What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-03 compared with 2023-11-02 · 175 added, 266 removed, 456 unchanged (49% of the section changed)

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For a description of our business, please see “Item 1.

Business” in our Annual Report and “Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—One Blue Owl” in our quarterly report on Form 10-Q for the quarter ended June 30, 2023 .

2023 Third Quarter Overview

Three Months Ended September 30, Nine Months Ended September 30,

Business” in the Annual Report.

2024 First Quarter Overview

Three Months Ended March 31,

(dollars in thousands) 2024 2023

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

Net Income Attributable to Blue Owl Capital Inc.

$ 25,091 $ 8,317

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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 (as defined in Note 1 to our Financial Statements), expanding our product offering in our liquid credit strategy.

See Note 3 to our Financial Statements for additional information.

On October 30, 2023, we announced an agreement to acquire funds managed by Cowen Healthcare Investments, a life sciences investment manager, from Cowen Investment Management.

The transaction is subject to customary closing conditions and expected to close in the fourth quarter of 2023.

The acquisition is expected to add approximately $1 billion in assets under management across 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.

In April 2024, we announced our entry into an agreement to acquire Kuvare Insurance Services LP (dba Kuvare Asset Management) (“KAM”), a boutique investment management firm focused on providing asset management services to the insurance industry, including Kuvare UK Holdings (“Kuvare”), for $750 million (the “KAM Acquisition”).

We will fund the KAM Acquisition through a combination of $325 million in cash and $425 million in Blue Owl Class A common stock.

The KAM Acquisition is expected to close in the second or third quarter of 2024 and remains subject to customary regulatory approvals and other closing conditions and specified termination rights.

Separately, we made a long-term investment in Kuvare, purchasing $250 million of preferred equity.

In April 2024, we announced our entry into an agreement to acquire Prima Capital Advisors (“Prima”) for $170 million (the “Prima Acquisition”).

The Prima Acquisition will be funded through a combination of approximately $157 million of Class A Shares, Class C Shares and Blue Owl Operating Group Units and approximately $13 million in cash, subject to certain closing consideration adjustments.

The Prima Acquisition is expected to close in the second or third quarter of 2024, subject to customary closing conditions.

Assets Under Management

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Commenced 2022

As of September 30, 2023, our AUM was $156.9 billion, which included $97.0 billion of FPAUM.

For the nine months ended September 30, 2023, approximately 92% of our management fees were earned on AUM from Permanent Capital.

As of September 30, 2023, we have $12.6 billion in AUM not yet paying fees, providing approximately $175 million of annualized management fees once deployed.

All amounts shown as of March 31, 2024, totals may not sum due to rounding.

As of March 31, 2024, our AUM was $174.3 billion, which included $105.4 billion of FPAUM.

For the three months ended March 31, 2024, approximately 90% of our management fees were earned on AUM from Permanent Capital.

As of March 31, 2024, we have $16.8 billion in AUM not yet paying fees, providing over $240 million of annualized management fees once deployed.

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

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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 the third quarter of 2023, uncertainty around the pace of inflation growth, in conjunction with elevated interest rates and slowing global gross domestic product growth, continued to weigh on industry deal activity, though activity has picked up from earlier in 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 continued management fee and earnings growth for Blue Owl.

We also ended the third quarter of 2023 with substantial available capital to deploy, reporting $12.6 billion of AUM not yet paying fees.

While broadly syndicated loan market activity modestly picked up, direct lenders continued to occupy a substantial share of the leveraged loan market.

Increasing repayments from levels seen earlier in the year allowed us to redeploy capital into higher yielding opportunities, while elevated interest rates continue to have a beneficial impact on our management fees compared to the prior year.

During the first quarter of 2024, industry M&A and capital markets activity remained moderately constructive, a continuation of the improvement relative to late 2022 and early 2023.

Over the past twelve months, 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.

Fundraising and capital deployment contributed to management fee growth of 22% over the last twelve months.

We ended the first quarter of 2024 with substantial available capital to deploy, reporting $16.8 billion of AUM not yet paying fees.

Activity in the loan market improved during the quarter, with direct lenders continuing to play a significant role in new financings alongside syndicated market activity, which recovered meaningfully from low levels in 2023.

Industry-wide, refinancings accelerated with greater capital availability, offsetting some of the new origination volume.

For Blue Owl, positive net deployment, ongoing capital raising, and the listing of OBDE on the NYSE continued to drive management fees higher.

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 remain under pressure due to a combination of rising interest rates, cost inflation, elevated vacancy rates and uncertainty around future capital availability.

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

Our investors 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.

In addition to our leading franchise in larger-cap GP stakes, we recently launched a strategy intended to finance mid-cap alternative asset managers, further expanding our suite of solutions.

In Real Estate, industry transaction volumes increased slightly, in conjunction with higher commercial mortgage-backed securities issuances.

Our Real Estate business, focused on single tenant triple net lease to primarily investment grade tenants, continued to deploy capital across four major themes:

digital infrastructure, onshoring, healthcare real estate, and essential retail.

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 across institutional and wealth channels.

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.

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See “ Item 1A.

Risk Factors — Risks Related to Macroeconomic Factors” in our Annual Report and “Item 1A.

Risk Factors — Difficult market and political conditions may reduce the value or hamper the performance of the investments made by our products or impair the ability of our products to raise or deploy capital” in our quarterly report on Form 10-Q for the period ended March 31, 2023.

Risk Factors — Risks Related to Macroeconomic Factors.

” in our Annual Report.

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

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In addition, our calculation of AUM includes amounts that are fee exempt (i.e., not subject to fees).

As of September 30, 2023, assets under management related to us, our executives and other employees totaled approximately $2.9 billion (including $1.7 billion related to accrued carried interest).

As of March 31, 2024, assets under management related to us, our executives and other employees totaled approximately $3.6 billion (including $1.8 billion related to accrued carried interest).

A portion of these assets under management are not charged fees.

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Management uses AUM not yet paying fees as an indicator of management fees that will be coming online as we deploy existing assets in products that charge fees based on deployed and not uncalled capital, as well as AUM that is currently subject to a fee holiday that will expire in the future.

AUM not yet paying fees could pr ovide approximately $175 million of additional annualized management fees once deployed or upon the expiration of the relevant fee holidays.

AUM not yet paying fees could provide over $240 million of additional annualized management fees once deployed or upon the expiration of the relevant fee holidays.

Permanency and Duration of Assets Under Management

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Changes in AUM

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022

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

Beginning Balance $ 73,793 $ 50,934 $ 24,826 $ 149,553 $ 56,827 $ 45,674 $ 16,639 $ 119,140

Acquisition 1,645 — — 1,645 — — — —

New capital raised 2,148 98 680 2,926 5,472 2,910 434 8,816

Change in debt 1,954 — — 1,954 3,058 — 1,590 4,648

Distributions (926) (47) (184) (1,157) (471) (304) (239) (1,014)

Change in value / other 913 413 619 1,945 800 (441) 190 549

Ending Balance $ 79,527 $ 51,398 $ 25,941 $ 156,866 $ 65,686 $ 47,839 $ 18,614 $ 132,139

Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

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

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

Acquisition 1,645 — — 1,645 6,529 — — 6,529

New capital raised 3,030 662 1,049 4,741 1,940 320 1,539 3,799

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Ending Balance $ 91,289 $ 55,793 $ 27,238 $ 174,320 $ 71,617 $ 49,167 $ 23,590 $ 144,374

Increase in AUM for the nine months ended September 30, 2023 was driven by the following:

• $1.6 billion of products in the liquid credit strategy were added in connection with the Par-Four Acquisition that closed in August 2023.

• $3.3 billion new capital raised in diversified lending, primarily driven by private wealth fundraising in OCIC and a separately managed account.

• $1.9 billion new capital raised in technology lending, driven by continued fundraising in OTIC, a separately managed account and OTF II.

The increase in AUM for the three months ended March 31, 2024 was driven by the following:

• $1.3 billion new capital raised in diversified lending, primarily driven by continued private wealth fundraising in OCIC.

• $1.3 billion new capital raised in first lien lending, primarily driven by recently launched products.

• $0.3 billion new capital raised in technology lending, primarily driven by continued private wealth fundraising in OTIC.

• $3.9 billion of additional net debt commitments primarily in diversified lending and technology lending strategies, as we continue to opportunistically manage leverage in our BDCs.

• $2.6 billion of overall appreciation across the platform.

• $1.2 billion offsetting decrease in distributions, which primarily relate to dividends paid from our BDCs.

Redemptions from these products were not material.

Redemptions and repurchases from these products were not material.

• $1.0 billion of overall appreciation across the platform.

GP Strategic Capital.

Increase in AUM for the nine months ended September 30, 2023 was driven by the overall appreciation across all of our major products of $3.4 billion and new capital raised of $0.6 billion, primarily in our professional sports minority stakes strategy, partially offset by distributions in Blue Owl GP Stakes IV and Blue Owl GP Stakes III.

Increase in AUM for the nine months ended September 30, 2023 was driven by new capital raised of $3.4 billion across various products, primarily Blue Owl Real Estate Fund VI (“OREF VI”), our recently launched triple net-lease drawdown fund, Blue Owl Real Estate Net Lease Trust (“ORENT”), our recently launched 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, partially offset by distributions in ONLP and Blue Owl Real Estate Fund V.

The increase in AUM for the three months ended March 31, 2024 was driven by overall appreciation primarily in our GP minority stakes strategy of $1.0 billion and new capital raised of $0.7 billion, primarily from our new mid-cap minority equity stakes product.

The increase in AUM for the three months ended March 31, 2024 was driven by new capital raised of $1.0 billion across various products, primarily Blue Owl Real Estate Net Lease Trust (“ORENT”), our real estate investment trust, and Blue Owl Real Estate Fund VI (“OREF VI”), our triple net-lease drawdown fund, partially offset by dispositions of certain assets of $0.6 billion.

Changes in FPAUM

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022

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

Beginning Balance $ 52,077 $ 28,462 $ 13,084 $ 93,623 $ 41,409 $ 26,678 $ 9,430 $ 77,517

Acquisition 1,645 — — 1,645 — — — —

New capital raised / deployed 603 161 997 1,761 3,595 2,675 1,095 7,365

Fee basis step down — (1) — (1) — (881) — (881)

Distributions (860) — (179) (1,039) (433) (15) (220) (668)

Change in value / other 835 — 197 1,032 721 — 81 802

Ending Balance $ 54,300 $ 28,622 $ 14,099 $ 97,021 $ 45,292 $ 28,457 $ 10,386 $ 84,135

Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

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

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

Acquisition 1,645 — — 1,645 6,501 — — 6,501

New capital raised / deployed 2,090 688 939 3,717 2,021 (8) 1,078 3,091

3,625 387 3,354 7,366 8,693 9,035 2,293 20,021

Fee basis step down (1)

— (334) — (334) — (1,779) — (1,779)

Distributions (1,157) — (198) (1,355) (732) (203) (151) (1,086)

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Ending Balance $ 58,779 $ 31,763 $ 14,895 $ 105,437 $ 51,150 $ 28,561 $ 11,922 $ 91,633

(1) The nine months ended September 30, 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.

Increase in FPAUM for the nine months ended September 30, 2023 was driven by a combination of continued fundraising, primarily in diversified lending and technology lending strategies, the overall appreciation across the platform and the Par-Four Acquisition, partially offset by distributions, which primarily related to dividends paid from our BDCs.

The increase in FPAUM for the three months ended March 31, 2024 was driven by the following:

• $1.3 billion new capital raised in diversified lending, primarily driven by continued private wealth fundraising in OCIC.

• $0.4 billion new capital raised in our strategic equity investment strategy.

• $0.3 billion new capital raised in technology lending, driven by continued private wealth fundraising in OTIC.

• $1.2 billion offsetting decrease in distributions, which primarily relate to dividends paid from our BDCs.

Redemptions and repurchases from these products were not material.

• $0.8 billion of overall appreciation across the platform.

GP Strategic Capital.

FPAUM for the nine months ended September 30, 2023 remained relatively unchanged.

Increase in FPAUM for the nine months ended September 30, 2023 was driven primarily by capital raised in OREF VI and ORENT, and deployment in OREF VI.

The increase in FPAUM for the three months ended March 31, 2024 was driven by new capital raised of $0.7 billion, primarily from our new mid-cap minority equity stakes product.

The increase in FPAUM for the three months ended March 31, 2024 was driven primarily by capital raised and deployment in ORENT and OREF VI, partially offset by dispositions of certain assets.

Product Performance

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Blue Owl Technology Finance Corp.

II 2021 $ 6,497 $ 4,078 $ 1,525 $ 66 $ 1,568 $ 1,634 NM NM NM NM

II 2021 $ 7,176 $ 4,159 $ 1,732 $ 135 $ 1,818 $ 1,953 1.20x 1.14x 16.4 % 11.4 %

First Lien Lending (3)

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Blue Owl First Lien Fund Unlevered 2019 $ 613 $ 363 $ 156 $ 69 $ 117 $ 186 1.24x 1.20x 6.5 % 5.2 %

(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 have not yet filed their quarterly information as of our filing date.

(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.

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Blue Owl GP Stakes V 2020 $ 13,627 $ 12,852 $ 4,581 $ 2,009 $ 3,239 $ 5,248 1.31x 1.15x 34.1 % 15.1 %

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

(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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(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 has not yet filed its quarterly information as of our filing date.

(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 and periodic investors closes, as applicable.

(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

Three Months Ended September 30, 2023, Compared to the Three Months Ended September 30, 2022

Three Months Ended September 30,

Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023

Three Months Ended March 31,

(dollars in thousands) 2024 2023 $ Change

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Administrative, transaction and other fees 63,397 31,655 31,742

Performance revenues 2,045 506 1,539

Total Revenues, Net 513,340 390,986 122,354

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Total Expenses 357,734 324,643 33,091

Net losses on investments (1,227) (592) (635)

Interest expense, net (13,986) (15,027) 1,041

Net gains on investments 3,173 612 2,561

Interest and dividend income 4,755 4,789 (34)

Interest expense (22,484) (18,362) (4,122)

Change in TRA liability 1,019 (1,964) 2,983

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Total Other Loss (28,822) (17,869) (10,953)

Income (Loss) Before Income Taxes 74,163 (14,093) 88,256

Income tax expense (benefit) 10,652 (4,085) 14,737

Consolidated and Combined Net Income (Loss) 63,511 (10,008) 73,519

Net (income) loss attributable to noncontrolling interests (48,402) 12,068 (60,470)

Income Before Income Taxes 126,784 48,474 78,310

Income tax expense 14,771 6,440 8,331

Consolidated Net Income 112,013 42,034 69,979

Net income attributable to noncontrolling interests (86,922) (33,717) (53,205)

Net Income Attributable to Blue Owl Capital Inc.

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See Note 9 to our Financial Statements for additional details on our GAAP management fees by strategy.

• Credit increased $56.2 million due to continued fundraising and deployment of capital within new and existing Credit products, including an increase in Part I Fees of $34.1 million driven by higher interest rates.

• GP Strategic Capital decreased $20.5 million, primarily driven by $21.5 million of catch-up fees related to additional closings in Blue Owl GP Stakes V during the prior period.

• Real Estate increased $11.9 million due to continued fundraising and deployment of capital within new and existing Real Estate products, primarily ORENT and OREF VI.

Administrative, Transaction and Other Fees .

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

• $6.3 million increase in dealer manager revenues due to growth in the distribution of our retail BDCs, OCIC and OTIC;

• $3.9 million increase in administrative fees, driven by a higher level of reimbursable expenses due to the growth of our products and business overall.

Compensation and Benefits.

Compensation and benefits expenses decreased primarily due to the following:

• $33.1 million decrease in equity-based compensation, reflecting a $41.6 million decrease in acquisition-related equity-based compensation primarily due to the settlement of the First Oak Street Earnout in January 2023, partially offset by

an $8.8 million increase in our other recurring annual equity grants driven by the additional grants made during the fourth quarter of 2022 in connection with year-end bonus compensation.

• $9.9 million decrease in acquisition-related cash compensation, primarily due to the settlement of the First Oak Street Earnout in January 2023.

• $22.0 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 decreased primarily due to corporate actions taken during the first quarter of 2023, resulting in a change of the estimated useful lives of acquired trademarks.

The remaining unamortized balances of the trademarks were expensed through June 30, 2023.

See Note 3 to our Financial Statements for additional information.

General, Administrative and Other Expenses .

General, administrative and other expenses decreased primarily due to the following:

• $21.4 million decrease in distribution costs primarily related to our Credit products.

• $7.9 million offsetting increase in professional fees driven by a $7.0 million increase in Transaction Expenses (as defined below).

• $6.8 million offsetting increase in occupancy costs driven by additional leased space to accommodate our continued growth.

• $6.1 million offsetting increase in reimbursed expenses due to growth in our products and business overall.

The remaining net change was across various categories.

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 (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 post-Business Combination net income due to the drivers discussed above.

The Common Units represent an approximately 67% and 69% weighted average economic interest in the Blue Owl Operating Group for the three months ended September 30, 2023 and September 30, 2022, respectively.

Nine Months Ended September 30, 2023, Compared to the Nine Months Ended September 30, 2022

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.

Nine Months Ended September 30,

(dollars in thousands) 2023 2022 $ Change

Management fees, net (includes Part I Fees of $275,423 and $155,893)

$ 1,116,663 $ 870,334 $ 246,329

Administrative, transaction and other fees 120,404 103,875 16,529

Realized performance income 506 — 506

Total Revenues, Net 1,237,573 974,209 263,364

Compensation and benefits 619,875 646,755 (26,880)

Amortization of intangible assets 243,532 192,246 51,286

General, administrative and other expenses 173,101 165,655 7,446

Total Expenses 1,036,508 1,004,656 31,852

Net gains (losses) on investments 2,415 (710) 3,125

Interest expense, net (41,127) (42,912) 1,785

Change in TRA liability 8,187 (4,683) 12,870

Change in warrant liability (3,550) 35,734 (39,284)

Change in earnout liability (4,912) (2,464) (2,448)

Total Other Loss (38,987) (15,035) (23,952)

Income (Loss) Before Income Taxes 162,078 (45,482) 207,560

Income tax expense (benefit) 22,494 (3,492) 25,986

Consolidated and Combined Net Income (Loss) 139,584 (41,990) 181,574

Net (income) loss attributable to noncontrolling interests (103,299) 31,109 (134,408)

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

$ 36,285 $ (10,881) $ 47,166

Revenues, Net

Management Fees .

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 $201.5 million due to continued fundraising and deployment of capital within new and existing Credit products, including an increase in Part I Fees of $118.2 million driven by higher interest rates.

• GP Strategic Capital increased $12.9 million, primarily driven by continued fundraising in Blue Owl GP Stakes V.

• Real Estate increased $31.9 million due to continued fundraising and deployment of capital within new and existing Real Estate products, primarily ORENT, OREF VI and ONLP .

• Credit increased $62.6 million, including an increase in Part I Fees of $33.2 million, due to continued fundraising and deployment of capital within new and existing Credit products.

• GP Strategic Capital increased $11.1 million, primarily driven by fundraising in our sixth flagship minority equity stakes product.

• Real Estate increased $15.4 million, attributable to continued fundraising and deployment of capital within new and existing Real Estate products, primarily OREF VI and ORENT.

Administrative, Transaction and Other Fees .

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

• $14.8 million increase in administrative fees, driven by a higher level of reimbursable expenses due to growth of our products and business overall.

• $12.9 million increase in dealer manager revenues due to growth in the distribution of our retail BDCs.

• $11.1 million offsetting decrease in fee income earned for services provided to portfolio companies, reflecting a lower volume of transactions on which we earn such fees.

• $16.3 million increase in fee income earned for services provided to portfolio companies, reflecting an increase in volume of transactions on which we earn such fees .

• $8.0 million increase in dealer manager revenues, due primarily to growth in the distribution of our retail BDCs.

• $7.4 million increase in administrative fees, driven by a higher level of reimbursable compensation expenses due to growth of our products and business overall.

Compensation and Benefits.

Compensation and benefits expenses decreased primarily due to the following:

• $89.6 million decrease in equity-based compensation, reflecting a $122.9 million decrease in acquisition-related equity-based compensation primarily due to the settlement of the First Oak Street Earnout (as described in Note 3 to the financial statements in our Annual Report) in January 2023, partially offset by an $35.5 million increase in our other recurring annual equity grants driven by the additional grants made during the fourth quarter of 2022 in connection with year-end bonus compensation.

• $29.5 million decrease in acquisition-related cash compensation, primarily due to the settlement of the First Oak Street Earnout in January 2023.

• $93.3 million offsetting increase driven by higher compensation to existing employees, as well as increased headcount due to our continued growth.

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

• $40.8 million increase, driven by higher compensation to existing employees, as well as increased headcount due to our continued growth.

• $7.6 million offsetting decrease in equity-based compensation, primarily reflecting an $18.6 million decrease in acquisition-related equity-based compensation primarily due to the settlement of the Second Oak Street Earnout (as described in Note 3 to the financial statements in our Annual Report) in January 2024, partially offset by a $10.5 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.

• $6.1 million offsetting decrease in acquisition-related cash compensation, primarily due to the settlement of the Second Oak Street Earnout in January 2024.

Amortization of Intangible Assets.

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

The remaining unamortized balances of the trademarks were expensed through June 30, 2023.

See Note 3 to our Financial Statements for additional information.

Amortization of intangible assets decreased $14.7 million due to increased trademarks amortization as a result of corporate actions taken in the prior year period that resulted in a shorter useful life.

General, Administrative and Other Expenses .

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

• $19.4 million increase in occupancy costs driven by additional leased space to accommodate our continued growth.

• $14.0 million increase in reimbursed expenses due to growth in our products and business overall.

• $19.3 million offsetting favorable change in expense support resulting from recoveries with certain products we manage.

• $10.3 million offsetting decrease in distribution costs primarily related to our Credit products.

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

• $8.1 million increase in Transaction Expenses, primarily due to the KAM Acquisition and Prima Acquisition.

• $7.9 million increase in reimbursed expenses, primarily related to dealer manager expenses, due to growth in our products and business overall.

• $4.0 million increase in distribution costs, primarily related to our Credit products.

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

Change in TRA Liability.

The change in the TRA liability for the current period was driven by a change in the expected timing of future payments.

The change in the TRA liability for the prior period was driven by a higher discount rate.

Interest Expense .

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

Change in Warrant Liability.

The change in the warrant liability for the current 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.

In August 2022, the Public Warrants were redeemed.

See Note 1 to our Financial Statements for additional information.

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.

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

Income Tax Expense

The increase in income tax expense was due to higher pre-tax income in the current period as a result of the drivers discussed above.

Please see Note 11 to our Financial Statements for a discussion of the significant tax differences that impacted our effective tax rate.

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 68% and 70% weighted average economic interest in the Blue Owl Operating Group for the nine months ended September 30, 2023 and September 30, 2022, respectively.

Net Income Attributable To Noncontrolling Interests

Net income 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 66% weighted average economic interest in the Blue Owl Operating Group for the three months ended March 31, 2024.

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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expense support payments and subsequent reimbursements;

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

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, net, 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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Fee-Related Earnings and Distributable Earnings Summary

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(dollars in thousands) 2024 2023

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Distributable Earnings $ 240,099 $ 209,014

Fee-Related Earnings and Distributable Earnings for the three months ended September 30, 2023, increased as a result of higher FRE revenues in Credit and Real Estate, partially offset by higher FRE expenses, as further discussed below.

Fee-Related Earnings and Distributable Earnings for the nine months ended September 30, 2023, 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.

Three Months Ended September 30, Nine Months Ended September 30,

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.

Three Months Ended March 31,

(dollars in thousands) 2024 2023

Credit Strategies

Credit Platform

Diversified lending $ 192,378 $ 146,095

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Liquid credit 6,799 7,518

Other 5,926 —

Management Fees, Net 270,801 208,188

Administrative, transaction and other fees 24,275 7,524

FRE Revenues - Credit Strategies 240,609 183,367 691,372 500,650

GP Strategic Capital Strategies

FRE performance revenues 175 —

FRE Revenues - Credit Platform 295,251 215,712

GP Strategic Capital Platform

GP minority stakes 139,786 130,296

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Administrative, transaction and other fees 1,618 1,203

FRE Revenues - GP Strategic Capital Strategies 139,115 158,537 410,688 395,281

Real Estate Strategies

FRE Revenues - GP Strategic Capital Platform 148,041 135,652

Real Estate Platform

Net lease 41,334 25,957

Management Fees, Net 41,334 25,957

FRE performance revenues 1,870 —

Administrative, transaction and other fees 52 82

FRE Revenues - Real Estate Strategies 33,047 21,069 89,590 57,451

FRE Revenues - Real Estate Platform 43,256 26,039

Total FRE Revenues $ 486,548 $ 377,403

FRE Management Fees .

For the three months ended September 30, 2023, Credit FRE revenues increased due to continued fundraising and deployment of capital within existing Credit products, including increased Part I Fees of $34.1 million driven by higher interest rates.

The change in GP Strategic Capital FRE revenues reflects $21.5 million of catch-up fees related to additional closings in Blue Owl GP Stakes V during the prior period.

Real Estate FRE revenues increased due to continued fundraising and deployment of capital within existing Real Estate products, primarily ORENT and ONLP.

For the nine months ended September 30, 2023, Credit FRE revenues increased due to continued fundraising and deployment of capital within new and existing Credit products, including increased Part I Fees of $118.2 million driven by higher interest rates.

GP Strategic Capital FRE revenues increased due to continued fundraising in Blue Owl GP Stakes V.

Real Estate FRE revenues increased due to continued fundraising and deployment of capital within new and existing Real Estate products, primarily OREF VI and ORENT.

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

• Credit FRE management fees increased $62.6 million, including an increase in Part I Fees of $33.2 million, due to continued fundraising and deployment of capital within new and existing Credit products.

• GP Strategic Capital FRE management fees increased $12.0 million, primarily driven by fundraising in our sixth flagship minority equity stakes product.

• Real Estate FRE management fees increased $15.4 million, attributable to continued fundraising and deployment of capital within new and existing Real Estate products, primarily OREF VI and ORENT.

FRE Administrative, Transaction and Other Fees .

For the three months ended September 30, 2023, the increase in FRE administrative, transaction and other fees was driven primarily by an increase in fee income earned for services provided to portfolio companies.

For the nine months ended September 30, 2023, 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.

Three Months Ended September 30, Nine Months Ended September 30,

The increase in FRE administrative, transaction and other fees was driven primarily by a $16.3 million increase in fee income earned for services provided to portfolio companies, reflecting an increase in volume of transactions on which we earn such fees .

Three Months Ended March 31,

(dollars in thousands) 2024 2023

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FRE Compensation and Benefits.

For the three months ended September 30, 2023, FRE compensation and benefits expenses increased, driven by higher compensation to existing employees, as well as increased headcount due to our continued growth.

For the nine months ended September 30, 2023, FRE compensation and benefits expenses increased, driven by higher compensation to existing employees, as well as increased headcount due to our continued growth.

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 .

For the three months ended September 30, 2023, FRE general, administrative and other expenses decreased, primarily due to a decrease in distribution costs of $27.6 million, primarily related to our Credit products, partially offset by an increase of $6.8 million in occupancy costs, driven by additional leased space, with the remaining net change across various categories, driven by our continued growth.

For the nine months ended September 30, 2023, FRE general, administrative and other expenses increased, due to an increase of $19.4 million in occupancy costs driven by additional leased space to accommodate our continued growth and other various categories driven by our continued growth, partially offset by a decrease in distribution costs of $23.0 million primarily related to our Credit products.

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

• $4.7 million increase primarily in office-related expenses and professional fees due to increased headcount and our continued growth.

• $3.3 million increase in occupancy costs, driven by additional leased space to accommodate our continued growth.

• $4.1 million offsetting decrease in distribution costs, primarily related to our Credit products.

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

Non-GAAP Reconciliations

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Please see “—Non-GAAP Analysis” for important information regarding these measures.

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(dollars in thousands) 2024 2023

GAAP Net Income (Loss) Attributable to Class A Shares $ 15,109 $ 2,060 $ 36,285 $ (10,881)

Net income (loss) attributable to noncontrolling interests 48,402 (12,068) 103,299 (31,109)

Income tax expense (benefit) 10,652 (4,085) 22,494 (3,492)

GAAP Income (Loss) Before Income Taxes 74,163 (14,093) 162,078 (45,482)

GAAP Net Income Attributable to Class A Shares $ 25,091 $ 8,317

Net income attributable to noncontrolling interests 86,922 33,717

Income tax expense 14,771 6,440

GAAP Income Before Income Taxes 126,784 48,474

Net (income) loss allocated to noncontrolling interests included in Fee-Related Earnings (5,813) 126

Strategic Revenue-Share Purchase consideration amortization 10,660 9,769

Realized performance income — — (506) —

Realized performance compensation — — 177 —

DE performance revenues — (506)

DE performance revenues compensation — 177

Equity-based compensation - other 46,150 35,628

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Expense support (1,798) (2,088)

Net gains (losses) on investments 1,227 592 (2,415) 710

Net losses on investments (3,173) (612)

Change in TRA liability (1,019) 1,964

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Change in earnout liability 585 994

Interest expense, net 13,986 15,027 41,127 42,912

Interest and dividend income (4,755) (4,789)

Interest expense 22,484 18,362

Fee-Related Earnings 289,698 225,899

Realized performance income — — 506 —

Realized performance compensation — — (177) —

Interest expense, net (13,986) (15,033) (41,127) (42,912)

DE performance revenues — 506

DE performance revenues compensation — (177)

Interest and dividend income 4,755 4,789

Interest expense (22,484) (18,362)

Taxes and TRA payments (31,870) (3,641)

Distributable Earnings $ 240,099 $ 209,014

Interest expense, net 13,986 15,033 41,127 42,912

Taxes and TRA payments 4,320 3,108 11,974 7,548

Fixed assets depreciation and amortization 2,903 235 7,406 694

Adjusted EBITDA $ 250,732 $ 210,049 $ 726,060 $ 578,955

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(dollars in thousands) 2024 2023

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Strategic Revenue-Share Purchase consideration amortization 10,660 9,769

Realized performance income — — (506) —

DE performance revenues — (506)

Reimbursed expenses (37,452) (22,846)

FRE Revenues $ 486,548 $ 377,403

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(dollars in thousands) 2024 2023

GAAP Compensation and Benefits $ 224,791 $ 197,618

Realized performance compensation — — (177) —

DE performance revenues compensation — (177)

Equity-based compensation - other (46,150) (35,628)

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FRE Compensation and Benefits $ 138,666 $ 103,600

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(dollars in thousands) 2024 2023

GAAP General, Administrative and Other Expenses $ 76,748 $ 56,134

Equity-based compensation - other — — — (722)

Transaction Expenses (8,222) (116)

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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 the third quarter of 2023 with $76.7 million of cash and cash equivalents and approximately $1.3 billion available under our Revolving Credit Facility.

We ended the first quarter of 2024 with $155.8 million of cash and cash equivalents and approximately $0.9 billion available under our Revolving Credit Facility.

In April 2024, we issued $750.0 million of 6.250% Senior Notes due 2034 (the “2034 Notes”), repaying outstanding borrowings under our Revolving Credit Facility and providing additional liquidity for general corporate purposes, including to fund strategic acquisitions and related transactions and growth initiatives.

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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• Grow our existing investment management business.

• Expand, or acquire, into businesses that are complementary to our existing investment management business or other strategic growth initiatives.

• Expand into, or acquire, businesses that are complementary to our existing investment management business or other strategic growth initiatives.

• Pay operating expenses, including cash compensation to our employees.

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Debt Obligations

As of September 30, 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 $270.0 million outstanding under our Revolving Credit Facility as of September 30, 2023, which was fully repaid subsequent to quarter end.

As of March 31, 2024, 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 $595.0 million outstanding under our Revolving Credit Facility as of March 31, 2024, and all outstanding amounts under our Revolving Credit Facility were repaid in connection with the issuance of the 2034 Notes.

We expect to use cash on hand to pay interest and principal due on our financing arrangements over time, which would reduce amounts available for dividends and distributions to our stockholders.

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We may also choose to repay borrowing by using proceeds from the issuance of equity or other securities, which would dilute stockholders.

See Note 4 to our Financial Statements and the financial statements in our Annual Report 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, net, 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 $250.7 million and $726.1 million for the three and nine months ended September 30, 2023, respectively.

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

See Note 7 to our Financial Statements and Note 4 to the financial statements in our Annual Report for additional information regarding our debt obligations.

Tax Receivable Agreement

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

As of September 30, 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 $961.0 million under the TRA (such amount excludes the adjustment to fair value for the portion classified as contingent consideration).

As discussed in Note 8 to our Financial Statements, we made a payment under the TRA and may in the future be required to make additional payments.

As of March 31, 2024, 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 $1.1 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.

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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.

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 the Registrant or Blue Owl GP in an amount sufficient to meet our obligations under the TRA.

The actual increase in tax basis of the Blue Owl Operating Group assets resulting from an exchange or from payments under the TRA, as well as the amortization thereof and the timing and amount of payments under the TRA, will vary based upon a number of factors, including the following:

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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.

There were no repurchases made under the Program during the three and nine months ended September 30, 2023.

During the three months ended September 30, 2022, we repurchased 1,021,079 Class A Shares for an aggregate amount of $9.8 million, excluding commission costs.

The Program replaced the previously authorized program under which we repurchased 2,000,000 shares during the first quarter of 2022.

There were no repurchases made under the Program during the three months ended March 31, 2024 and 2023.

Additionally, pursuant to the terms of our RSU agreements, upon the vesting of RSUs to employees, we may net settle awards to satisfy employee tax withholding obligations.

In such instances, we cancel a number of RSUs equivalent in value to the amount of tax withholding payments that we make on behalf of employees out of available cash.

During the three and nine months ended September 30, 2023, 542,167 RSUs with a fair value of $6.4 million and 901,113 RSUs with a fair value of $11.2 million, respectively, were withheld to satisfy tax withholding obligations.

During the three and nine months ended September 30, 2022, 45,668 RSUs with a fair value of $0.6 million and 152,838 with a fair value of $1.9 million, respectively, were withheld to satisfy tax withholding obligations.

During the three months ended March 31, 2024 and 2023, 969,149 RSUs with a fair value of $17.4 million and 319,306 RSUs with a fair value of $4.4 million, respectively, were withheld to satisfy tax withholding obligations.

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 the financial statements in our Annual Report) 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.

A portion of the Oak Street Cash Earnout and the Wellfleet Earnout (each as defined in Note 3 in our Annual Report) 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.

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.

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

For details on the Oak Street Cash Earnout and Wellfleet Earnouts, see Note 8 to our Financial Statements and Note 3 to the financial statements in our Annual Report for additional information.

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

In April 2024, the Wellfleet Triggering Event occurred with respect to the Second Wellfleet Earnout.

For details on the Oak Street Cash Earnout and Wellfleet Earnouts, see Note 1 to the Financial Statements and Note 3 to the financial statements in our Annual Report for additional information.

Dividends and Distributions

For the third quarter of 2023, we declared a dividend of $0.14 to holders of record as of the close of business on November 20, 2023, which will be paid on November 30, 2023.

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 first quarter of 2024, we declared a dividend of $0.18 to holders of record as of the close of business on May 21, 2024, which will be paid on May 30, 2024.

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.

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See “Item 1A.

Risk Factors — Risks Related to Macroeconomic Factors” in our Annual Report and “Item 1A.

LIBOR Transition

On March 5, 2021, the U.K.

Financial Conduct Authority announced that it would phase out the London Interbank Offered Rate (“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 the secured overnight financing rate (“SOFR”) 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.

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” in our Annual Report.

Risk Factors — Risks Related to Macroeconomic Factors” in our Annual Report.

Cash Flows Analysis

Nine Months Ended September 30,

Three Months Ended March 31,

(dollars in thousands) 2024 2023 $ Change

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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 higher management fees, partially offset by operating expenses, in particular higher bonus payments made during the first quarter related to the prior year.

Included in the nine months ended September 30, 2023, were the cash outflows of the portion of the First Oak Street Earnout classified as contingent consideration that settled in January 2023;

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

Included in the three months ended March 31, 2024, were the cash outflows of the portion of the Second Oak Street Earnout classified as contingent consideration in excess of the acquisition-date fair value that settled in January 2024;

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.

Included in the three months ended March 31, 2023, were the cash outflows of the portion of the First Oak Street Earnout classified as contingent consideration in excess of the acquisition-date fair value 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 the nine months ended September 30, 2023, were primarily related to purchases of investments in our Real Estate products, 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 notes receivable.

Cash flows from investing activities for the nine months ended September 30, 2022, were primarily related to cash consideration paid in connection with the Wellfleet Acquisition.

In addition, investment activities also included cash outflows related to office space-related leasehold improvements and investments by us into our products.

Cash flows from investing activities for the three months ended March 31, 2024, were primarily related to purchases of investments in our products and cash outflows for office space-related leasehold improvements.

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 the three months ended March 31, 2023, were primarily related to purchases of investments in our products.

Financing Activities.

Cash flows from financing activities for the nine months ended September 30, 2023, were primarily driven by dividends on our Class A Shares and related distributions on our Common Units (noncontrolling interests).

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

Included in the nine months ended September 30, 2023, were 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 the nine months ended September 30, 2022, were primarily driven by dividends on our Class A Shares and related distributions on our Common Units (noncontrolling interests).

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, partially offset by repayments under our Revolving Credit Facility.

Cash flows from financing activities for the three months ended March 31, 2024, were primarily related to borrowing and repayment activity under our Revolving Credit Facility,which borrowings were used to finance working capital needs and general capital purposes.

In addition, we had distributions on our Common Units (noncontrolling interests) and dividends on our Class A Shares.

Included in the three months ended March 31, 2024, was a portion of the cash outflows related to the Second Oak Street Earnout classified as contingent consideration that settled in January 2024, as discussed above, as well as amounts paid under the TRA.

Cash flows from financing activities for the three months ended March 31, 2023, were primarily driven by dividends on our Class A Shares and related distributions on our Common Units (noncontrolling interests).

In addition, we had borrowings and repayments under our Revolving Credit Facility, which borrowings were used to finance working capital needs and general capital purposes.

Included in the three months ended March 31, 2023, were a portion of the cash outflows related to the First Oak Street Earnout classified as contingent consideration that settled in January 2023.

Critical Accounting Estimates

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In the absence of observable market prices, we use valuation methodologies applied on a consistent basis and assumptions that we believe market participants would use to determine the fair value of the investments.

For investments where little market activity exists, the determination of fair value is based on the best information available, we incorporate our own assumptions and involves a significant degree of judgment, and the consideration of a combination of internal and external factors.

For investments where little market activity exists, the determination of fair value is based on the best information available, our own assumptions, a significant degree of judgment, and the consideration of a combination of internal and external factors.

Our products generally value their investments at fair value, as determined in good faith by each product’s respective board of directors or valuation committee, as applicable, based on, among other things, the input of third party valuation firms and taking into account the nature and realizable value of any collateral, an investee’s ability to make payments and its earnings, the markets in which the investee operates, comparison to publicly traded companies, discounted cash flows, current market interest rates and other relevant factors.

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TRA Liability

We carry a portion of our TRA liability at fair value, as it is contingent consideration related to the Dyal Acquisition (as defined in Note 1 to our Financial Statements).

We carry a portion of our TRA liability at fair value, as it is contingent consideration related to the Dyal Acquisition.

The valuation of this portion of the TRA liability is mostly sensitive to our expectation of future cash savings that we may ultimately realize related to our tax goodwill and other intangible assets deductions.

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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 and the financial statements in our Annual Report for additional details.

See Note 10 to our Financial Statements and Note 8 to the financial statements in our Annual Report for additional details.

Deferred Tax Assets

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

We take into account factors such as the adverse impacts to 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.

10 unchanged sentences

Impact of Changes in Accounting on Recent and Future Trends

We believe that none of the changes to GAAP that went into effect during the nine months ended September 30, 2023, or that have been issued but that we have not yet adopted, are expected to materially impact our future trends.

We believe that none of the changes to GAAP that went into effect during the three months ended March 31, 2024, or that have been issued but that we have not yet adopted, are expected to materially impact our future trends.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis