BLUE OWL CAPITAL INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), should be read in conjunction with the Financial Statements. For a description of our business, please see “Item 1. Business” in the Annual Report. 2024 Second Quarter Overview Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands) 2024 2023 2024 2023 Net Income Attributable to Blue Owl Capital Inc. $ 33,945 $ 12,859 $ 59,036 $ 21,176 Fee-Related Earnings (1) $ 296,475 $ 244,597 $ 586,173 $ 470,496 Distributable Earnings (1) $ 272,965 $ 227,016 $ 513,064 $ 436,030 (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.” Please see “—GAAP Results of Operations Analysis” and “—Non-GAAP Analysis” for a detailed discussion of the underlying drivers of our results. Acquisitions On June 6, 2024, we completed the Prima Acquisition (as defined in Note 1 to our Financial Statements) for $173 million, through a combination of cash and Blue Owl equity, creating our real estate finance strategy. See Note 3 to our Financial Statements for additional information. Additionally, subject to achievement of certain milestones, we will deliver earnout consideration in the form of Class A Shares representing an aggregate value of approximately $26.3 million and earnout consideration in the form of Class C Shares and Common Units representing an aggregate value of up to approximately $8.7 million, representing a total value of up to $35.0 million. On July 1, 2024, we completed the KAM Acquisition (as defined in Note 14 to our Financial Statements) for $750 million. We funded the KAM Acquisition through a combination of $325 million in cash and $425 million in Blue Owl Class A common stock, subject to certain closing consideration adjustments. In addition, there is potential for up to a $250 million earnout subject to certain adjustments and achievements of future revenue targets. On July 16, 2024 we announced our entry into an agreement to acquire substantially all of the assets of Atalaya Capital Management LP (“Atalaya”), Atalaya Capital Leasing LLC and Atalaya’s other investment advisor affiliates and subsidiaries (the “Atalaya Acquisition”) for $450 million. The Atalaya Acquisition will be funded through a combination of approximately $350 million of Class A Shares, Common Units and corresponding Class C Shares, and cash of approximately $100 million, subject to certain closing consideration adjustments. Additionally, subject to achievement of certain revenue targets, we will deliver earnout consideration in the form of Common Units and Class C Shares representing an aggregate value of up to approximately $350 million. The Atalaya Acquisition is expected to close in the second half of 2024, subject to customary closing conditions. 7 Table of Contents Assets Under Management Blue Owl AUM: $192.2 billion FPAUM: $121.5 billion Credit AUM: $95.1 billion FPAUM: $63.7 billion GP Strategic Capital AUM: $57.8 billion FPAUM: $32.8 billion Real Estate AUM: $39.2 billion FPAUM: $25.0 billion Diversified Lending Commenced 2016 AUM: $56.4 billion FPAUM: $35.0 billion GP Minority Stakes Commenced 2010 AUM: $55.5 billion FPAUM: $31.4 billion Net Lease Commenced 2009 AUM: $28.4 billion FPAUM: $15.6 billion Technology Lending Commenced 2018 AUM: $22.4 billion FPAUM: $16.2 billion GP Debt Financing Commenced 2019 AUM: $1.6 billion FPAUM: $1.1 billion Real Estate Finance Commenced 2024 AUM: $10.8 billion FPAUM: $9.4 billion First Lien Lending Commenced 2018 AUM: $4.6 billion FPAUM: $1.9 billion Professional Sports Minority Stakes Commenced 2021 AUM: $0.8 billion FPAUM: $0.3 billion Opportunistic Lending Commenced 2020 AUM: $2.5 billion FPAUM: $1.5 billion Liquid Credit Commenced 2022 AUM: $7.8 billion FPAUM: $7.8 billion Other AUM: $1.4 billion FPAUM: $1.4 billion All amounts shown as of June 30, 2024, totals may not sum due to rounding. As of June 30, 2024, our AUM was $192.2 billion, which included $121.5 billion of FPAUM. As of June 30, 2024, we have $15.9 billion in AUM not yet paying fees, providing over $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 United States, 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 the second 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, 91% of our GAAP management fees and 92% of our FRE management fees were generated by Permanent Capital and the remainder was 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 21% over the last twelve months. We ended the second quarter of 2024 with substantial available capital to deploy, reporting $15.9 billion of AUM not yet paying fees. The second quarter of 2024 was our most active deployment quarter ever, with $19 billion of originations, as direct lenders continued to play a significant role in new deals, add-ons and refinancings alongside the syndicated market. For Blue Owl, positive net deployment and ongoing capital raising continued to drive management fees higher while the credit quality of our portfolio remains strong. 8 Table of Contents 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. We continue to raise capital across our large-cap and mid-cap GP stakes strategies. In Real Estate, we continue to actively deploy capital in our net lease strategy at attractive cap rates in the mid to high 7 percent range behind our four major themes: digital infrastructure, onshoring, healthcare real estate and essential retail. Investors in our net lease strategy continue to benefit from inflation-mitigation, highly predictable net rent growth and long-duration contractual income across the portfolio. We also closed the Prima Acquisition during the second quarter, forming the base of our newly launched real estate finance strategy and expanding the array of financing solutions we offer. 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 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 ” in our Annual Report. 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 We present information regarding our AUM, FPAUM and various other related metrics throughout this MD&A to provide context around our fee generating revenues results, as well as indicators of the potential for future earnings from existing and new products. Our calculations of AUM and FPAUM may differ from the calculation methodologies of other asset managers, and as a result these measures may not be comparable to similar measures presented by other asset managers. In addition, our calculation of AUM includes amounts that are fee exempt (i.e., not subject to fees). As of June 30, 2024, assets under management related to us, our executives and other employees totaled approximately $3.9 billion (including $1.8 billion related to accrued carried interest). A portion of these assets under management are not charged fees. Composition of Assets Under Management Our AUM consists of FPAUM, AUM not yet paying fees, fee-exempt AUM and net appreciation and leverage in products on which fees are based on commitments or investment cost. AUM not yet paying fees generally relates to unfunded capital commitments (to the extent such commitments are not already subject to fees), undeployed debt (to the extent we earn fees based on total asset values or investment cost, inclusive of assets purchased using debt) and AUM that is subject to a temporary fee holiday. Fee-exempt AUM represents certain investments by us, our employees, other related parties and third parties, as well as certain co-investment vehicles on which we never earn fees. 9 Table of Contents 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 provide over $200 million of additional annualized management fees once deployed or upon the expiration of the relevant fee holidays. All amounts shown as of June 30, 2024, totals may not sum due to rounding. Permanency and Duration of Assets Under Management Our capital base is heavily weighted toward Permanent Capital. We view the permanency and duration of the products that we manage as a differentiator in our industry and as a means of measuring the stability of our future revenues stream. The chart below presents the composition of our management fees by remaining product duration. Changes in these relative percentages will occur over time as the mix of products we offer changes. For example, our Real Estate products have a higher concentration in what we refer to as “long-dated” funds, or funds in which the contractual remaining life is five years or more, which in isolation may cause our percentage of management fees from Permanent Capital to decline. 10 Table of Contents Changes in AUM Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 (dollars in millions) Credit GP Strategic Capital Real Estate Total Credit GP Strategic Capital Real Estate Total Beginning Balance $ 91,289 $ 55,793 $ 27,238 $ 174,320 $ 71,617 $ 49,167 $ 23,590 $ 144,374 Acquisitions — — 10,850 10,850 — — — — New capital raised 3,433 1,288 659 5,380 1,529 184 1,150 2,863 Change in debt 1,341 — 608 1,949 716 — 201 917 Distributions (1,669) (643) (270) (2,582) (842) (409) (209) (1,460) Change in value / other 710 1,406 123 2,239 773 1,992 94 2,859 Ending Balance $ 95,104 $ 57,844 $ 39,208 $ 192,156 $ 73,793 $ 50,934 $ 24,826 $ 149,553 Six Months Ended June 30, 2024 Six Months Ended June 30, 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 Acquisitions — — 10,850 10,850 — — — — New capital raised 6,463 1,950 1,708 10,121 3,469 504 2,689 6,662 Change in debt 5,238 — 735 5,973 1,655 — 696 2,351 Distributions (2,918) (729) (468) (4,115) (1,605) (1,111) (416) (3,132) Change in value / other 1,689 2,424 (473) 3,640 1,667 3,031 772 5,470 Ending Balance $ 95,104 $ 57,844 $ 39,208 $ 192,156 $ 73,793 $ 50,934 $ 24,826 $ 149,553 Credit. The increase in AUM for the six months ended June 30, 2024 was driven by the following: • $3.3 billion new capital raised in diversified lending, primarily driven by continued private wealth fundraising in OCIC. • $1.8 billion new capital raised in first lien lending, primarily driven by recently launched products. • $0.8 billion new capital raised in technology lending, primarily driven by continued private wealth fundraising in OTIC. • $5.2 billion of additional net debt commitments, primarily in diversified lending and technology lending strategies as we continue to opportunistically manage leverage in our BDCs. • $2.9 billion offsetting decrease in distributions, which primarily relate to distributions paid from our BDCs. Redemptions and repurchases from these products were not material. • $1.7 billion of overall appreciation across the platform. GP Strategic Capital. The increase in AUM for the six months ended June 30, 2024 was driven by overall appreciation primarily in our GP minority stakes strategy of $2.4 billion and new capital raised of $2.0 billion, primarily in our sixth flagship minority equity stakes product and our new mid-cap minority equity stakes product. Real Estate. The increase in AUM for the six months ended June 30, 2024 was driven by the products added in connection with the Prima Acquisition that closed in June 2024 and new capital raised of $1.7 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 product. 11 Table of Contents Changes in FPAUM Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 (dollars in millions) Credit GP Strategic Capital Real Estate Total Credit GP Strategic Capital Real Estate Total Beginning Balance $ 58,779 $ 31,763 $ 14,895 $ 105,437 $ 51,150 $ 28,561 $ 11,922 $ 91,633 Acquisitions — — 9,430 9,430 — — — — New capital raised / deployed 5,760 1,025 919 7,704 1,001 234 1,279 2,514 Fee basis step down — — — — — (333) — (333) Distributions (1,547) — (270) (1,817) (765) — (141) (906) Change in value / other 744 — 51 795 691 — 24 715 Ending Balance $ 63,736 $ 32,788 $ 25,025 $ 121,549 $ 52,077 $ 28,462 $ 13,084 $ 93,623 Six Months Ended June 30, 2024 Six Months Ended June 30, 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 Acquisitions — — 9,430 9,430 — — — — New capital raised / deployed 7,850 1,713 1,858 11,421 3,022 226 2,357 5,605 Fee basis step down — — — — — (333) — (333) Distributions (2,704) — (468) (3,172) (1,497) (203) (292) (1,992) Change in value / other 1,516 — (342) 1,174 1,511 — 22 1,533 Ending Balance $ 63,736 $ 32,788 $ 25,025 $ 121,549 $ 52,077 $ 28,462 $ 13,084 $ 93,623 Credit. The increase in FPAUM for the six months ended June 30, 2024 was driven by the following: • $5.4 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. • $0.5 billion new capital raised in our strategic equity investment strategy. • $2.7 billion offsetting decrease in distributions, which primarily relate to dividends paid from our BDCs. Redemptions and repurchases from these products were not material. • $1.5 billion of overall appreciation across the platform. GP Strategic Capital. The increase in FPAUM for the six months ended June 30, 2024 was driven by new capital raised of $1.7 billion, primarily in our sixth flagship minority equity stakes product and our new mid-cap minority equity stakes product. Real Estate. The increase in FPAUM for the six months ended June 30, 2024 was driven by the products added in connection with the Prima Acquisition that closed in June 2024, and by capital raised and deployment of $1.9 billion primarily in ORENT and OREF VI. 12 Table of Contents Product Performance Product performance for certain of our products is included throughout this discussion with analysis to facilitate an understanding of our results of operations for the periods presented. The performance information of our products reflected is not indicative of Blue Owl’s performance. An investment in Blue Owl is not an investment in any of our products. Past performance is not indicative of future results. As with any investment, there is always the potential for gains as well as the possibility of losses. There can be no assurance that any of these products or our other existing and future products will achieve similar returns. 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”). Credit MoIC IRR (dollars in millions) Year of Inception AUM Capital Raised (4) Invested Capital (5) Realized Proceeds (6) Unrealized Value (7) Total Value Gross (8) Net (9) Gross (10) Net (11) Diversified Lending (1) Blue Owl Capital Corporation 2016 $ 14,941 $ 5,970 $ 5,970 $ 3,205 $ 6,015 $ 9,220 1.80x 1.57x 13.6 % 9.8 % Blue Owl Capital Corporation II (2) 2017 $ 2,811 $ 1,246 $ 1,215 $ 476 $ 1,212 $ 1,688 NM 1.41x NM 7.5 % Blue Owl Capital Corporation III 2020 $ 4,825 $ 1,837 $ 1,837 $ 504 $ 1,928 $ 2,432 1.41x 1.34x 14.7 % 12.3 % Blue Owl Credit Income Corp. (2) 2020 $ 22,708 $ 10,651 $ 9,918 $ 1,272 $ 10,194 $ 11,466 NM 1.15x NM 10.6 % Technology Lending (1) Blue Owl Technology Finance Corp. 2018 $ 7,383 $ 3,329 $ 3,329 $ 826 $ 3,544 $ 4,370 1.43x 1.32x 11.9 % 8.6 % Blue Owl Technology Finance Corp. II 2021 $ 7,784 $ 4,166 $ 1,987 $ 173 $ 2,095 $ 2,268 1.21x 1.15x 16.6 % 11.8 % Blue Owl Technology Income Corp. (2) 2022 $ 4,875 $ 2,274 $ 2,092 $ 229 $ 2,159 $ 2,388 NM 1.14x NM 11.9 % First Lien Lending (3) Blue Owl First Lien Fund Levered 2018 $ 1,781 $ 986 $ 912 $ 524 $ 717 $ 1,241 1.44x 1.37x 10.9 % 9.0 % Blue Owl First Lien Fund Unlevered 2019 $ 91 $ 175 $ 156 $ 98 $ 91 $ 189 1.26x 1.21x 6.6 % 5.3 % (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, OCIC and OTIC. (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. The gross and net MoIC for the Offshore Levered feeder fund is 1.42x and 1.31x, respectively. The gross and net IRR for the Offshore Levered feeder is 10.2% and 7.5%, 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. (5) Invested capital includes capital calls, reinvested dividends and periodic investor closes, as applicable. (6) Realized proceeds represent the sum of all cash distributions to investors. (7) Unrealized value represents the product’s NAV. There can be no assurance that unrealized values will be realized at the valuations indicated. (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. (9) Net MoIC measures the aggregate value generated by a product’s investments in absolute terms. Net 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. Net MoIC is calculated after giving effect to management fees (including Part I Fees) and Part II Fees, as applicable, and all other expenses. (10) Gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the product and the product’s residual value at the end of the measurement period. Gross IRRs are calculated before giving effect to management fees (including Part I Fees) and Part II Fees, as applicable. (11) Net IRRs are calculated consistent with gross IRRs, but after giving effect to management fees (including Part I Fees) and Part II Fees, as applicable, and all other expenses. An individual investor’s IRR may differ from the reported IRR based on the timing of capital transactions. 13 Table of Contents GP Strategic Capital MoIC IRR (dollars in millions) Year of Inception AUM Capital Raised Invested Capital (2) Realized Proceeds (3) Unrealized Value (4) Total Value Gross (5) Net (6) Gross (7) Net (8) GP Minority Stakes (1) Blue Owl GP Stakes I 2011 $ 724 $ 1,284 $ 1,266 $ 773 $ 501 $ 1,274 1.16x 1.01x 2.7 % 0.1 % Blue Owl GP Stakes II 2014 $ 2,961 $ 2,153 $ 1,961 $ 918 $ 2,218 $ 3,136 1.91x 1.60x 13.8 % 9.3 % Blue Owl GP Stakes III 2015 $ 10,233 $ 5,318 $ 3,275 $ 3,447 $ 5,593 $ 9,040 3.38x 2.76x 30.2 % 23.5 % Blue Owl GP Stakes IV 2018 $ 15,871 $ 9,041 $ 6,533 $ 4,536 $ 8,377 $ 12,913 2.37x 1.98x 62.8 % 41.0 % Blue Owl GP Stakes V 2020 $ 13,567 $ 12,852 $ 4,581 $ 2,121 $ 3,086 $ 5,207 1.31x 1.14x 30.0 % 12.3 % (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. (3) Realized proceeds represent the sum of all cash distributions to investors. (4) Unrealized value represents the product’s NAV. There can be no assurance that unrealized values will be realized at the valuations indicated. (5) 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 and carried interest, as applicable. (6) Net MoIC measures the aggregate value generated by a product’s investments in absolute terms. Net 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. Net MoIC is calculated after giving effect to management fees and carried interest, as applicable, and all other expenses. (7) Gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the product and the product’s residual value at the end of the measurement period. Gross IRRs are calculated before giving effect to management fees and carried interest, as applicable. (8) Net IRR is an annualized since inception net internal rate of return of cash flows to and from the product and the product’s residual value at the end of the measurement period. Net IRRs reflect returns to all investors. Net IRRs are calculated after giving effect to management fees and carried interest, as applicable, and all other expenses. An individual investor’s IRR may differ from the reported IRR based on the timing of capital transactions. Real Estate MoIC IRR (dollars in millions) Year of Inception AUM Capital Raised Invested Capital (3) Realized Proceeds (4) Unrealized Value (5) Total Value Gross (6) Net (7) Gross (8) Net (9) Net Lease Blue Owl Real Estate Fund IV (1) 2017 $ 1,066 $ 1,250 $ 1,260 $ 1,492 $ 470 $ 1,962 1.73x 1.56x 23.1 % 19.0 % Blue Owl Real Estate Net Lease Property Fund 2019 $ 6,571 $ 3,553 $ 3,849 $ 1,307 $ 3,529 $ 4,836 1.29x 1.26x 11.6 % 10.3 % Blue Owl Real Estate Fund V (1) 2020 $ 4,274 $ 2,500 $ 2,500 $ 853 $ 2,567 $ 3,420 1.47x 1.37x 26.5 % 21.3 % Blue Owl Real Estate Net Lease Trust (2) 2022 $ 5,248 $ 3,084 $ 3,084 $ 116 $ 2,879 $ 2,995 NM NM NM NM Blue Owl Real Estate Fund VI (1) 2023 $ 6,318 $ 5,163 $ 438 $ 18 $ 389 $ 407 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. (5) Unrealized value represents the fund’s NAV. There can be no assurance that unrealized values will be realized at the valuations indicated. (6) 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 and carried interest, as applicable. (7) Net MoIC measures the aggregate value generated by a product’s investments in absolute terms. Net 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. Net MoIC is calculated after giving effect to management fees and carried interest, as applicable, and all other expenses. (8) Gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the product and the product’s residual value at the end of the measurement period. Gross IRRs are calculated before giving effect to management fees and carried interest, as applicable. (9) Net IRR is an annualized since inception net internal rate of return of cash flows to and from the product and the product’s residual value at the end of the measurement period. Net IRRs reflect returns to all investors. Net IRRs are calculated after giving effect to management fees and carried interest, as applicable, and all other expenses. An individual investor’s IRR may differ from the reported IRR based on the timing of capital transactions. 14 Table of Contents GAAP Results of Operations Analysis Three Months Ended June 30, 2024, Compared to the Three Months Ended June 30, 2023 Three Months Ended June 30, (dollars in thousands) 2024 2023 $ Change Revenues Management fees, net (includes Part I Fees of $129,442 and $91,938) $ 465,754 $ 371,829 $ 93,925 Administrative, transaction and other fees 83,906 45,108 38,798 Performance revenues 188 — 188 Total Revenues, Net 549,848 416,937 132,911 Expenses Compensation and benefits 227,103 208,281 18,822 Amortization of intangible assets 56,734 115,917 (59,183) General, administrative and other expenses 93,458 51,482 41,976 Total Expenses 377,295 375,680 1,615 Other Loss Net gains on investments 2,624 3,030 (406) Interest and dividend income 13,787 5,606 8,181 Interest expense (32,715) (19,174) (13,541) Change in TRA liability (2,978) 10,116 (13,094) Change in warrant liability 3,050 450 2,600 Change in earnout liability (70) (1,844) 1,774 Total Other Loss (16,302) (1,816) (14,486) Income Before Income Taxes 156,251 39,441 116,810 Income tax expense 18,197 5,402 12,795 Consolidated Net Income 138,054 34,039 104,015 Net income attributable to noncontrolling interests (104,109) (21,180) (82,929) Net Income Attributable to Blue Owl Capital Inc. $ 33,945 $ 12,859 $ 21,086 Revenues, Net Management Fees . The increase in management fees was primarily due to the drivers below. See Note 9 to our Financial Statements for additional details on our GAAP management fees by strategy. • Credit increased $71.8 million, including an increase in Part I Fees of $36.3 million, due to continued fundraising and deployment of capital within new and existing Credit products. • GP Strategic Capital increased $10.4 million, primarily driven by fundraising in our sixth flagship minority equity stakes product. • Real Estate increased $11.8 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: • $22.6 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. • $9.9 million increase in dealer manager revenues, due primarily to growth in the distribution of OCIC and ORENT. • $6.3 million increase in administrative fees, driven by a higher level of reimbursable compensation expenses due to the growth of our products and business overall. 15 Table of Contents Expenses Compensation and Benefits. Compensation and benefits expenses increased primarily due to the following: • $36.2 million increase, driven by higher compensation to existing employees, as well as increased headcount due to our continued growth. • $10.9 million offsetting decrease in equity-based compensation, primarily reflecting an $18.7 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 an $8.0 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. • $6.5 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 decreased $59.2 million reflecting the increase in 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 primarily due to the following: • $20.2 million increase in distribution costs, primarily related to our Credit and Real Estate Products. • $10.5 million increase in reimbursed expenses, primarily related to dealer manager expenses, due to growth in our products and business overall. • $7.9 million increase in Transaction Expenses, primarily due to the KAM Acquisition and Prima Acquisition. • The remaining net change was across various categories, driven by our continued growth. Other Loss Interest and Dividend Income. The increase in interest and dividend income was driven by dividend income from the preferred equity investment related to the KAM Acquisition. Interest Expense . The increase in interest expense was driven by higher average debt outstanding, reflecting the issuance of senior notes during the three months ended June 30, 2024. Change in TRA Liability. The change in TRA for the current year and prior year periods was driven by changes in fair value attributable to the portion of the TRA classified as contingent consideration from the Business Combination. The change for the current year period was driven by the passage of time, while the change for the prior year period was driven by a combination of a higher discount rate, a change in the expected timing of future payments and the passage of time. Income Tax Expense The change 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 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 post-Business Combination net income due to the drivers discussed above. The Common Units represent an approximately 66% and 68% weighted average economic interest in the Blue Owl Operating Group for the three months ended June 30, 2024 and June 30, 2023, respectively. 16 Table of Contents Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023 Six Months Ended June 30, (dollars in thousands) 2024 2023 $ Change Revenues Management fees, net (includes Part I Fees of $249,603 and $177,802) $ 913,652 $ 730,654 $ 182,998 Administrative, transaction and other fees 147,303 76,763 70,540 Performance revenues 2,233 506 1,727 Total Revenues, Net 1,063,188 807,923 255,265 Expenses Compensation and benefits 451,894 405,899 45,995 Amortization of intangible assets 112,929 186,808 (73,879) General, administrative and other expenses 170,206 107,616 62,590 Total Expenses 735,029 700,323 34,706 Other Loss Net gains on investments 5,797 3,642 2,155 Interest and dividend income 18,542 10,395 8,147 Interest expense (55,199) (37,536) (17,663) Change in TRA liability (1,959) 8,152 (10,111) Change in warrant liability (11,650) (1,500) (10,150) Change in earnout liability (655) (2,838) 2,183 Total Other Loss (45,124) (19,685) (25,439) Income Before Income Taxes 283,035 87,915 195,120 Income tax expense 32,968 11,842 21,126 Consolidated Net Income 250,067 76,073 173,994 Net income attributable to noncontrolling interests (191,031) (54,897) (136,134) Net Income Attributable to Blue Owl Capital Inc. $ 59,036 $ 21,176 $ 37,860 Revenues, Net Management Fees . The increase in management fees was primarily due to the drivers below. See Note 9 to our Financial Statements for additional details on our GAAP management fees by strategy. • Credit increased $134.4 million, including an increase in Part I Fees of $69.5 million, due to continued fundraising and deployment of capital within new and existing Credit products. • GP Strategic Capital increased $21.5 million, primarily driven by fundraising in our sixth flagship minority equity stakes product. • Real Estate increased $27.1 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: • $38.9 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. • $17.9 million increase in dealer manager revenues, due primarily to growth in the distribution of our retail OCIC and ORENT. • $13.7 million increase in administrative fees, driven by a higher level of reimbursable compensation expenses due to growth of our products and business overall. 17 Table of Contents Expenses Compensation and Benefits. Compensation and benefits expenses increased, primarily due to the following: • $77.0 million increase, driven by higher compensation to existing employees, as well as increased headcount due to our continued growth. • $18.4 million offsetting decrease in equity-based compensation, primarily reflecting a $37.3 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 an $18.5 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. • $12.6 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 decreased $73.9 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, primarily driven by the following: • $24.1 million increase in distribution costs, primarily related to our Credit and Real Estate products. • $18.4 million increase in reimbursed expenses, primarily related to dealer manager expenses, due to growth in our products and business overall. • $16.0 million increase in Transaction Expenses, primarily due to the KAM Acquisition and Prima Acquisition. • The remaining net change was across various categories, driven by our continued growth. Other Loss Interest and Dividend Income. The increase in interest and dividend income was driven by dividend income from the preferred equity investment related to the KAM Acquisition. Interest Expense . The increase in interest expense was driven by higher average debt outstanding, reflecting the issuance of senior notes during the six months ended June 30, 2024. Change in TRA Liability. The change in TRA for the current year and prior year periods was driven by changes in fair value attributable to the portion of the TRA classified as contingent consideration from the Business Combination. The change for the current year period was driven by a combination of a change in the expected timing of future payments, the passage of time and a higher discount rate, while the change for the prior year period was driven by a combination of a change in the expected timing of future payments and the passage of time. Change in Warrant Liability. 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 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 65% and 68% weighted average economic interest in the Blue Owl Operating Group for the six months ended June 30, 2024 and June 30, 2023, respectively. 18 Table of Contents Non-GAAP Analysis In addition to presenting our results in accordance with GAAP, we present certain other financial measures that are not presented in accordance with GAAP. Management uses these measures in budgeting and to assess the operating results of our business, and we believe that this information enhances the ability of stockholders to analyze our performance from period to period. These non-GAAP financial measures supplement and should be considered in addition to and not in lieu of our GAAP results, and such measures should not be considered as indicative of our liquidity. Our non-GAAP measures may not be comparable to other similarly titled measures used by other companies. Please see “—Non-GAAP Reconciliations” for reconciliations of these measures to the most comparable measures prepared in accordance with GAAP. Fee-Related Earnings and Related Components 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. Fee-Related Earnings exclude various items that are required for the presentation of our results under GAAP, including the following: noncontrolling interests in the Blue Owl Operating Partnerships; equity-based compensation expense; compensation expenses related to capital contributions in certain subsidiary holding companies that are in-turn paid as compensation to certain employees, as such contributions are not included in Fee-Related Earnings or Distributable Earnings; amortization of acquisition-related earnouts; amortization of intangible assets; “Transaction Expenses” as defined below; expense support payments and subsequent reimbursements; net gains (losses) on investments; net losses on retirement of debt; interest and dividend income; interest expense; changes in TRA, warrant and earnout liabilities; and taxes. 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 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, 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. Current income taxes payable and payments made pursuant to the TRA reflect the benefit of tax deductions that are excluded when calculating Distributable Earnings (e.g., equity-based compensation expenses, Transaction Expenses, tax goodwill, etc.). If these tax deductions were to be excluded from amounts payable for taxes, Distributable Earnings would be lower and our effective tax rate would appear to be higher, even though a lower amount of income taxes would have been paid or payable for a period’s earnings. We make these adjustments when calculating Distributable Earnings to more accurately reflect the net realized earnings that are expected to be or become available for distribution or reinvestment into our business. Management believes that Distributable Earnings can be useful as a supplemental performance measure to our GAAP results assessing the amount of earnings available for distribution. Margins GAAP Margin is calculated as income before income taxes, divided by total revenues. FRE Margin is a supplemental non-GAAP measure that equals Fee-Related Earnings before net (income) loss allocated to noncontrolling interests, divided by FRE revenues. Management believes that FRE Margin can be useful as a supplemental performance measure used to make operating decisions and assess our core operating results. 19 Table of Contents Fee-Related Earnings and Distributable Earnings Summary Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands) 2024 2023 2024 2023 FRE revenues $ 520,006 $ 401,476 $ 1,006,554 $ 778,879 FRE expenses 213,875 154,732 404,912 306,362 Net income allocated to noncontrolling interests included in Fee-Related Earnings (9,656) (2,147) (15,469) (2,021) Fee-Related Earnings $ 296,475 $ 244,597 $ 586,173 $ 470,496 Distributable Earnings $ 272,965 $ 227,016 $ 513,064 $ 436,030 Fee-Related Earnings and Distributable Earnings for the three months ended June 30, 2024 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. Fee-Related Earnings and Distributable Earnings for the six months ended June 30, 2024 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. FRE Revenues Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands) 2024 2023 2024 2023 Credit Platform Diversified lending $ 208,010 $ 155,086 $ 400,388 $ 301,181 Technology lending 61,428 48,097 120,638 95,787 First lien lending 3,410 4,748 7,513 9,233 Opportunistic lending 2,398 2,475 4,783 4,875 Liquid credit 6,736 6,136 13,535 13,654 Other 6,328 — 12,254 — Management Fees, Net 288,310 216,542 559,111 424,730 Administrative, transaction and other fees 41,703 18,509 65,978 26,033 FRE performance revenues 188 — 363 — FRE Revenues - Credit Platform 330,201 235,051 625,452 450,763 GP Strategic Capital Platform GP minority stakes 139,489 130,424 279,275 260,720 GP debt financing 5,674 3,626 11,079 7,377 Professional sports minority stakes 732 565 1,964 967 Management Fees, Net 145,895 134,615 292,318 269,064 Administrative, transaction and other fees 1,632 1,306 3,250 2,509 FRE Revenues - GP Strategic Capital Platform 147,527 135,921 295,568 271,573 Real Estate Platform Net lease 40,853 30,442 82,187 56,399 Real estate finance 1,356 — 1,356 — Management Fees, Net 42,209 30,442 83,543 56,399 FRE performance revenues — — 1,870 — Administrative, transaction and other fees 69 62 121 144 FRE Revenues - Real Estate Platform 42,278 30,504 85,534 56,543 Total FRE Revenues $ 520,006 $ 401,476 $ 1,006,554 $ 778,879 20 Table of Contents FRE Management Fees . For the three months ended June 30, 2024, the increase in FRE management fees was primarily driven by the following: • Credit FRE management fees increased $71.8 million, including an increase in Part I Fees of $36.3 million, due to continued fundraising and deployment of capital within new and existing Credit products. • GP Strategic Capital FRE management fees increased $11.3 million, primarily driven by fundraising in our sixth flagship minority equity stakes product. • Real Estate FRE management fees increased $11.8 million, attributable to continued fundraising and deployment of capital within new and existing Real Estate products, primarily OREF VI and ORENT. FRE Management Fees . For the six months ended June 30, 2024, the increase in FRE management fees was primarily driven by the following: • Credit FRE management fees increased $134.4 million, including an increase in Part I Fees of $69.5 million, due to continued fundraising and deployment of capital within new and existing Credit products. • GP Strategic Capital FRE management fees increased $23.3 million, primarily driven by fundraising in our sixth flagship minority equity stakes product. • Real Estate FRE management fees increased $27.1 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 and six months ended June 30, 2024, the increase in FRE administrative, transaction and other fees was driven primarily by an increase of $22.6 million and $38.9 million, respectively, 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 June 30, Six Months Ended June 30, (dollars in thousands) 2024 2023 2024 2023 FRE compensation and benefits $ 148,202 $ 115,621 $ 286,868 $ 219,221 FRE general, administrative and other expenses 65,673 39,111 118,044 87,141 Total FRE Expenses $ 213,875 $ 154,732 $ 404,912 $ 306,362 FRE Compensation and Benefits. For the three and six months ended June 30, 2024, 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 June 30, 2024, FRE general, administrative and other expenses increased, driven by the following: • $13.3 million increase primarily in office-related expenses and professional fees due to increased headcount and our continued growth. • $10.2 million increase in distribution costs, primarily related to our Credit and Real Estate products. • $2.2 million increase in occupancy costs, driven by additional leased space to accommodate our continued growth. • The remaining net change was across various categories, driven by our continued growth. FRE General, Administrative and Other Expenses . For the six months ended June 30, 2024, FRE general, administrative and other expenses increased, driven by the following: • $17.9 million increase primarily in office-related expenses and professional fees due to increased headcount and our continued growth. • $6.1 million increase in distribution costs, primarily related to our Credit products. • $5.5 million increase in occupancy costs, driven by additional leased space to accommodate our continued growth. • The remaining net change was across various categories, driven by our continued growth. 21 Table of Contents Non-GAAP Reconciliations The table below presents the reconciliation of the non-GAAP measures presented throughout this MD&A. Please see “—Non-GAAP Analysis” for important information regarding these measures. Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands) 2024 2023 2024 2023 GAAP Net Income Attributable to Class A Shares $ 33,945 $ 12,859 $ 59,036 $ 21,176 Net income attributable to noncontrolling interests 104,109 21,180 191,031 54,897 Income tax expense 18,197 5,402 32,968 11,842 GAAP Income Before Income Taxes 156,251 39,441 283,035 87,915 Strategic Revenue-Share Purchase consideration amortization 10,660 9,770 21,320 19,539 DE performance revenues — — — (506) DE performance revenues compensation — — — 177 Equity-based compensation - other 40,155 32,204 86,305 67,832 Equity-based compensation - acquisition related 2,163 20,897 4,266 41,576 Equity-based compensation - Business Combination grants 17,649 17,725 35,109 34,693 Acquisition-related cash earnout amortization — 6,498 — 12,596 Capital-related compensation 681 1,860 1,594 3,558 Amortization of intangible assets 56,734 115,917 112,929 186,808 Transaction Expenses 11,613 3,701 19,835 3,817 Expense support (6,077) (3,085) (7,875) (5,173) Net losses on investments (2,624) (3,030) (5,797) (3,642) Change in TRA liability 2,978 (10,116) 1,959 (8,152) Change in warrant liability (3,050) (450) 11,650 1,500 Change in earnout liability 70 1,844 655 2,838 Interest and dividend income (13,787) (5,606) (18,542) (10,395) Interest expense 32,715 19,174 55,199 37,536 Fee-Related Earnings Before Noncontrolling Interests 306,131 246,744 601,642 472,517 Net income allocated to noncontrolling interests included in Fee-Related Earnings (9,656) (2,147) (15,469) (2,021) Fee-Related Earnings 296,475 244,597 586,173 470,496 DE performance revenues — — — 506 DE performance revenues compensation — — — (177) Interest and dividend income 13,787 5,606 18,542 10,395 Interest expense (32,715) (19,174) (55,199) (37,536) Taxes and TRA payments (4,582) (4,013) (36,452) (7,654) Distributable Earnings $ 272,965 $ 227,016 $ 513,064 $ 436,030 Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands) 2024 2023 2024 2023 GAAP Revenues $ 549,848 $ 416,937 $ 1,063,188 $ 807,923 Strategic Revenue-Share Purchase consideration amortization 10,660 9,770 21,320 19,539 DE performance revenues — — — (506) Reimbursed expenses (40,502) (25,231) (77,954) (48,077) FRE Revenues $ 520,006 $ 401,476 $ 1,006,554 $ 778,879 22 Table of Contents Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands) 2024 2023 2024 2023 GAAP Compensation and Benefits $ 227,103 $ 208,281 $ 451,894 $ 405,899 DE performance revenues compensation — — — (177) Equity-based compensation - other (40,155) (32,204) (86,305) (67,832) Equity-based compensation - acquisition related (2,163) (20,897) (4,266) (41,576) Equity-based compensation - Business Combination grants (17,649) (17,725) (35,109) (34,693) Acquisition-related cash earnout amortization — (6,498) — (12,596) Capital-related compensation (681) (1,860) (1,594) (3,558) Reimbursed expenses (18,253) (13,476) (37,752) (26,246) FRE Compensation and Benefits $ 148,202 $ 115,621 $ 286,868 $ 219,221 Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands) 2024 2023 2024 2023 GAAP General, Administrative and Other Expenses $ 93,458 $ 51,482 $ 170,206 $ 107,616 Transaction Expenses (11,613) (3,701) (19,835) (3,817) Expense support 6,077 3,085 7,875 5,173 Reimbursed expenses (22,249) (11,755) (40,202) (21,831) FRE General, Administrative and Other Expenses $ 65,673 $ 39,111 $ 118,044 $ 87,141 Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands) 2024 2023 2024 2023 Income Before Income Taxes $ 156,251 $ 39,441 $ 283,035 $ 87,915 GAAP Revenues 549,848 416,937 1,063,188 807,923 GAAP Margin 28 % 9 % 27 % 11 % Fee-Related Earnings Before Noncontrolling Interests 306,131 246,744 601,642 472,517 FRE Revenues 520,006 401,476 1,006,554 778,879 FRE Margin 59 % 61 % 60 % 61 % Liquidity and Capital Resources Overview We rely on management fees as the primary source of our operating liquidity. From time to time we may rely on the use of our Revolving Credit Facility between management fee collection dates, which generally occur on a quarterly basis. 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 second quarter of 2024 with $436.8 million of cash and cash equivalents and approximately $1.5 billion available under our Revolving Credit Facility. During the three months ended June 30, 2024, we issued $1.0 billion of 6.250% Senior Notes due 2034 (the “2034 Notes”), which proceeds we used to repay outstanding borrowings under our Revolving Credit Facility and provide 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. Over the short and long term, we may use cash and cash equivalents, issue additional debt or equity securities, or may seek other sources of liquidity to: • Grow our existing investment management business. • Expand into, or acquire, businesses that are complementary to our existing investment management business or other strategic growth initiatives. 23 Table of Contents • Pay operating expenses, including cash compensation to our employees. • Repay debt obligations and interest thereon. • Opportunistically repurchase Class A Shares on the open market, as well as pay withholding taxes on net settled, vested RSUs. • Pay income taxes and amounts due under the TRA. • Pay dividends to holders of our Class A Shares, as well as make corresponding distributions to holders of Common Units at the Blue Owl Operating Group level. • Fund debt and equity investment commitments to existing or future products. Debt Obligations As of June 30, 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”), $1.0 billion aggregate principal amount of 2034 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, 2032 and the 2034 Notes, the “Notes”). Our Revolving Credit Facility was fully repaid as of June 30, 2024. 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. We may choose to refinance all or a portion of any amounts outstanding on or prior to their respective maturity dates by issuing new debt, which could result in higher borrowing costs. We may also choose to repay borrowing by using proceeds from the issuance of equity or other securities, which would dilute stockholders. 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 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 June 30, 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 $1.3 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 (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 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: • The amount and timing of our taxable income will impact the payments to be made under the TRA. To the extent that we do not have sufficient taxable income to utilize the amortization deductions available as a result of the increased tax basis in the Blue Owl Operating Partnerships’ assets, payments required under the TRA would be reduced. • The price of our Class A Shares at the time of any exchange will determine the actual increase in tax basis of the Blue Owl Operating Partnerships’ assets resulting from such exchange; payments under the TRA resulting from future exchanges, if any, will be dependent in part upon such actual increase in tax basis. • The composition of the Blue Owl Operating Group assets at the time of any exchange will determine the extent to which we may benefit from amortizing the increased tax basis in such assets and thus will impact the amount of future payments under the TRA resulting from any future exchanges. 24 Table of Contents • The extent to which future exchanges are taxable will impact the extent to which we will receive an increase in tax basis of the Blue Owl Operating Group assets as a result of such exchanges, and thus will impact the benefit derived by us and the resulting payments, if any, to be made under the TRA. • The tax rates in effect at the time any potential tax savings are realized, which would affect the amount of any future payments under the TRA. Depending upon the outcome of these and other factors, payments that we may be obligated to make under the TRA in respect of exchanges could be substantial. In light of the numerous factors affecting our obligation to make payments under the TRA, the timing and amounts of any such actual payments are not reasonably ascertainable. Share Repurchases and RSUs Withheld for Tax Withholding On May 4, 2022, our Board authorized the repurchase of up to $150.0 million of Class A Shares (the “Program”). Under the Program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual numbers repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. 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 six months ended June 30, 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 six months ended June 30, 2024, 31,669 RSUs with a fair value of $0.6 million and 1,000,818 RSUs with a fair value of $18.1 million, respectively, were withheld to satisfy tax withholding obligations. During the three and six months ended June 30, 2023, 39,640 RSUs with a fair value of $0.4 million and 358,946 RSUs with a fair value of $4.8 million, respectively, were withheld to satisfy tax withholding obligations. Oak Street Cash Earnouts, Wellfleet Earnouts and Prima Earnouts A portion of the Oak Street Cash Earnout, the Wellfleet Earnouts (each as defined in Note 3 in our Annual Report) and the Prima Earnouts (defined in Note 3 to the 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, Wellfleet Triggering Events and Prima 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. 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. 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. 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. 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 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 second quarter of 2024, we declared a dividend of $0.18 to holders of record as of the close of business on August 21, 2024, which will be paid on August 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. 25 Table of Contents 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, 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. All of the foregoing is subject to the qualification that the declaration and payment of any dividends are at the sole discretion of our Board, and our Board may change our dividend policy at any time, including, without limitation, to reduce or eliminate dividends entirely. The Blue Owl Operating Partnerships will make cash distributions (“Tax Distributions”) to the partners of such partnerships, including to Blue Owl GP, if we determine that the taxable income of the relevant partnership will give rise to taxable income for its partners. Generally, Tax Distributions will be computed based on our estimate of the taxable income of the relevant partnership allocable to a partner multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, New York State and New York City income tax rates prescribed for an individual or corporate resident in New York City (taking into account certain assumptions set forth in the relevant partnership agreements). Tax Distributions will be made only to the extent distributions from the Blue Owl Operating Partnerships for the relevant year were otherwise insufficient to cover the estimated assumed tax liabilities. Holders of our Class A and B Shares may not always receive distributions or may receive lower distributions on a per share basis at a time when we, indirectly through Blue Owl GP, and holders of our Common Units are receiving distributions on their interests, as distributions to the Registrant and Blue Owl GP may be used to settle tax and TRA liabilities, if any, and other obligations. Dividends are expected to be treated as qualified dividends under current law to the extent of the Company’s current and accumulated earnings and profits, with any excess dividends treated as a return of capital to the extent of a stockholder’s basis, and any remaining excess generally treated as gain realized on the sale or other disposition of stock. Risks to our Liquidity Our ability to obtain financing provides us with additional sources of liquidity. Any new financing arrangement that we may enter into may have covenants that impose additional limitations on us, including with respect to making distributions, entering into business transactions or other matters, and may result in increased interest expense. If we are unable to secure financing on terms that are favorable to us, our business may be adversely impacted. 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 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. 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 Macroeconomic Factors” in our Annual Report. Cash Flows Analysis Six Months Ended June 30, (dollars in thousands) 2024 2023 $ Change Net cash provided by (used in): Operating activities $ 349,541 $ 359,094 $ (9,553) Investing activities (150,021) (56,896) (93,125) Financing activities 133,071 (328,956) 462,027 Net Change in Cash and Cash Equivalents $ 332,591 $ (26,758) $ 359,349 Operating Activities. Our net cash flows from operating activities are generally comprised of management fees, less cash used for operating expenses, including interest paid on our debt obligations. 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. 26 Table of Contents 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 six months ended June 30, 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 six months ended June 30, 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 the six months ended June 30, 2024 were primarily related to a preferred equity investment in Kuvare UK Holdings, 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 that was fully repaid. Cash flows from investing activities for the six months ended June 30, 2023, were primarily related to purchases of investments in our Real Estate products, as well as cash outflows related to office space-related leasehold improvements. Financing Activities. Cash flows from financing activities for the six months ended June 30, 2024 were primarily related to the issuance of our 2034 Notes and borrowing and repayment activity under our Revolving Credit Facility, which borrowings were used to finance the Prima Acquisition that closed on June 6, 2024 and the KAM Acquisition that closed on July 1, 2024. In addition, we had distributions on our Common Units (noncontrolling interests) and dividends on our Class A Shares. Included in the six months ended June 30, 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 six months ended June 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 six months ended June 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. Critical Accounting Estimates We prepare our Financial Statements in accordance with U.S. GAAP. In applying many of these accounting principles, we make estimates that affect the reported amounts of assets, liabilities, revenues and expenses in the Financial Statements. We base our estimates on historical experience and other factors that we believe are reasonable under the circumstances. These estimates, however, are subjective and subject to change, and actual results may differ materially from our current estimates due to the inherent nature of these estimates, including geopolitical, macro-environmental and other uncertainty. For a summary of our significant accounting policies, see Note 2 to our Financial Statements and the financial statements in our Annual Report. Estimation of Fair Values Investments Held by our 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. 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, our own assumptions, a significant degree of judgment, and the consideration of a combination of internal and external factors. 27 Table of Contents 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. Because such valuations are inherently uncertain, the valuations may fluctuate significantly over time due to changes in market conditions. These valuations would, in turn, have corresponding proportionate impacts on the amount of management fees that we may earn from certain products on which revenues are based on the fair value of investments. TRA Liability 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. We then apply a discount rate that we believe is appropriate given the nature of and expected timing of payments of the liability. A decrease in the discount rate assumption would result in an increase in the fair value estimate of the liability, which would have a correspondingly negative impact on our GAAP results of operations. However, payments under the TRA are ultimately only made to the extent we realize the offsetting cash savings on our income taxes due to the tax goodwill and other intangibles deduction. See Note 4 to our Financial Statements for additional details. Earnout Liability The fair value of our earnout liability was 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 this liability may have a material impacts on our results of operations in any given period, as any increases in this liability has a corresponding negative impact on our GAAP results of operations. See Note 4 to our Financial Statements for additional details. Preferred Equity Investment We have elected the fair value option on our preferred equity investment. The valuation of the preferred equity investment considers our best estimate of future cash flow, including timing of repayment, which is discounted considering the risk free rate and credit assumptions related to the underlying issuer. A decrease in the expected cash flows or increase in the discount rate assumptions would result in a decrease in the fair value of the preferred equity investment, which would have a correspondingly negative impact on our GAAP results of operations. These assumptions require a significant amount of judgment and could have a material impact on the valuation. See Note 4 to our Financial Statements for additional details. Equity-based Compensation 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. Deferred Tax Assets Substantially all of our deferred tax assets relate to goodwill and other intangible assets deductible for tax purposes, as well as payments expected to be made under the TRA. In accordance with relevant tax rules, we expect to take substantially all of these goodwill and other intangible deductions over a 15-year period following the applicable transaction. To the extent we generate insufficient taxable income to take the full deduction in any given year, we will generate a net operating loss (“NOL”) that is available for us to use over an indefinite carryforward period in order to fully realize the deferred tax assets. 28 Table of Contents When evaluating the realizability of deferred tax assets, all evidence—both positive and negative—is considered. This evidence includes, but is not limited to, expectations regarding future earnings, future reversals of existing temporary tax differences and tax planning strategies. We did not take into account any tax planning strategies when arriving at this conclusion; however, the other assumptions underlying the taxable income estimates are based on our near-term operating model. If we experience a significant decline in AUM for any extended time during the period for which these estimates relate and we do not otherwise experience offsetting growth rates in other periods, we may not generate taxable income sufficient to realize the deferred tax assets and may need to record a valuation allowance. 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. Acquisitions Purchase Price Allocation We account for business combinations using the acquisition method of accounting, under which the purchase price of the acquisition is allocated to the assets acquired and liabilities assumed, with any excess consideration allocated to goodwill, using the fair values determined by management as of the acquisition date. Management’s determination of the fair value of assets acquired and liabilities assumed at the acquisition date is based on the best information available and may incorporate management’s own assumptions and involve significant judgment. We use our best estimates and assumptions to accurately assign fair value to the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date. Assumptions in valuing certain intangible assets include, but are not limited to, future expected cash inflows and outflows, future fundraising and timing of new product launches, discount rates, revenue volatility and income tax rates. Our estimates for future cash flows are based on historical data, internal estimates and external sources, and are based on assumptions that are consistent with the plans and estimates we use to manage the underlying assets acquired. We estimate the useful lives of intangible assets based on the expected period over which we anticipate generating substantially all of the economic benefit from the asset. We base our estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Unanticipated events and circumstances may occur that could affect the accuracy or validity of such assumptions, estimates or actual results. Impairment Testing of 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 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 The determination of whether to consolidate a variable interest entity (“VIE”) under GAAP requires a significant amount of judgment concerning the degree of control over an entity by its holders of variable interests. To make these judgments, we conduct an analysis, on a case-by-case basis, of whether we are the primary beneficiary and are therefore required to consolidate an entity. We continually reconsider whether we should consolidate a VIE. Upon the occurrence of certain events, such as modifications to organizational documents and investment management agreements of our products, we will reconsider our conclusion regarding the status of an entity as a VIE. Our judgement when analyzing the status of an entity and whether we consolidate an entity could have a material impact on individual line items within our Financial Statements, as a change in our conclusion would have the effect of grossing up the assets, liabilities, revenues and expenses of the entity being evaluated. In light of the relevantly insignificant direct and indirect investments into our products, the likelihood of a reasonable change in our estimation and judgement would likely not result in a change in our conclusions to consolidate or not consolidate any VIEs to which we have exposure. 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 six months ended June 30, 2024, or that have been issued but that we have not yet adopted, are expected to materially impact our future trends. 29 Table of Contents