes for product, a advantaged many our example, for pays And tax with yield

just under So totally though the even different estate. it it's word real lives

categories, play products, delivering real to hopefully continue I are differences something develop our we'll that to different to of our as that streak within and strength, these partner new continue even that said, think So there Doug managers.

Brian Bedell

you. Thank color. great That’s

Alan Kirshenbaum

Brian. Thanks

Operator

from with KBW. The Mike next Brown is question

Your line is open.

Mike Brown

Great. Hi, good morning, everyone.

Doug Ostrover

Good morning.

Mike Brown

ask to the on margins. FRE wanted So

achieved guidance G&A gave You the target for ‘XX. XXXX. the margin And XX% for you Alan,

just the consider any a to wanted is continue if there puts But And here? margin you I XXXX. to into like and there So see we have target to then takes it XXXX? that for check sounds need expansion can

Alan Kirshenbaum

Sure. distribution placement costs. FRE That on, in Thanks, Mike. particular, question. our margin around little move we costs, what I based was saw is appreciate bit the XX% margin. XXXX, going to In a

And Doug costs. XXXX. that's margin, little well. us folks look touched I and as the so reaffirming I shift. expect move In end mix talked on can about FRE shift should on in That for for XX% we down think I'm where bit placement the the XXXX, what up of or ultimately mix based frankly, up a

we continue to mix but lower -- little It's takes costs. a little basis, little shift. If fee a institutional Institutional than a has see to less the retail. more longer also We close. placement see

little lower XQ, we the could if back placement margin. a in but little higher more we a year, flip margin, retail in little not see costs FRE exceed if on to in a starting continue on meet, in $XX the half the really FRE us So And up fee-paying the of raise. we sets if see that, that see through, side, in bit of the comes to particular, could billion AUM but also certainly maybe

channels and and or institutional So from of fund there's a when raise much and and of think think the how much our pull FRE retail push is bit how from little is you a wealth the channel. about the about margin mix

Mike Brown

for explanation. Thank Great. the you Thank question. taking my you for

Alan Kirshenbaum

Thank you, Mike.

Operator

Kotowski from Oppenheimer. is Chris with question next The

open. is line Your

Chris Kotowski

front just us Thanks I one the the then watch swaps and private -- when it A morning. it question. or to I tables will on the a my invested looking start for then from the they like love to and XX% good equity used for XX% are Yes, at color some one. mean get another. raising of dynamics it's of next fund. Michael, question from We normal would fund more over. And I taking of who guess, XX%, a those bit handoff

And and XX% handoff recent should fund tables me, so drawn. expect we about only -- IV is is from rest the invested. XX% the at and of the spoken look you're invested. the talking work? already -- most IV Funds presumably, I when money but Fund how And But III in XX-Q, and the for, not V how V only next drawdowns dynamics that your about to exactly of that fund the does were excuse -- one But about

Michael Rees

on market really Chris. that's question, the company. quote turn to should paid economics you for Thanks date will start the management -- to And we focus The fund. And on Yes. what then is reasonable commitments the come that we capital the time, a be amount that be for when that raising out a once given year all fund. or the in upwards the of of the fees even span the And payable two, can in. but are

fund. on wouldn't about of I So of as focus the deals capital gone amount XXX% to We commit much of each into fund. each that's

It the be might like all payments might ground money isn't go in paid earmarked that delayed investments. not time. a it's fashion. are that So on rapid for There not over

in and good That's about a Owl So much for the at impact in raised Blue annual focus looks level company really billion commitments left the fund. we've P&L. total management pace doesn't got is $X our And all about really good. that how pipeline metric on deployment, we Fund we've What V. per our

we're will it's of flip on some question Fund likely the this be start pacing switch to end rest VI. going key towards fees year. and in of the on is to we depending to 'XX when talking to about of VI, that And for the 'XX, at going point deployment mean for Fund the middle So turn investors to it's

Chris Kotowski

right? targeting flips or and VI but time V, fraction assume Fund over But... it for some were turns close I and be you Okay. than for -- the over, let's XX% by But of more first that, would XX% Fund the presumably, mean,

Michael Rees

it. We correct. and close that. how unlikely a we It's for typically -- wouldn't big that not a one That's Correct. it's like fund we have will done do

Chris Kotowski

it me. from Thank That’s Okay. you.

Michael Rees

Thanks, Chris.

Operator

Autonomous from question is with Research. next The Patrick Davitt

Your open. line is

Patrick Davitt

are inorganic year. year. growth Thank lighter guidance you. that you you on guide? are in mentioned the Just you What a follow-up of of this in in kind this the terms any guide? rate anticipating deployment firstly, guess, that And I year-over-year deployment assuming

Alan Kirshenbaum

leave Sure. Patrick. about. to one I'll talk Thanks, to of Inorganics, partners my that

what XXXX. terms of a the That we're of the $XX expecting, seeing we're heavier the on think In raise, institutional little side lighter to fund should is raise Patrick, say, the a a and little other what half in billion or I I retail is on side. balances the little out

Patrick Davitt

as obviously well a the equation of in credit. that's Sorry, part deployment, yes,

Marc Lipschultz

in and right it's Yes. credit, With particular, regard now. to deployment slower

we said, we I again, saw the our the remember, capital we not As see with permanent now. have with We like. investments see, that in crystal pools we suggesting the really the fourth variances, But deals quarter. it a ball. We're see, we and

shortage, if today, against shortage a really another our opportunities. anything, So well, way, put of capital those it's capital certainly opportunity not is --

the in half, So the really I don't exact state the of second M&A know. market

that terms In impact in of shows of, on the sort really only fees. P&L, frankly, up the, fees arrangement in

we're more what built We're that's prior seen our quarter-to-quarter. years, year that a predict -- and on. more pace don't robust this assuming we than we've in tepid again, So

you deliver inorganic, When be if is, the is a front on of extremely capabilities, it comment Blue capabilities. and for to and regard place a us, can there's performance? adjacent we which role that add that, are look, we us platform? With to to strengths and DNA of of the mind quick complementary it idea in really a really where product selective very things Is we suits want on the that but our deliver allows Owl of sort a market-leading interested, continue much across adding

be us in in in important Lending, of lead. where we'd couple. Direct that's in a GP that in, clear we're can to the leader we're Solutions, lease, really spaces we the in triple market products one Clearly, And net

we when But will handful good really people. things things continue active will a to study can is to We we all culture together, be certainly in not the side Oak kind look happen wonderful happen, and to that investors. side well. then in would expect, are a we Street as that take want of important, We you all of inbounds, continue certainly for. but one, be or that to of lot fit, never And We all won't we a the opportunity of to as that look. inorganic critically a predict get

Operator

That closing for our remarks. question-and-answer will Ostrover conclude session. I'll over to turn it Doug any

Doug Ostrover

for the Well, clearly We're all questions. ’XX. of proud thanks, everybody. our We appreciate results

You've I in the heard our business us words profitability growth. think describe past the stability, talk and using the Marc touched on

again, you've as sense $X we're And FRE, year-over-year. all And just this to I equally a well we're call, XX% highlight revenue, got DE, about XXXX. think over that up And billion the DE. of reaffirming excited growth AUM, on

you. the all to to look everyone Thank appreciate So talking soon. support, forward and

Operator

call. conference participating. you today's concludes this Thank gentlemen, and for Ladies

now You may disconnect.

Blue Owl Capital (OWL) 13 Feb 232022 Q4 Earnings call transcript