What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-23 compared with 2023-02-27 · 228 added, 234 removed, 409 unchanged (53% of the section changed)

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(dollars in thousands) 2023 2022

Net Loss Attributable to Blue Owl Capital Inc.

(After May 19, 2021) / Owl Rock (Prior to May 19, 2021) $ (9,289) $ (376,171)

Net Income (Loss) Attributable to Blue Owl Capital Inc.

$ 54,343 $ (9,289)

Fee-Related Earnings (1)

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(1) For the specific components and calculations of these Non-GAAP measures, as well as a reconciliation of these measures to the most comparable measure in accordance with GAAP, see “—Non-GAAP Analysis” and “—Non-GAAP Reconciliations.”

Our results for the year ended 2021 do not include the results of Oak Street or Wellfleet, and include partial results of Dyal Capital;

therefore, prior period amounts are not comparable to current period.

Please see “— GAAP Results of Operations Analysis” and “—Non-GAAP Analysis” for a detailed discussion of the underlying drivers of our results, including the accretive impacts of the Dyal Acquisition, Oak Street Acquisition and Wellfleet Acquisition (collectively “Acquisitions”).

Please see “—GAAP Results of Operations Analysis” and “—Non-GAAP Analysis” for a detailed discussion of the underlying drivers of our results.

On August 15, 2023, we closed the Par Four Acquisition, expanding our liquid credit strategy team.

See Note 3 to our Financial Statements for additional information.

On December 1, 2023, we closed the CHI Acquisition.

The acquisition increased our assets under managment by approximately $1 billion comprised of several funds and further strengthen Blue Owl’s market presence in the life sciences sector with an emphasis on mid-to-late-stage equity investments into biopharmaceutical and healthcare companies.

See Note 3 to our Financial Statements for additional information.

Assets Under Management

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$102.7 billion

Direct Lending Products

$84.6 billion

$57.1 billion

GP Capital Solutions Products

GP Strategic Capital

$54.2 billion

$31.1 billion

Real Estate Products

$26.9 billion

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$29.6 billion

GP Minority Equity

GP Minority Stakes

Commenced 2010

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Professional Sports

Minority Investments

Minority Stakes

Commenced 2021

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Commenced 2020

Liquid Credit

Commenced 2022

We finished the year ended December 31, 2022 with $138.2 billion of AUM, which included $88.8 billion of FPAUM.

For the year ended 2022, approximately 93% of our management fees were earned on AUM from Permanent Capital.

As of December 31, 2022, we have approximately $10.8 billion in AUM not yet paying fees, providing approximately $141 million of annualized management fees once deployed or upon the expiration of certain fee holidays.

All amounts shown as of December 31, 2023, totals may not sum due to rounding.

As of December 31, 2023, our AUM was $165.7 billion, which included $102.7 billion of FPAUM.

For the year ended December 31, 2023, approximately 92% of our management fees were earned on AUM from Permanent Capital.

As of December 31, 2023, we have $14.5 billion in AUM not yet paying fees, providing approximately $200 million of annualized management fees once deployed.

See “—Assets Under Management” for additional information, including important information on how we define these metrics.

Business Environment

Our business is impacted by conditions in the financial markets and economic conditions in the U.S., and to a lesser extent, elsewhere in the world.

We believe that our management-fee centric business model and base of Permanent Capital contribute to the resiliency of our earnings and the strength of our business growth.

In 2022, macroeconomic factors, including inflation, interest rates, global gross domestic product (“GDP”) growth, geopolitical instability and the impact of COVID-19 variants on economic growth, drove significant volatility in the public equity and fixed income markets.

inflation rose steeply through the first half of 2022, and although it eased during the second half of 2022, it has remained at an elevated level.

In an effort to combat inflation, the Federal Reserve began raising its target federal funds range during the first quarter of 2022 and continued raising throughout the year, weighing on U.S.

GDP growth and corporate earnings.

Through an environment where capital availability was more scarce, our Direct Lending products took market share, providing financing solutions to sponsors and companies at wider spreads and lower loan to value ratios on average, though our Direct Lending origination volume was impacted by the market environment and declined year over year.

Rising interest rates had a beneficial impact to our management fees, as higher base rates drove a meaningful increase in Part I Fees for the year.

Despite a more challenging industry fundraising backdrop, we held a final close for Dyal Fund V in 2022 at $12.9 billion, surpassing the initial $9 billion target.

The deployment potential for investment remains attractive with significant capital needs across the private alternative asset management universe.

Across the real estate industry, rising interest rates pressured cap rates and restrained transaction volume, while the inflationary environment in conjunction with higher interest expense impacted net operating income for many real estate owners.

Our Real Estate products, focused on triple net lease, benefited from the inflation-mitigating net lease structure and raised meaningful amounts of capital as we launched fundraising for a couple of new products in the second half of 2022.

Our business is impacted by conditions in the financial markets and economic conditions in the U.S., and to a lesser extent, globally.

We believe that our management-fee centric business model and base of Permanent Capital contribute to the resiliency of our earnings and the strength of our business growth, including during periods of market uncertainty and volatility.

During 2023, uncertainty around the pace of inflation growth, in conjunction with elevated interest rates and slowing global gross domestic product growth, weighed on industry M&A and capital markets activity, though volumes began to pick up in the latter part of the year.

During the quarter, 92% of our management fees were generated by Permanent Capital and the remainder predominantly from long-dated capital, with no meaningful pressure to our asset base from redemptions.

As a result, fundraising and capital deployment contributed to management fee and revenue growth of 26% in 2023 compared with the prior year.

We also ended the fourth quarter of 2023 with substantial available capital to deploy, reporting $14.5 billion of AUM not yet paying fees.

As trends in loan market activity improved again in the fourth quarter, direct lenders continued to play a significant role in the leveraged loan market.

Increasing repayments from levels seen earlier in the year allowed us to redeploy capital into higher yielding opportunities, while higher origination volume continued to have a beneficial impact on our management fees compared to the prior year and on our transaction fees quarter over quarter.

We continue to see attractive deployment opportunities for our GP Strategic Capital products, as capital needs across the private alternative asset management sector remain elevated, particularly in the current challenging fundraising and realization environment.

In Real Estate, industry valuations and transaction volumes remained muted due to a higher average interest rate environment, cost inflation, elevated vacancy rates, new supply dynamics, and uncertainty around future capital availability.

In contrast, our Real Estate business, focused on triple net lease to primarily investment grade tenants, continued to deploy significant capital and identify opportunities to monetize assets at meaningful spreads to our entry points.

Investors in our Real Estate products continue to benefit from the inflation-mitigating characteristics of the net lease structure, highly predictable net rent growth, and long-duration contractual income across the portfolio, and we are raising capital through various new products launched in 2022.

We are continuing to closely monitor developments related to the macroeconomic factors that have contributed to market volatility, and to assess the impact of these factors on financial markets and on our business.

Our future results may be adversely affected by slowdowns in fundraising activity and the pace of capital deployment, which could result in delayed or decreased management fees.

It is currently not possible to predict the ultimate effects of these events on the financial markets, overall economy and our consolidated financial statements.

Our future results may be adversely affected by slowdowns in fundraising activity and the pace of capital deployment, which could result in delayed management fees.

It is currently not possible to predict the ultimate effects of these events on the financial markets, overall economy and our Financial Statements.

See “ Item 1A.

Risk Factors — Risks Related to Macroeconomic Factors.

Additionally, we intend to pursue strategic acquisitions and investments to accelerate our growth and broaden our product offerings.

Our acquisition strategy is centered around driving additional scale or expanding capabilities that complement or augment our existing products.

Assets Under Management

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Year Ended December 31, 2023 Year Ended December 31, 2022

(dollars in millions) Direct Lending GP Capital Solutions Real

Estate Total Direct Lending GP Capital Solutions Real

(dollars in millions) Credit GP Strategic Capital Real Estate Total Credit GP Strategic Capital Real Estate Total

Beginning Balance $ 68,607 $ 48,510 $ 21,085 $ 138,202 $ 39,227 $ 39,906 $ 15,362 $ 94,495

Acquisition 6,529 — — 6,529 — — 15,362 15,362

Acquisitions 2,658 — — 2,658 6,529 — — 6,529

New capital raised 8,143 3,207 4,432 15,782 12,104 9,023 3,662 24,789

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Ending Balance $ 84,632 $ 54,199 $ 26,856 $ 165,687 $ 68,607 $ 48,510 $ 21,085 $ 138,202

Direct Lending.

Increase in AUM for the year ended December 31, 2022 was driven by the following:

• $6.5 billion from the Wellfleet Acquisition.

• $6.8 billion new capital raised in diversified lending, primarily driven by private wealth fundraising in ORCIC and a separately managed account.

• $4.1 billion new capital raised in technology lending, driven by continued fundraising in ORTF II and ORTIC.

• $1.0 billion in new capital raised in CLOs.

• $11.0 billion of additional net debt commitments across all of Direct Lending, as we continue to opportunistically manage leverage in our BDCs.

• $1.7 billion in distributions, which primarily relate to dividends paid from our BDCs.

Redemptions from these products were not material in 2022.

The increase in AUM for the year ended December 31, 2023 was driven by the following:

• $2.7 billion of products were added in connection with the Par Four Acquisition and the CHI Acquisition that closed in August 2023 and December 2023, respectively.

• $5.1 billion new capital raised in diversified lending, primarily driven by continued private wealth fundraising in OCIC, a private credit product and separately managed accounts.

• $2.4 billion new capital raised in technology lending, driven by continued private wealth fundraising in OTIC, OTF II and separately managed accounts.

• $5.3 billion of additional net debt commitments primarily in diversified lending and technology lending strategies, as we continue to opportunistically manage leverage in our BDCs.

• $3.5 billion offsetting decrease in distributions, which primarily relate to dividends paid from our BDCs.

Redemptions from these products were not material.

• $3.4 billion of overall appreciation across the platform.

GP Capital Solutions.

Increase in AUM for the year ended December 31, 2022 was driven by new capital raised, primarily in Dyal Fund V and related co-investment vehicles, and overall appreciation across all of our major products, partially offset by distributions in co-investment vehicles and Dyal Fund III.

Increase in AUM for the year ended December 31, 2022 was driven by new capital raised of $3.7 billion across various products, primarily Oak Street Real Estate Capital Fund VI, our recently launched triple net-lease drawdown fund, and Oak Street Net Lease Trust, our recently launched REIT, additional net debt commitments of $1.1 billion, primarily related to Oak Street Net Lease Trust, and $2.2 billion of overall appreciation across the platform, partially offset by distributions across various products.

GP Strategic Capital.

The increase in AUM for the year ended December 31, 2023 was driven by the overall appreciation primarily in our GP minority stakes and professional sports minority stakes strategies of $4.2 billion and new capital raised of $3.2 billion, primarily in Blue Owl GP Stakes VI, partially offset by distributions across the platform.

The increase in AUM for the year ended December 31, 2023 was driven by new capital raised of $4.4 billion across various products, primarily Blue Owl Real Estate Fund VI (“OREF VI”), our triple net-lease drawdown fund, Blue Owl Real Estate Net Lease Trust (“ORENT”), our real estate investment trust, and Blue Owl Real Estate Net Lease Property Fund (“ONLP”), overall appreciation across the platform of $1.4 billion and additional debt commitments of $0.7 billion, primarily related to ONLP and ORENT, partially offset by distributions of $0.8 billion primarily related to ONLP and Blue Owl Real Estate Fund V (“OREF V”).

Changes in FPAUM

Year Ended December 31, 2023 Year Ended December 31, 2022

(dollars in millions) Direct Lending GP Capital Solutions Real

Estate Total Direct Lending GP Capital Solutions Real

(dollars in millions) Credit GP Strategic Capital Real Estate Total Credit GP Strategic Capital Real Estate Total

Beginning Balance $ 49,041 $ 28,772 $ 10,997 $ 88,810 $ 32,029 $ 21,212 $ 8,203 $ 61,444

Acquisition 6,501 — — 6,501 — — 8,203 8,203

Acquisitions 2,625 — — 2,625 6,501 — — 6,501

New capital raised / deployed (1)

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Ending Balance $ 57,074 $ 31,075 $ 14,547 $ 102,696 $ 49,041 $ 28,772 $ 10,997 $ 88,810

(1) Reflects a change in classification during the fourth quarter of 2022 from fee basis step down to new capital raised / deployed for the fee holiday expiration in GP Capital Solutions Dyal Fund V of $2.1 billion on January 1, 2022.

Direct Lending.

Increase in FPAUM for the year ended December 31, 2022 was driven by a combination of continued fundraising and debt deployment, and the Wellfleet acquisition, partially offset by distributions, which primarily related to dividends paid from our BDCs, and a change in methodology included within change in value / other that reduced FPAUM by approximately $1.5 billion.

GP Capital Solutions.

Increase in FPAUM for the year ended December 31, 2022 was driven by new capital raised, primarily in Dyal Fund V.

Additionally, the expiration of a fee holiday in Dyal Fund V on January 1, 2022, drove an increase in FPAUM of $2.1 billion, which was partially offset by a decrease in FPAUM in Dyal Fund I of $0.8 billion, as such fund no longer pays management fees, and a step down of $0.9 billion from committed to invested capital in Dyal Fund III.

Increase in FPAUM for the year ended December 31, 2022 was driven primarily by capital raised of $1.7 billion in Oak Street Real Estate Capital Net Lease Property Fund and new capital raised of $1.1 billion in Oak Street Net Lease Trust.

(1) The year ended December 31, 2022 reflects a change in classification from fee basis step down to new capital raised / deployed for the fee holiday expiration in Blue Owl GP Stakes V of $2.1 billion on January 1, 2022.

The increase in FPAUM for the year ended December 31, 2023 was driven by the following:

• $2.6 billion of products were added in connection with the Par Four Acquisition and the CHI Acquisition that closed in August 2023 and December 2023, respectively.

• $3.7 billion new capital raised in diversified lending, primarily driven by continued private wealth fundraising in OCIC.

• $1.8 billion new capital raised in technology lending, driven by continued private wealth fundraising in OTIC and OTF II.

• $3.3 billion offsetting decrease in distributions, which primarily relate to dividends paid from our BDCs.

Redemptions from these products were not material.

• $3.1 billion of overall appreciation across the platform.

GP Strategic Capital.

The increase in FPAUM for the year ended December 31, 2023 was driven primarily by capital raised in Blue Owl GP Stakes VI.

The increase in FPAUM for the year ended December 31, 2023 was driven primarily by capital raised and deployment in OREF VI, ORENT and OREF V.

Product Performance

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There can be no assurance that any of these products or our other existing and future products will achieve similar returns.

MoIC and IRR data has not been presented for products that have launched within the last two years as such information is generally not meaningful (“NM”).

Direct Lending

Multiple of invested capital (“MoIC”) and internal rate of return (“IRR”) data has not been presented for products that have launched within the last two years as such information is generally not meaningful (“NM”).

(dollars in millions) Year of

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Diversified Lending (1)

ORCC 2016 $ 14,878 $ 6,019 $ 6,019 $ 2,409 $ 5,884 $ 8,293 1.52 x 1.38 x 12.3 % 9.0 %

ORCC II (9) 2017 $ 2,595 $ 1,345 $ 1,345 $ 340 $ 1,297 $ 1,637 NM 1.24 x NM 6.9 %

ORCC III 2020 $ 4,018 $ 1,800 $ 1,800 $ 229 $ 1,814 $ 2,043 1.14 x 1.13 x 11.0 % 10.1 %

ORCIC (9) 2020 $ 13,066 $ 5,532 $ 5,532 $ 332 $ 5,250 $ 5,582 NM 1.05 x NM 5.9 %

Blue Owl Capital Corporation 2016 $ 14,836 $ 5,970 $ 5,970 $ 2,862 $ 5,999 $ 8,861 1.72x 1.52x 13.4 % 9.8 %

Blue Owl Capital Corporation II (2) 2017 $ 2,588 $ 1,294 $ 1,264 $ 417 $ 1,265 $ 1,682 NM 1.36x NM 7.5 %

Blue Owl Capital Corporation III 2020 $ 4,192 $ 1,828 $ 1,828 $ 400 $ 1,888 $ 2,288 1.31x 1.29x 13.5 % 12.7 %

Blue Owl Credit Income Corp.

(2) 2020 $ 17,689 $ 7,979 $ 7,497 $ 788 $ 7,657 $ 8,445 NM 1.15x NM 11.3 %

Technology Lending (1)

ORTF 2018 $ 6,986 $ 3,234 $ 3,234 $ 441 $ 3,386 $ 3,827 1.25 x 1.18 x 11.7 % 8.3 %

ORTF II 2021 $ 5,739 $ 3,495 $ 1,220 $ 17 $ 1,225 $ 1,242 NM NM NM NM

Blue Owl Technology Finance Corp.

2018 $ 7,312 $ 3,289 $ 3,289 $ 663 $ 3,481 $ 4,144 1.39x 1.29x 12.4 % 9.1 %

Blue Owl Technology Finance Corp.

II 2021 $ 6,757 $ 4,129 $ 1,728 $ 95 $ 1,783 $ 1,878 1.18x 1.13x 16.1 % 11.0 %

First Lien Lending (3)

Owl Rock First Lien Fund Levered 2018 $ 2,817 $ 1,161 $ 863 $ 172 $ 867 $ 1,039 1.26x 1.21x 9.6 % 7.6 %

Owl Rock First Lien Fund Unlevered 2019 $ 154 $ 150 $ 150 $ 28 $ 143 $ 171 1.13x 1.09x 5.0 % 3.5 %

Blue Owl First Lien Fund Levered 2018 $ 2,455 $ 1,161 $ 912 $ 279 $ 937 $ 1,216 1.41x 1.34x 11.3 % 9.4 %

Blue Owl First Lien Fund Unlevered 2019 $ 613 $ 356 $ 156 $ 56 $ 128 $ 184 1.23x 1.18x 6.4 % 5.0 %

(1) Information presented in the AUM through Total Value columns for these vehicles is presented on a quarter lag due to these vehicles being public filers with the SEC and not yet filing their quarterly information as of our filing date.

Additional information related to these vehicles can be found in their filings with the SEC, which are not part of this report.

(2) For the purposes of calculating Gross IRR, the expense support provided to the fund would be impacted when assuming a performance excluding management fees (including Part I Fees) and Part II Fees, and therefore is not meaningful for OBDC II and OCIC.

(3) Blue Owl First Lien Fund is comprised of three feeder funds:

Onshore Levered, Offshore Levered and Insurance Unlevered.

The gross and net MoIC and IRR presented in the chart are for Onshore Levered and Insurance Unlevered as those are the largest of the levered and unlevered feeder funds.

gross and net MoIC for the Offshore Levered feeder fund is 1.38x and 1.29x, respectively.

The gross and net IRR for the Offshore Levered feeder is 10.5% and 7.7%, respectively.

All other values for Blue Owl First Lien Fund Levered are for Onshore Levered and Offshore Levered combined.

AUM is presented as the aggregate of the three Blue Owl First Lien Fund feeders.

Blue Owl First Lien Fund Unlevered Investor equity and note commitments are both treated as capital for all values.

(4) Includes reinvested dividends and share repurchases, if applicable.

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There can be no assurance that unrealized values will be realized at the valuations indicated.

(5) Gross multiple of invested capital (“MoIC”) is calculated by adding total realized proceeds and unrealized values of a product’s investments and dividing by the total amount of invested capital.

(8) Gross MoIC is calculated by adding total realized proceeds and unrealized values of a product’s investments and dividing by the total amount of invested capital.

Gross MoIC is calculated before giving effect to management fees (including Part I Fees) and Part II Fees, as applicable.

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An individual investor’s IRR may differ from the reported IRR based on the timing of capital transactions.

(9) For the purposes of calculating Gross IRR, the expense support provided to the fund would be impacted when assuming a performance excluding management fees (including Part I Fees) and Part II Fees, and therefore is not meaningful for ORCC II and ORCIC.

(10) Owl Rock First Lien Fund is comprised of three feeder funds:

Onshore Levered, Offshore Levered and Insurance Unlevered.

The gross and net MoIC and IRR presented in the chart are for Onshore Levered and Insurance Unlevered as those are the largest of the levered and unlevered feeder funds.

The gross and net MoIC for the Offshore Levered feeder fund is 1.25x and 1.17x, respectively.

The gross and net IRR for the Offshore Levered feeder is 9.1% and 6.1%, respectively.

All other values for Owl Rock First Lien Fund Levered are for Onshore Levered and Offshore Levered combined.

AUM is presented as the aggregate of the three Owl Rock First Lien Fund feeders.

Owl Rock First Lien Fund Unlevered Investor equity and note commitments are both treated as capital for all values.

GP Capital Solutions

GP Strategic Capital

(dollars in millions) Year of

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Value Gross (5) Net (6) Gross (7) Net (8)

GP Minority Equity (1)

Dyal Fund I 2011 $ 818 $ 1,284 $ 1,248 $ 583 $ 677 $ 1,260 1.16 x 1.01 x 3.0 % 0.2 %

Dyal Fund II 2014 $ 2,976 $ 2,153 $ 1,851 $ 637 $ 2,179 $ 2,816 1.79 x 1.52 x 14.9 % 10.0 %

Dyal Fund III 2015 $ 8,603 $ 5,318 $ 3,258 $ 3,069 $ 4,411 $ 7,480 2.80 x 2.30 x 31.2 % 23.6 %

Dyal Fund IV 2018 $ 13,875 $ 9,041 $ 5,596 $ 3,012 $ 6,430 $ 9,442 2.01 x 1.69 x 83.4 % 50.8 %

Dyal Fund V 2020 $ 13,471 $ 12,852 $ 1,789 $ — $ 2,283 $ 2,283 1.49 x 1.28 x 69.4 % 37.1 %

(1) Valuation-related amounts and performance metrics are presented on a quarter lag and are exclusive of investments made by us and the related carried interest vehicles of the respective products.

GP Minority Stakes (1)

Blue Owl GP Stakes I 2011 $ 711 $ 1,284 $ 1,266 $ 723 $ 498 $ 1,221 1.11x 0.96x 2.1 % -0.6 %

Blue Owl GP Stakes II 2014 $ 3,073 $ 2,153 $ 1,857 $ 703 $ 2,377 $ 3,080 1.98x 1.66x 15.0 % 10.3 %

Blue Owl GP Stakes III 2015 $ 9,540 $ 5,318 $ 3,273 $ 3,362 $ 5,101 $ 8,463 3.12x 2.59x 30.2 % 23.5 %

Blue Owl GP Stakes IV 2018 $ 15,027 $ 9,041 $ 5,864 $ 3,928 $ 7,262 $ 11,190 2.29x 1.91x 67.0 % 42.8 %

Blue Owl GP Stakes V 2020 $ 13,603 $ 12,852 $ 3,563 $ 1,914 $ 2,271 $ 4,185 1.36x 1.17x 36.8 % 16.7 %

(1) Information presented in the Invested Capital through IRR columns for these vehicles is presented on a quarter lag and is exclusive of investments made by the related carried interest vehicles of the respective products.

(2) Invested capital includes capital calls.

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Value Gross (6) Net (7) Gross (8) Net (9)

Oak Street Real Estate Capital Fund IV (1) 2017 $ 1,194 $ 1,250 $ 1,250 $ 1,384 $ 573 $ 1,957 1.72x 1.55x 27.1 % 21.8 %

Oak Street Real Estate Capital Net Lease Property Fund 2019 $ 6,345 $ 3,472 $ 3,472 $ 540 $ 3,719 $ 4,259 1.24x 1.22x 17.7 % 16.4 %

Oak Street Real Estate Capital Fund V (1) 2020 $ 3,579 $ 2,500 $ 1,377 $ 363 $ 1,488 $ 1,851 1.43x 1.34x 38.4 % 30.9 %

Oak Street Net Lease Trust (1) 2022 $ 3,259 $ 1,123 $ 361 $ 2 $ 359 $ 361 NM NM NM NM

Oak Street Real Estate Capital Fund VI (1) 2022 $ 1,850 $ 1,850 $ — $ — $ — $ — NM NM NM NM

(1) Valuation-related amounts and performance metrics, as well as invested capital and realized proceeds, are presented on a quarter lag where applicable.

(2) Invested capital includes investments by the general partner, capital calls, dividends reinvested and periodic investors closes, as applicable.

Blue Owl Real Estate Fund IV (1) 2017 $ 1,121 $ 1,250 $ 1,260 $ 1,478 $ 510 $ 1,988 1.76x 1.58x 24.8 % 20.3 %

Blue Owl Real Estate Net Lease Property Fund 2019 $ 6,767 $ 3,463 $ 3,747 $ 978 $ 3,634 $ 4,612 1.26x 1.23x 12.3 % 10.9 %

Blue Owl Real Estate Fund V (1) 2020 $ 3,984 $ 2,500 $ 2,504 $ 766 $ 2,456 $ 3,222 1.39x 1.29x 28.0 % 22.4 %

Blue Owl Real Estate Net Lease Trust (2) 2022 $ 4,396 $ 2,088 $ 2,088 $ 67 $ 2,007 $ 2,074 NM NM NM NM

Blue Owl Real Estate Fund VI (1) 2022 $ 5,271 $ 4,335 $ 438 $ 7 $ 434 $ 441 NM NM NM NM

(1) Information presented in the Invested Capital through IRR columns for these vehicles is presented on a quarter lag.

(2) Information presented in the AUM through Total Value columns for this vehicle is presented on a quarter lag due to the vehicle being a public filer with the SEC and not yet filing its quarterly information as of our filing date.

Additional information related to this vehicle can be found in its filings with the SEC, which are not part of this report.

(3) Invested capital includes investments by the general partner, capital calls, dividends reinvested, recallable capital which has been reinvested and periodic investor closes, as applicable.

(4) Realized proceeds represent the sum of all cash distributions to all investors.

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GAAP Results of Operations Analysis

As a result of the Acquisitions, prior period amounts are not comparable to current period amounts or expected future trends.

Dyal Capital’s, Oak Street’s and Wellfleet’s results of operations are included from the business combination dates, May 19, 2021, December 29, 2021, and April 1, 2022, respectively.

As a result of the Wellfleet Acquisition, prior period amounts may not be comparable to current period amounts or expected future trends.

Wellfleet’s results of operations are included from April 1, 2022.

For a discussion of our results for the year ended December 31, 2022, compared to the year ended December 31, 2021, please refer to “Blue Owl Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K , filed February 27, 2023.

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Administrative, transaction and other fees 200,746 145,895 54,851

Realized performance income 12,221 5,906 6,315

Performance revenues 3,621 12,221 (8,600)

Total Revenues, Net 1,731,608 1,369,722 361,886

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Total Expenses 1,413,792 1,372,205 41,587

Other Income (Loss)

Net losses on investments (132) (3,526) 3,394

Net losses on retirement of debt — (17,636) 17,636

Net gains (losses) on investments 4,203 (132) 4,335

Interest and dividend income 22,176 4,357 17,819

Interest expense (75,696) (60,068) (15,628)

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Change in earnout liability (6,409) (14,488) 8,079

Total Other Income (Loss) (47,132) (940,210) 893,078

Loss Before Income Taxes (49,615) (1,867,477) 1,817,862

Income tax benefit (9,380) (65,211) 55,831

Consolidated and Combined Net Loss (40,235) (1,802,266) 1,762,031

Net loss attributable to noncontrolling interests 30,946 1,426,095 (1,395,149)

Net Loss Attributable to Blue Owl Capital Inc.

Total Other Loss (71,432) (47,132) (24,300)

Income (Loss) Before Income Taxes 246,384 (49,615) 295,999

Income tax expense (benefit) 25,608 (9,380) 34,988

Consolidated and Combined Net Income (Loss) 220,776 (40,235) 261,011

Net (income) loss attributable to noncontrolling interests (166,433) 30,946 (197,379)

Net Income (Loss) Attributable to Blue Owl Capital Inc.

$ 54,343 $ (9,289) $ 63,632

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Management Fees .

The increase in management fees was primarily driven by the drivers below.

See Note 6 to our Financial Statements for additional details on our GAAP management fees by product and strategy.

• Direct Lending increased $206.3 million due to both the accretive impact of the Wellfleet Acquisition, as well as continued fundraising and deployment of capital within new and existing Direct Lending products.

• GP Capital Solutions increased $257.1 million, primarily driven by the accretive impact of the Dyal Acquisition that closed in May 2021, as well as continued fundraising in Dyal Fund V, partially offset by a $27.5 million increase in Strategic Revenue-Share Purchase consideration amortization.

• Real Estate increased $80.2 million due to the accretive impact of the Oak Street Acquisition that closed at the end of 2021, as well as continued fundraising and deployment of capital within new and existing Real Estate products.

The increase in management fees was primarily due to the drivers below.

See Note 6 to our Financial Statements for additional details on our GAAP management fees by strategy.

• Credit increased $259.9 million, including an increase in Part I Fees of $151.2 million, due to continued fundraising and deployment of capital within new and existing Credit products.

The increase in Part I Fees was also driven by higher interest rates.

• GP Strategic Capital increased $13.5 million, primarily driven by continued fundraising in Blue Owl GP Stakes V.

• Real Estate increased $42.2 million, attributable to continued fundraising and deployment of capital within new and existing Real Estate products, primarily ORENT, OREF VI and OREF V.

Administrative, Transaction and Other Fees .

The decrease in administrative, transaction and other fees was driven primarily by the following:

(i) a $42.2 million decrease in fee income earned for services provided to portfolio companies, reflecting a lower volume of transactions on which we earn such fees;

(ii) partially offset by a $21.8 million increase in dealer manager revenues due to growth in the distribution of our retail BDCs;

and (iii) an increase of $16.3 million in administrative fees, driven by a higher level of reimbursable expenses due to growth in our products and business overall.

The increase in administrative, transaction and other fees was driven primarily by the following:

• $21.0 million increase in administrative fees, driven by a higher level of reimbursable expenses due to growth of our products and business overall.

• $17.8 million increase in fee income earned for services provided to portfolio companies reflecting an increase in average transaction size.

• $16.1 million increase in dealer manager revenues due to growth in the distribution of our retail BDCs.

Compensation and Benefits.

Compensation and benefits expenses decreased, primarily due to the following:

• $784.0 million decrease in equity-based compensation, which was driven by the following:

(i) a $935.7 million decrease related to acquisitions, primarily due to a $1.2 billion charge related to Blue Owl Operating Group Units issued in connection with the Business Combination, with the remaining offsetting increase related to the Oak Street and Wellfleet Earnouts, which are classified as compensation;

(ii) an offsetting $93.1 million increase related to recurring annual equity-based grants to employees, as such amounts were granted for the first time during the fourth quarter of 2021;

and (iii) an offsetting $58.6 million increase related to one-time equity-based grants to employees in connection with the Business Combination, as such equity-based grants were made during the fourth quarter of 2021.

• $66.1 million increase due to the amortization of cash earnouts, primarily related to the Oak Street Acquisition.

• Remaining offsetting increase was driven by the higher compensation for existing and new employees, inclusive of the increase in headcount related to the Dyal Acquisition, Oak Street Acquisition and Wellfleet Acquisition.

• $107.5 million decrease in equity-based compensation, primarily reflecting a $163.9 million decrease in acquisition-related equity-based compensation primarily due to the settlement of the First Oak Street Earnout (as described in Note 3) in January 2023, partially offset by a $59.8 million increase in our other recurring annual equity grants driven by the additional grants made during the fourth quarter of 2023 in connection with year-end bonus compensation.

• $40.4 million decrease in acquisition-related cash compensation, primarily due to the settlement of the First Oak Street Earnout in January 2023.

• $123.9 million offsetting increase, driven by higher compensation to existing employees, as well as increased headcount due to our continued growth.

Amortization of Intangible Assets.

Amortization of intangible assets increased due to the addition of intangible assets in connection with the Business Combination, the Oak Street Acquisition and the Wellfleet Acquisition.

Amortization of intangible assets increased $61.6 million, primarily due to corporate actions taken during the first quarter of 2023, resulting in a change of the estimated useful lives of acquired trademarks.

As a result of the corporate actions, the remaining unamortized balance of the trademarks of $72.4 million was expensed through June 30, 2023.

This increase was partially offset by a decrease of $18.5 million related to investment management agreements that fully amortized in 2022.

See Note 3 to our Financial Statements for additional information.

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General, administrative and other expenses increased, primarily driven by the following:

(i) an increase in distribution costs of $67.7 million due to increased fundraising;

(ii) a $26.1 million increase in reimbursed expenses due to growth in our products and business overall;

(iii) a $13.9 million increase in occupancy costs driven by the increase in headcount and our continued growth;

(iv) a $12.8 million increase in professional fees driven by our continued growth and (v) an $11.2 million increase in expense support to certain Direct Lending products.

These increases were partially offset by a $47.1 million decrease in Transaction Expenses, primarily due to Business Combination and Oak Street Acquisition related expenses that were incurred in the prior year period.

• $23.2 million increase in occupancy costs, driven by additional leased space to accommodate our continued growth.

• $17.0 million increase in reimbursed expenses due to growth in our products and business overall.

• $14.0 million offsetting favorable change in expense support resulting from recoveries with certain products we manage.

• $10.5 million offsetting decrease in distribution costs, primarily related to our Credit and GP Strategic Capital products.

• The remaining net change was across various categories, driven by our continued growth.

Interest and Dividend Income.

The increase in interest and dividend income was driven by our $250.0 million interest-bearing revolving promissory note receivable from a product we manage that was entered into on August 8, 2022, and amended in November 2023.

Interest Expense .

The increase in interest expense was driven by higher average debt outstanding.

Change in TRA Liability.

The change in the TRA liability for the current year period and prior year period was not material.

Change in Warrant Liability.

In August 2022, the Public Warrants were redeemed, see Note 1 for additional information.

The change in the warrant liability for the current year period was driven by the decrease in the price of our Class A Shares, as well as a markdown to the contractual redemption values for the Public Warrants that were redeemed in August 2022.

The change in the warrant liability in the prior year period was driven by the increase in the price of our Class A Shares.

Change in Earnout Liability.

The increase in the earnout liability for the current year was primarily driven by the passage of time for the Oak Street Earnouts.

The change in the fair value of the earnout liability in the prior year was primarily due to the increase in our Class A Share price, as such input was a material driver of the valuation of the Earnout Securities (as defined in Note 1 to the Financial Statements) carried at fair value which were settled as of December 2021.

Income Tax Benefit

Prior to the Business Combination, our income was generally subject to New York City unincorporated business tax, as the operating entities are partnerships for U.S.

federal income tax purposes.

As a result of the Business Combination, the portion of income allocable to the Registrant is now also generally subject to corporate tax rates at the U.S.

federal and state and local levels.

For the period, the income tax benefit decreased due to lower pre-tax loss as a result of the drivers discussed above.

The change in the warrant liability for the current year period was driven by the increase in the price of our Class A Shares.

The change in the warrant liability in the prior year period was driven by the decrease in the price of our Class A Shares, as well as a markdown to the contractual redemption values for the Public Warrants that were redeemed in August 2022.

Income Tax Expense (Benefit)

The change in income tax expense (benefit) was due to pre-tax income in the current period as a result of the drivers discussed above.

Please see Note 10 to our Financial Statements for a discussion of the significant tax differences that impacted our effective tax rate.

Net Loss Attributable to Noncontrolling Interest

Net loss attributable to noncontrolling interests in the current year primarily represents the allocation to Common Units of their pro rata share of the Blue Owl Operating Group’s post-Business Combination net loss due to the drivers discussed above.

The Common Units represented an approximately 70% weighted average economic interest in the Blue Owl Operating Group during the year ended December 31, 2022.

Prior to the Business Combination, amounts attributable to noncontrolling interests were not significant, and related primarily to third-party interests held in certain of our consolidated investment adviser holding companies.

Net (Income) Loss Attributable to Noncontrolling Interests

Net (income) loss attributable to noncontrolling interests primarily represents the allocation to Common Units (as defined in Note 1 to our Financial Statements) of their pro rata share of the Blue Owl Operating Group’s net income or loss due to the drivers discussed above.

The Common Units represented an approximately 67% weighted average economic interest in the Blue Owl Operating Group for the year ended December 31, 2023.

Non-GAAP Analysis

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Fee-Related Earnings is a supplemental non-GAAP measure of our core operating performance used to make operating decisions and assess our core operating results, focusing on whether our core revenue streams, primarily consisting of management fees, are sufficient to cover our core operating expenses.

FRE performance revenues refers to the GAAP performance revenues that are measured and eligible to be received on a recurring basis and not dependent on realization events from the underlying investments.

Management also reviews the components that comprise Fee-Related Earnings (i.e., FRE revenues and FRE expenses) on the same basis used to calculate Fee-Related Earnings, and such components are also non-GAAP measures and have been identified with the prefix “FRE” in the tables and discussion below.

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net gains (losses) on investments, net losses on retirement of debt;

interest and dividend income;

interest expense;

changes in TRA, warrant and earnout liabilities;

Transaction Expenses are expenses incurred in connection with the Business Combination and other acquisitions and strategic transactions, including subsequent adjustments related to such transactions, that were not eligible to be netted against consideration or recognized as acquired assets and assumed liabilities in the relevant transactions.

FRE revenues and FRE expenses also exclude realized performance income and related compensation expense, as well as revenues and expenses related to amounts reimbursed by our products, including administrative fees and dealer manager reallowed commissions, that have no impact to our bottom line operating results, and therefore FRE revenues and FRE expenses do not represent our total revenues or total expenses in any given period.

FRE revenues and FRE expenses also exclude DE performance revenues and related compensation expense, as well as revenues and expenses related to amounts reimbursed by our products, including administrative fees and dealer manager reallowed commissions, that have no impact to our bottom line operating results, and therefore FRE revenues and FRE expenses do not represent our total revenues or total expenses in any given period.

DE performance revenues refers to GAAP performance revenues that are not FRE performance revenues.

Distributable Earnings

Distributable Earnings is a supplemental non-GAAP measure of operating performance that equals Fee-Related Earnings plus or minus, as relevant, realized performance income and related compensation, interest expense, as well as amounts payable for taxes and payments made pursuant to the TRA.

Distributable Earnings is a supplemental non-GAAP measure of operating performance that equals Fee-Related Earnings plus or minus, as relevant, DE performance revenues and related compensation, interest and dividend income, interest expense, as well as amounts payable for taxes and payments made pursuant to the TRA.

Amounts payable for taxes presents the current income taxes payable, excluding the impact of tax contingency-related accrued expenses or benefits, as such amounts are included when paid or received, related to the respective period’s earnings, assuming that all Distributable Earnings were allocated to the Registrant, which would occur following the exchange of all Blue Owl Operating Group Units for Class A Shares.

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Year Ended December 31,

(dollars in thousands) 2022 2021 $ Change

(dollars in thousands) 2023 2022

FRE revenues $ 1,660,459 $ 1,321,740

FRE expenses 652,052 529,318

Net loss (income) allocated to noncontrolling interests included in Fee-Related Earnings 7,709 (3,961) 11,670

Net income (loss) allocated to noncontrolling interests included in Fee-Related Earnings (10,690) 7,709

Fee-Related Earnings $ 997,717 $ 800,131

Distributable Earnings $ 927,838 $ 742,802

Fee-Related Earnings and Distributable Earnings increased as a result of the accretive impact of the Dyal Acquisition, Oak Street Acquisition and Wellfleet Acquisition, as well as higher FRE revenues in Direct Lending, GP Capital Solutions and Real Estate, partially offset by higher FRE expenses, as further discussed below.

Fee-Related Earnings and Distributable Earnings increased as a result of higher FRE revenues in Credit, GP Strategic Capital and Real Estate, partially offset by higher FRE expenses, as further discussed below.

Year Ended December 31,

(dollars in thousands) 2022 2021 $ Change

Direct Lending Products

(dollars in thousands) 2023 2022

Credit Platform

Diversified lending $ 637,999 $ 480,874

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Opportunistic lending 9,707 8,756

CLOs 19,440 — 19,440

Liquid credit 27,936 19,440

Other 1,491 —

Management Fees, Net 899,902 639,975

Administrative, transaction and other fees 85,566 67,400

FRE Revenues - Direct Lending Products 707,375 540,603 166,772

GP Capital Solutions Products

GP minority equity investments 513,613 233,505 280,108

FRE performance revenues 1,276 —

FRE Revenues - Credit Platform 986,744 707,375

GP Strategic Capital Platform

GP minority stakes 526,502 513,613

GP debt financing 16,921 13,611

Professional sports minority investments 1,611 477 1,134

Professional sports minority stakes 2,409 1,611

Management Fees, Net 545,832 528,835

Administrative, transaction and other fees 5,244 5,097

FRE Revenues - GP Capital Solutions Products 533,932 245,298 288,634

Real Estate Products

FRE Revenues - GP Strategic Capital Platform 551,076 533,932

Real Estate Platform

Net lease 122,365 80,179

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Administrative, transaction and other fees 274 254

FRE Revenues - Real Estate Products 80,433 — 80,433

FRE Revenues - Real Estate Platform 122,639 80,433

Total FRE Revenues $ 1,660,459 $ 1,321,740

FRE Management Fees .

The increase in FRE management fees was primarily driven by the drivers below:

• Direct Lending increased due to both the accretive impact of the Wellfleet Acquisition, as well as continued fundraising and deployment of capital within new and existing Direct Lending products.

• GP Capital Solutions increased, primarily driven by the accretive impact of the Dyal Acquisition that closed in May 2021, as well as continued fundraising in Dyal Fund V.

• Real Estate increased due to the accretive impact of the Oak Street Acquisition, as well as continued fundraising and deployment of capital within new and existing Real Estate products.

The increase in FRE management fees was primarily due to the drivers below.

• Credit FRE management fees increased $259.9 million, including an increase in Part I Fees of $151.2 million, due to continued fundraising and deployment of capital within new and existing Credit products.

The increase in Part I Fees was also driven by higher interest rates.

• GP Strategic Capital FRE management fees increased $17.0 million, primarily due to continued fundraising in Blue Owl GP Stakes V.

• Real Estate FRE management fees increased $42.2 million, primarily due to continued fundraising and deployment of capital within new and existing Real Estate products, primarily ORENT, OREF VI and OREF V.

FRE Administrative, Transaction and Other Fees .

The decrease in FRE administrative, transaction and other fees was driven primarily by a decrease in fee income earned for services provided to portfolio companies, reflecting a lower volume of transactions on which we e arn such fees.

The increase in FRE administrative, transaction and other fees was driven primarily by a $17.8 million increase in fee income earned for services provided to portfolio companies reflecting an increase in average transaction size.

Year Ended December 31,

(dollars in thousands) 2022 2021 $ Change

(dollars in thousands) 2023 2022

FRE compensation and benefits $ 467,272 $ 361,041

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FRE Compensation and Benefits.

FRE compensation and benefits expenses increased, driven by higher compensation for existing and new employees, inclusive of the increase in headcount related to the Dyal Acquisition, Oak Street Acquisition and Wellfleet Acquisition.

FRE compensation and benefits expenses increased, driven by higher compensation to existing employees, as well as increased headcount due to our continued growth.

FRE General, Administrative and Other Expenses .

FRE general, administrative and other expenses increased, primarily driven by:

(i) an increase in distribution costs of $44.8 million due to increased fundraising;

(ii) a $13.9 million increase in occupancy costs driven by the increase in headcount and our continued growth;

(iii) a $12.8 million increase in professional fees driven by our continued growth;

and (iv) the remaining net increase was across various categories, driven by our continued growth.

FRE general, administrative and other expenses increased, driven by the following:

• $22.5 million increase in occupancy costs, driven by additional leased space to accommodate our continued growth.

• $8.1 million increase in professional fees, driven by our continued growth.

• $26.3 million offsetting decrease in distribution costs, primarily related to our Credit and GP Strategic Capital products.

• The remaining net change was across various categories, driven by our continued growth.

Non-GAAP Reconciliations

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(dollars in thousands) 2023 2022

GAAP Net Loss Attributable to Class A Shares $ (9,289) $ (376,171)

Net loss attributable to noncontrolling interests (30,946) (1,426,095)

Income tax benefit (9,380) (65,211)

GAAP Loss Before Income Taxes (49,615) (1,867,477)

Net loss (income) allocated to noncontrolling interests included in Fee-Related Earnings 7,709 (3,961)

GAAP Net Income (Loss) Attributable to Class A Shares $ 54,343 $ (9,289)

Net income (loss) attributable to noncontrolling interests 166,433 (30,946)

Income tax expense (benefit) 25,608 (9,380)

GAAP Income (Loss) Before Income Taxes 246,384 (49,615)

Net income (loss) allocated to noncontrolling interests included in Fee-Related Earnings (10,690) 7,709

Strategic Revenue-Share Purchase consideration amortization 40,858 37,383

Realized performance income (12,221) (5,906)

Realized performance compensation 4,282 2,067

DE performance revenues (2,345) (12,221)

DE performance revenues compensation 821 4,282

Equity-based compensation - other 158,573 99,520

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Expense support (6,617) 8,194

Net losses on investments 132 3,526

Net losses on retirement of debt — 17,636

Net gains (losses) on investments (4,203) 132

Change in TRA liability 1,656 11,435

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Change in earnout liability 6,409 14,488

Interest and dividend income (22,176) (4,357)

Interest expense 75,696 60,068

Fee-Related Earnings 997,717 800,131

Realized performance income 12,221 5,906

Realized performance compensation (4,282) (2,067)

DE performance revenues 2,345 12,221

DE performance revenues compensation (821) (4,282)

Interest and dividend income 22,176 4,357

Interest expense (75,696) (60,068)

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Distributable Earnings $ 927,838 $ 742,802

Interest expense 55,711 27,275

Taxes and TRA payments 9,557 926

Fixed assets depreciation and amortization 2,304 665

Adjusted EBITDA $ 810,374 $ 456,188

Year Ended December 31,

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Strategic Revenue-Share Purchase consideration amortization 40,858 37,383

Realized performance income (12,221) (5,906)

DE performance revenues (2,345) (12,221)

Reimbursed expenses (109,662) (73,144)

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GAAP Compensation and Benefits $ 870,642 $ 894,686

Realized performance compensation (4,282) (2,067)

DE performance revenues compensation (821) (4,282)

Equity-based compensation - other (158,573) (98,798)

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Equity-based compensation - Business Combination grants (69,448) (72,857)

Capital-related compensation (4,327) (1,416)

Acquisition-related cash earnout amortization (25,731) (66,110)

Capital-related compensation (5,930) (4,327)

Reimbursed expenses (58,324) (38,816)

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GAAP General, Administrative and Other Expenses $ 242,809 $ 220,610

Transaction Expenses (9,089) (56,218)

Equity-based compensation - other — (722)

Transaction Expenses (13,308) (9,089)

Expense support 6,617 (8,194)

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We may also rely on our Revolving Credit Facility for liquidity needed to fund acquisitions, which we may replace with longer-term financing, subject to market conditions.

We ended 2022 with $68.1 million of cash and cash equivalents and approximately $900 million available under our Revolving Credit Facility.

We ended 2023 with $104.2 million of cash and cash equivalents and approximately $1.3 billion available under our Revolving Credit Facility.

Based on management’s experience and our current level of liquidity and assets under management, we believe that our current liquidity position and cash generated from management fees will continue to be sufficient to meet our anticipated working capital needs for at least the next 12 months.

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Debt Obligations

As of December 31, 2022, our long-term debt obligations consisted of $700.0 million aggregate principal amount of 3.125% Senior Notes due 2031 (the “2031 Notes”), $400.0 million aggregate principal amount of 4.375% Senior Notes due 2032 (the “2032 Notes”) and $350.0 million aggregate principal amount of 4.125% Senior Notes due 2051 (the “2051 Notes”and collectively with the 2031 Notes and the 2032 Notes, the “Notes”).

As of December 31, 2023, our long-term debt obligations consisted of $59.8 million aggregate principal amount of 7.397% Senior Notes due 2028 (the “2028 Notes”), $700.0 million aggregate principal amount of 3.125% Senior Notes due 2031 (the “2031 Notes”), $400.0 million aggregate principal amount of 4.375% Senior Notes due 2032 (the “2032 Notes”) and $350.0 million aggregate principal amount of 4.125% Senior Notes due 2051 (the “2051 Notes” and collectively with the 2028 Notes, 2031 Notes and the 2032 Notes, the “Notes”).

We also had $205.0 million outstanding under our Revolving Credit Facility as of December 31, 2023.

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See Note 4 to our Financial Statements for additional information regarding our debt obligations.

Management regularly reviews Adjusted EBITDA to assess our ability to service our debt obligations, and as such believes that such measure is meaningful to our investors.

Adjusted EBITDA is equal to Distributable Earnings plus interest expense, taxes payable and TRA payments, and fixed assets depreciation and amortization.

Adjusted EBITDA is a non-GAAP financial measure that supplements and should be considered in addition to and not in lieu of our GAAP results, and such measure should not be considered as indicative of our liquidity.

Adjusted EBITDA may not be comparable to other similarly titled measured used by other companies.

Adjusted EBITDA was $810.4 million for the year ended December 31, 2022.

Please see “—Non-GAAP Reconciliations” for reconciliations of Adjusted EBITDA to the most comparable measures prepared in accordance with GAAP.

Tax Receivable Agreement

As discussed in Note 11 to our Financial Statements in this report, we may in the future be required to make payments under the TRA.

As of December 31, 2022, assuming no material changes in the relevant tax law and that we generate sufficient taxable income to realize the full tax benefit of the increased amortization resulting from the increase in tax basis of certain Blue Owl Operating Group assets, we expect to pay approximately $936.2 million under the TRA (such amount excludes the adjustment to fair value for the portion classified as contingent consideration).

As discussed in Note 11 to our Financial Statements, we may in the future be required to make payments under the TRA.

As of December 31, 2023, assuming no material changes in the relevant tax law and that we generate sufficient taxable income to realize the full tax benefit of the increased amortization resulting from the increase in tax basis of certain Blue Owl Operating Group assets, we expect to pay approximately $1.0 billion under the TRA (such amount excludes the adjustment to fair value for the portion classified as contingent consideration).

Future cash savings and related payments under the TRA in respect of subsequent exchanges of Blue Owl Operating Group Units for Class A or B Shares would be in addition to these amounts.

Payments under the TRA are anticipated to increase the tax basis adjustment and, consequently, result in increasing annual amortization deductions in the taxable years of and after such increases to the original basis adjustments, and potentially will give rise to increasing tax savings with respect to such years and correspondingly increasing payments under the TRA.

The obligation to make payments under the TRA is an obligation of Blue Owl GP, and any other corporate taxpaying entities that in the future may hold GP Units, and not of the Blue Owl Operating Group.

The obligation to make payments under the TRA is an obligation of Blue Owl GP, and any other corporate taxpaying entities that in the future may hold GP Units (as defined in Note 1 to our Financial Statements) and not of the Blue Owl Operating Group.

We may need to incur debt to finance payments under the TRA to the extent the Blue Owl Operating Group does not distribute cash to Registrant or Blue Owl GP in an amount sufficient to meet our obligations under the TRA.

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The Program may be changed, suspended or discontinued at any time and will terminate upon the earlier of (i) the purchase of all shares available under the Program or (ii) December 31, 2024.

The Program replaced the previously authorized program (the “2021 Program,” collectively the “Programs”).

There were no repurchases made under the Program during the year ended December 31, 2023.

During the year ended December 31, 2022, we repurchased 7,637,877 Class A Shares under the Programs for an aggregate amount of $78.6 million, excluding commission costs, which includes 2,000,000 shares repurchased under the 2021 Program for an aggregate amount of $24.2 million, excluding commission costs, using cash on hand.

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During the year ended December 31, 2023, 1,222,135 RSUs with a fair value of $15.5 million were withheld to satisfy tax withholding obligations.

We classify the warrants issued in connection with the Business Combination as liabilities in our consolidated and combined statements of financial condition, as in the event of a change in control, warrant holders have the ability to demand cash settlement from us.

In August 2022 (the “Redemption Date”), we redeemed all outstanding Public Warrants.

See Note 1 to our Financial Statements for additional information.

The Private Placement Warrants are not redeemable at our option and continue to remain outstanding following the Redemption Date.

Oak Street Cash Earnout and Wellfleet Earnout

A portion of the Oak Street Cash Earnout and the Wellfleet Earnout (each as defined in Note 3 to our Financial Statements) is classified as a liability and represents the fair value of the obligation to make future cash payments that would need to be made if all the respective Oak Street Triggering Events and Wellfleet Triggering Events occur.

As we approach each Triggering Event, we generally would expect the respective liabilities to increase due to the passage of time, which would result in mark-to-market losses being recognized in our consolidated statement of operations.

In April 2023, we modified our purchase agreement with the Wellfleet sellers, such that Wellfleet Earnout Shares will be delivered in cash in lieu of Wellfleet Earnout Shares.

Further, the cash portion classified as compensation expense will be expensed and a corresponding accrued compensation liability will be recorded over the service period.

To the extent we have insufficient cash on hand or that we opt to, we may rely on debt or equity financing to facilitate these transactions in the future.

For details on the Oak Street Cash Earnout and Wellfleet Earnout, see Note 3 to the Financial Statements.

In January 2023, the Oak Street Triggering Event occurred with respect to the First Oak Street Earnout.

In April 2023, the Wellfleet Triggering Event occurred with respect to the First Wellfleet Earnout.

In January 2024, the Oak Street Triggering Event occurred with respect to the Second Oak Street Earnout.

For details on the Oak Street Cash Earnout and Wellfleet Earnouts, see Note 3 to the Financial Statements.

Dividends and Distributions

Starting in 2023, we moved to a fixed quarterly dividend based on our expected annual Distributable Earnings for the current fiscal year, which will be reassessed on an annual basis.

For the fourth quarter of 2023, we declared a dividend of $0.14 to holders of record as of the close of business on February 23, 2024, which will be paid on March 5, 2024.

Starting in 2023, we intend to move to a fixed quarterly dividend based on the Company’s expected annual Distributable Earnings for the current fiscal year, and will be reassessed on an annual basis.

We expect to set the target annual dividend for fiscal year 2023 at $0.56 per Class A Share (representing a fixed quarterly dividend of $0.14 per Class A Share), subject to the approval of the Board each quarter on or prior to each quarterly distribution date and in compliance with Delaware law, and such dividends are paid following the end of each quarter.

We set the target annual dividend for fiscal year 2024 at $0.72 per Class A Share (representing a fixed quarterly dividend of $0.18 per Class A Share), subject to the approval of the Board each quarter on or prior to each quarterly distribution date and in compliance with Delaware law, and such dividends are paid following the end of each quarter.

We intend to increase our fixed dividend each year, in line with our expected growth in Distributable Earnings.

When setting our dividend, our Board considers Blue Owl’s share of Distributable Earnings, and makes adjustments as necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and products, including funding of GP commitments and potential strategic transactions;

to provide for future cash requirements such as tax-related payments, operating reserves, fixed asset purchases under the Company's share repurchase program and dividends to stockholders for any ensuing quarter;

to provide for future cash requirements such as tax-related payments, operating reserves, fixed asset purchases, purchases under the Company's share repurchase program and dividends to stockholders for any ensuing quarter;

or to comply with applicable law and the Company's contractual obligations.

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No assurance can be given that we will be able to issue new debt, enter into new credit facilities or issue equity or other securities in the future on attractive terms or at all.

Adverse market conditions, including from unexpectedly high and persistent inflation, an increasing interest rate environment, geopolitical events, and ongoing impact from COVID-19 globally, may negatively impact our liquidity.

Adverse market conditions, including from unexpectedly high and persistent inflation, an increasing interest rate environment, geopolitical events, and the current instability experienced by some financial institutions, may negatively impact our liquidity.

Cash flows from management fees may be impacted by a slowdown or a decline in fundraising and deployment, as well as declines in the value of investments held in certain of our products.

LIBOR Transition

On March 5, 2021, the U.K.

Financial Conduct Authority announced that it would phase out LIBOR as a benchmark immediately after December 31, 2021, for sterling, euro, Japanese yen, Swiss franc and 1-week and 2-month U.S.

Dollar settings and immediately after June 30, 2023, the remaining U.S.

Dollar settings.

Our Notes are fixed rate borrowings, and therefore the LIBOR phase out will not have an impact on this borrowing.

The Revolving Credit Facility is subject to SOFR rates at our option, or alternative rates that are not tied to LIBOR.

Certain of our products hold investments and have borrowings that are tied to LIBOR, and we continue to focus on managing any risk related to those exposures.

Our senior management has oversight of these transition efforts.

We hold the majority of our cash balances with a single highly rated financial institution and such balances are in excess of Federal Deposit Insurance Corporation insured limits.

See “Item 1A.

Risk Factors—Risks Related to Our Legal and Regulatory Environment—Changes to the method of determining LIBOR or the selection of a replacement for LIBOR may affect the value of investments held by our products.”

Risk Factors — Risks Related to Macroeconomic Factors .”

Cash Flows Analysis

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One of our largest operating cash outflows generally relates to bonus expense, which are generally paid out during the first quarter of the year following the expense.

Net cash flows from operating activities increased from the prior year period due to the inclusion of the GP Capital Solutions and Real Estate related cash flows, as well as higher management fees from our Direct Lending products.

These increases were partially offset by higher 2021 discretionary bonuses, which were paid in the first quarter of 2022, as compared to discretionary bonuses in 2020, which were paid in the first quarter of 2021.

Net cash flows from operating activities increased from the prior year period due to higher management fees, partially offset by higher operating expenses, in particular higher bonus payments made during the first quarter related to the prior year.

Included in the year ended December 31, 2023, were the cash outflows of the portion of the First Oak Street Earnout classified as contingent consideration that settled in January 2023.

The amount paid up to the acquisition-date fair value was included in financing activities and the remainder (i.e., accretion since the acquisition date) was included in operating activities.

Investing Activities.

Cash flows from investing activities for 2023 were primarily related to purchases of investments including funding of the promissory note from a product that we manage, cash outflows related to office space-related leasehold improvements, as well as cash consideration paid in connection with the Par Four Acquisition.

In addition, investment activities included inflows from repayments on our interest-bearing revolving promissory note receivable from a product we manage.

Cash flows from investing activities for 2022 were primarily attributable to investments by us into our products, cash consideration paid in connection with the Wellfleet Acquisition and cash outflows related to office space-related leasehold improvements.

In 2021, cash flows from investing activities were primarily related to the cash consideration paid in connection with the Dyal Acquisition and Oak Street Acquisition.

In 2021, we also invested excess liquidity from our Notes offerings and retained earnings in various fixed income investments and subsequently sold such investments for general corporate purposes.

Financing Activities.

Cash flows from financing activities for 2022 were primarily driven by dividends on our Class A Shares and related distributions on our Common Units (i.e., noncontrolling interests).

Cash flows from financing activities for 2023 were primarily related to distributions on our Common Units (noncontrolling interests) and dividends on our Class A Shares.

In addition, we had borrowings and repayment activity under our Revolving Credit Facility and the issuance of our 2028 Notes, the net proceeds of which borrowings were used to finance working capital needs and general capital purposes.

Included in the year ended December 31, 2023, was a portion of the cash outflows related to the First Oak Street Earnout classified as contingent consideration that settled in January 2023, as discussed above.

Cash flows from financing activities for 2022 were primarily related to distributions on our Common Units (noncontrolling interests) and dividends on our Class A Shares.

Our cash flows from financing activities also benefited from a net increase related to the proceeds from our 2032 Notes, which were used to finance working capital needs and general capital purposes, including acquisitions, partially offset by repayments under our Revolving Credit Facility.

Cash flows related to financing activities for 2021 were primarily driven by cash proceeds from the Business Combination, as well as related cash consideration paid to certain pre-Business Combination Owl Rock owners.

Additionally, distributions of pre-Business Combination-related earnings were also made during 2021, with a final distribution of $52.0 million related to pre-Business Combination-related earnings made during the third quarter of 2021.

Cash flows related to financing activities in 2021 also included the proceeds from our 2031 Notes, which proceeds were used in part to repay our previously outstanding Term Loan and proceeds from our 2051 Notes, which proceeds were used to finance working capital needs and general capital purposes, including acquisitions.

We also made various short-term borrowings and repayments under our revolving credit facilities.

Critical Accounting Estimates

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Investments Held by our Products

The fair value of the investments held by our Direct Lending products and certain Real Estate products is the primary input to the calculation for the majority of our management fees.

Management fees from our GP Capital Solutions and other Real Estate products are generally based on commitments or investment cost, so our management fees are generally not impacted by changes in the estimated fair values of investments held by these products.

The fair value of the investments held by our products in our Credit and Real Estate platforms is the primary input to the calculation for the majority of our management fees.

Management fees from our GP Strategic Capital and other Real Estate products are generally based on commitments or investment cost, so our management fees are generally not impacted by changes in the estimated fair values of investments held by these products.

However, to the extent that management fees are calculated based on investment cost of the product’s investments, the amount of fees that we may charge will increase or decrease from the effect of changes in the cost basis of the product’s investments, including potential impairment losses.

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See Note 9 to our Financial Statements for additional details.

Earnout Liability and Private Placement Warrants Liability

The fair values of our Earnout Securities liability and Private Placement Warrants liability were determined using various significant unobservable inputs, including a discount rate and our best estimate of expected volatility and expected holding periods.

Earnout Liability and Warrant Liability

The fair values of our earnout liability and warrant liability were determined using various significant unobservable inputs, including a discount rate and our best estimate of expected volatility and expected holding periods.

Changes in the estimated fair values of these liabilities may have material impacts on our results of operations in any given period, as any increases in these liabilities have a corresponding negative impact on our GAAP results of operations.

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Equity-based Compensation

The grant-date fair values of our RSU and Incentive Unit grants, as well as the Wellfleet Earnouts are generally determined using our Class A Share price on the grant date, adjusted for the lack of dividend participation during the vesting period, and the application of a discount for lack of marketability on RSUs and Incentive Units that are subject to post-vesting transfer restrictions.

The grant-date fair values of our RSU and Incentive Unit (both defined in Note 1 to our Financial Statements) grants, as well as the Wellfleet Earnouts are generally determined using our Class A Share price on the grant date, adjusted for the lack of dividend participation during the vesting period, and the application of a discount for lack of marketability on RSUs and Incentive Units that are subject to post-vesting transfer restrictions.

The higher these discounts, the lower the compensation expense taken over time for these grants.

For the Oak Street Earnout Units that were classified as equity-based compensation for GAAP, we determines the grant date fair value using Monte Carlo simulations that had various significant unobservable inputs.

For the Oak Street Earnout Units that were classified as equity-based compensation for GAAP, we determined the grant date fair value using Monte Carlo simulations that had various significant unobservable inputs.

The assumptions used have a material impact on the valuation of these grants, and include our best estimate of expected volatility, expected holding periods and appropriate discounts for lack of marketability.

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The higher the expected holding periods and discount for lack of marketability, the lower the compensation expense taken for these grants.

See Note 8 to our Financial Statements for additional details.

See Note 8 to our Financial Statements.

Deferred Tax Assets

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However, given the indefinite carryforward period available for NOLs and the conservative estimates used to prepare the taxable income projections, the sensitivity of our estimates and assumptions are not likely to have a material impact on our conclusion that a valuation allowance is not needed.

Impairment of Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Our ongoing accounting for goodwill and other intangible assets requires us to make significant estimates and assumptions when evaluating these assets for impairment.

We generally undertake a qualitative review of factors that may indicate whether an impairment exists.

We take into account factors such as the growth in FPAUM and management fees, general economic conditions, and various other factors that require judgement in deciding whether a quantitative analysis should be undertaken.

We take into account factors such as the adverse impacts to FPAUM and management fees and general economic conditions that require judgement in deciding whether a quantitative analysis should be undertaken.

Our evaluation for indicators of impairment may not capture a potential impairment, which could result in an overstatement of the carrying values of goodwill and other intangible assets.

We also estimate the useful lives of our finite-lived intangible assets for purposes of amortization.

The useful lives are based on our judgment of the expected future economic benefits of the assets.

Changes in estimated useful lives could result in significant changes to the amount of amortization expense recognized in future periods.

Variable Interest Entities

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What changed 10-K

Item 7. Management’s Discussion and Analysis