owl-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________

FORM 10-Q

___________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39653

___________________________

BLUE OWL CAPITAL INC.

(Exact name of registrant as specified in its charter)

___________________________

Delaware

86-3906032

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)


399 Park Avenue,	New York,	NY	10022
(address of principal executive offices)

(212) 419-3000

(Registrant’s telephone number, including area code)

___________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Class A common stock

OWL

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding at August 2, 2023
Class A common stock, par value $0.0001						454,557,594
Class B common stock, par value $0.0001						—
Class C common stock, par value $0.0001						633,520,277
Class D common stock, par value $0.0001						319,132,127

TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION	7
Item 1.	Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30

PART II	OTHER INFORMATION	31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	33
Signatures		35
Index to Financial Statements		F-1

Table of Contents

DEFINED TERMS


Assets Under Management or AUM						Refers to the assets that we manage, and are generally equal to the sum of (i) net asset value (“NAV”); (ii) drawn and undrawn debt; (iii) uncalled capital commitments; (iv) total managed assets for certain Real Estate products; and (v) par value of collateral for collateralized loan obligations (“CLOs”).

Annual Report						Refers to our annual report for the year ended December 31, 2022, filed with the SEC on Form 10-K on February 27, 2023.

our BDCs						Refers to our business development companies, as regulated under the Investment Company Act of 1940, as amended: Blue Owl Capital Corporation (NYSE: OBDC) (“OBDC”), Blue Owl Capital Corporation II (“OBDC II”), Blue Owl Capital Corporation III (“OBDC III”), Blue Owl Technology Finance Corp. (“OTF”), Blue Owl Technology Finance Corp. II (“OTF II”), Blue Owl Credit Income Corp. (“OCIC”) and Blue Owl Technology Income Corp. (“OTIC”).

Blue Owl, the Company, the firm, we, us, and our						Refers to the Registrant and its consolidated subsidiaries.

Blue Owl Carry						Refers to Blue Owl Capital Carry LP.

Blue Owl GP						Refers collectively to Blue Owl Capital GP Holdings LLC and Blue Owl Capital GP LLC, which are directly or indirectly wholly owned subsidiaries of the Registrant that hold the Registrants interests in the Blue Owl Operating Partnerships.

Blue Owl Holdings						Refers to Blue Owl Capital Holdings LP.

Blue Owl Operating Group						Refers collectively to the Blue Owl Operating Partnerships and their consolidated subsidiaries.

Blue Owl Operating Group Units						Refers collectively to a unit in each of the Blue Owl Operating Partnerships.

Blue Owl Operating Partnerships						Refers to Blue Owl Carry and Blue Owl Holdings, collectively.

Blue Owl Securities						Refers to Blue Owl Securities LLC, a Delaware limited liability company. Blue Owl Securities is a broker-dealer registered with the SEC, a member of FINRA and the SIPC. Blue Owl Securities is wholly owned by Blue Owl and provides distribution services to all Blue Owl Divisions.

Business Combination						Refers to the transactions contemplated by the business combination agreement dated as of December 23, 2020 (as the same has been or may be amended, modified, supplemented or waived from time to time), by and among Altimar Acquisition Corporation, Owl Rock Capital Group LLC, Owl Rock Capital Feeder LLC, Owl Rock Capital Partners LP and Neuberger Berman Group LLC, which transactions were completed on May 19, 2021.

Business Combination Date						Refers to May 19, 2021, the date on which the Business Combination was completed.

Class A Shares						Refers to the Class A common stock, par value $0.0001 per share, of the Registrant.

Class B Shares						Refers to the Class B common stock, par value $0.0001 per share, of the Registrant.

Class C Shares						Refers to the Class C common stock, par value $0.0001 per share, of the Registrant.

Class D Shares						Refers to the Class D common stock, par value $0.0001 per share, of the Registrant.

Class E Shares						Refers to the Class E common stock, par value $0.0001 per share, of the Registrant.

Credit						Refers to our Credit platform that offers private credit solutions to middle-market companies through our investment strategies: diversified lending, technology lending, first lien lending, opportunistic lending, and also includes our adjacent investment strategy liquid credit, which focuses on the management of CLOs.

Table of Contents


Fee-Paying AUM or FPAUM						Refers to the AUM on which management fees are earned. For our BDCs, FPAUM is generally equal to total assets (including assets acquired with debt but excluding cash). For our other Credit products, excluding CLOs, FPAUM is generally equal to NAV or investment cost. FPAUM also includes uncalled committed capital for products where we earn management fees on such uncalled committed capital. For CLOs, FPAUM is generally equal to the par value of collateral. For our GP Strategic Capital products, FPAUM for the GP minority stakes strategy is generally equal to capital commitments during the investment period and the cost of unrealized investments after the investment period. For GP Strategic Capitals’ other strategies, FPAUM is generally equal to investment cost. For Real Estate, FPAUM is generally equal to a combination of capital commitments and cost of unrealized investments during the investment period and the cost of unrealized investments after the investment period; however, for certain Real Estate products FPAUM is based on NAV.

Financial Statements						Refers to our consolidated and combined financial statements included in this report.

GAAP						Refers to U.S. generally accepted accounting principles.

GP Strategic Capital						Refers to our GP Strategic Capital platform that primarily focuses on acquiring equity stakes in, and providing debt financing to, large, multi-product private equity and private credit firms through two existing investment strategies: GP minority stakes and GP debt financing, and also include our professional sports minority stakes.

NYSE						Refers to the New York Stock Exchange.

our products						Refers to the products that we manage, including our BDCs, private funds, CLOs and managed accounts.







Part I Fees						Refers to quarterly performance income on the net investment income of our BDCs and similarly structured products, subject to a fixed hurdle rate. These fees are classified as management fees throughout this report, as they are predictable and recurring in nature, not subject to repayment, and cash-settled each quarter.

Part II Fees						Generally refers to fees from our BDCs and similarly structured products that are paid in arrears as of the end of each measurement period when the cumulative aggregate realized capital gains exceed the cumulative aggregate realized capital losses and aggregate unrealized capital depreciation, less the aggregate amount of Part II Fees paid in all prior years since inception. Part II Fees are classified as realized performance income throughout this report.



Permanent Capital						Refers to AUM in products that do not have ordinary redemption provisions or a requirement to exit investments and return the proceeds to investors after a prescribed period of time. Some of these products, however, may be required or can elect to return all or a portion of capital gains and investment income, and some may have periodic tender offers or redemptions. Permanent Capital includes certain products that are subject to management fee step downs or roll-offs or both over time.

Principals						Refers to our founders and senior members of management who hold, or in the future may hold, Class B Shares and Class D Shares. Class B Shares and Class D Shares collectively represent 80% of the total voting power of all shares.

Real Estate						Refers, unless context indicates otherwise, to our Real Estate platform that primarily focuses on providing investors with predictable current income, and potential for appreciation, while focusing on limiting downside risk through a unique net lease strategy.

Registrant						Refers to Blue Owl Capital Inc.

SEC						Refers to the U.S. Securities and Exchange Commission.

Tax Receivable Agreement or TRA						Refers to the Amended and Restated Tax Receivable Agreement, dated as of October 22, 2021, as may be amended from time to time by and among the Registrant, Blue Owl Capital GP LLC, the Blue Owl Operating Partnerships and each of the Partners (as defined therein) party thereto.

Table of Contents

AVAILABLE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with the SEC. We make available free of charge on our website (www.blueowl.com) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other filing as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. We also use our website to distribute company information, including assets under management and performance information, and such information may be deemed material. Accordingly, investors should monitor our website, in addition to our press releases, SEC filings and public conference calls and webcasts.

Also posted on our website in the “Investor Resources—Governance” section is the charter for our Audit Committee, as well as our Corporate Governance Guidelines and Code of Business Conduct governing our directors, officers and employees. Information on or accessible through our website is not a part of or incorporated into this report or any other SEC filing. Copies of our SEC filings or corporate governance materials are available without charge upon written request to Blue Owl Capital Inc., 399 Park Avenue, 37th Floor, New York, New York 10022, Attention: Office of the Secretary. Any materials we file with the SEC are also publicly available through the SEC’s website (www.sec.gov).

No statements herein, available on our website or in any of the materials we file with the SEC constitute, or should be viewed as constituting, an offer of any fund.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, which reflect our current views with respect to, among other things, future events, operations and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “projects,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words, other comparable words or other statements that do not relate to historical or factual matters. The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Such forward-looking statements are subject to various risks, uncertainties (some of which are beyond our control) or other assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Some of these factors are described under the headings “Item 1A. Risk Factors” and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These factors should not be construed as exhaustive and should be read in conjunction with the risk factors and other cautionary statements that are included in this report and in our other periodic filings. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these forward-looking statements. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Therefore, you should not place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

The information required by this item is included in the Financial Statements set forth in the F-pages of this report.

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 “Business of Blue Owl” in the Annual Report.

One Blue Owl

As part of our brand’s evolution, we have transitioned to one Blue Owl. In connection with this initiative, our legacy brands - Owl Rock, Dyal Capital and Oak Street - have been renamed to Credit, GP Strategic Capital and Real Estate investment platforms, respectively, including products within each of these investment platforms. The strategic shift to a unified brand reflects our long-term commitment to delivering the collective power of our investment capabilities to the market. As we emerge as one Blue Owl, our mission and the solutions we provide to our investors and users of our capital remain unchanged.

2023 Second Quarter Overview


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2023		2022		2023		2022
Net Income (Loss) Attributable to Blue Owl Capital Inc.	$	12,859	$	(1,126)	$	21,176	$	(12,941)



Fee-Related Earnings(1)	$	244,597	$	197,064	$	470,496	$	368,447

Distributable Earnings(1)	$	227,016	$	180,402	$	436,030	$	336,128

(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.

Table of Contents

Assets Under Management

Blue Owl

AUM: $149.6 billion

FPAUM: $93.6 billion

Credit

AUM: $73.8 billion

FPAUM: $52.1 billion

GP Strategic Capital

AUM: $50.9 billion

FPAUM: $28.5 billion

Real Estate

AUM: $24.8 billion

FPAUM: $13.1 billion

Diversified Lending

Commenced 2016

AUM: $43.1 billion

FPAUM: $27.0 billion

GP Minority Stakes

Commenced 2010

AUM: $48.7 billion

FPAUM: $27.5 billion

Net Lease

Commenced 2009

AUM: $24.8 billion

FPAUM: $13.1 billion

Technology Lending

Commenced 2018

AUM: $17.7 billion

FPAUM: $13.8 billion

GP Debt Financing

Commenced 2019

AUM: $1.6 billion

FPAUM: $0.8 billion

First Lien Lending

Commenced 2018

AUM: $3.5 billion

FPAUM: $2.8 billion

Professional Sports

Minority Stakes

Commenced 2021

AUM: $0.6 billion

FPAUM: $0.2 billion

Opportunistic Lending

Commenced 2020

AUM: $2.4 billion

FPAUM: $1.5 billion

Liquid Credit

Commenced 2022

AUM: $7.1 billion

FPAUM: $7.0 billion

As of June 30, 2023, our AUM was $149.6 billion, which included $93.6 billion of FPAUM. For the six months ended June 30, 2023, approximately 93% of our management fees were earned on AUM from Permanent Capital. As of June 30, 2023, we have $12.0 billion in AUM not yet paying fees, providing approximately $170 million of annualized management fees once deployed or upon the expiration of certain fee holidays. See “—Assets Under Management” for additional information, including important information on how we define these metrics.

Business Environment

Our business is impacted by conditions in the financial markets and economic conditions in the U.S., and to a lesser extent, 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 2023, the persistence of elevated inflation, in conjunction with higher interest rates and slowing global gross domestic product growth, continued to weigh on industry deal activity. However, compared to the first quarter of 2023, announced global M&A and capital markets issuances increased.

During the quarter, 93% of our management fees were generated by Permanent Capital and the remainder 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 second quarter of 2023 with substantial available capital to deploy, reporting $12.0 billion of AUM not yet paying fees.

As a number of legacy participants have remained on the sidelines in the broadly syndicated loan market, direct lenders continue to take market share, providing financing solutions to sponsors and companies at wider spreads and lower loan to value ratios on average. An increase in repayments over the prior quarter allowed us to redeploy capital into higher yielding opportunities, while rising interest rates continue to have a beneficial impact on our management fees as higher base rates continue to drive increased Part I Fees.

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.

Table of Contents

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 and ongoing 100% rent collection across the portfolio, and we are raising capital through various new products launched in 2022.

We are continuing to closely monitor developments related to the macroeconomic factors that have contributed to market volatility, and to assess the impact of these factors on financial markets and on our business. Our future results may be adversely affected by slowdowns in fundraising activity and the pace of capital deployment, which could result in delayed 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 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.

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, 2023, assets under management related to us, our executives and other employees totaled approximately $3.4 billion (including $1.3 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.

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 approximately $170 million of additional annualized management fees once deployed or upon the expiration of the relevant fee holidays.

Table of Contents

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.

Table of Contents

Changes in AUM


	Three Months Ended June 30, 2023								Three Months Ended June 30, 2022
(dollars in millions)	Credit		GP Strategic Capital		Real Estate		Total		Credit		GP Strategic Capital		Real Estate		Total
Beginning Balance	$	71,617	$	49,167	$	23,590	$	144,374	$	44,775	$	41,153	$	16,090	$	102,018
Acquisition	—		—		—		—		6,529		—		—		6,529
New capital raised	1,529		184		1,150		2,863		3,015		3,958		208		7,181
Change in debt	716		—		201		917		3,142		—		—		3,142
Distributions	(842)		(409)		(209)		(1,460)		(380)		(219)		(100)		(699)
Change in value / other	773		1,992		94		2,859		(254)		782		441		969
Ending Balance	$	73,793	$	50,934	$	24,826	$	149,553	$	56,827	$	45,674	$	16,639	$	119,140

	Six Months Ended June 30, 2023								Six Months Ended June 30, 2022
(dollars in millions)	Credit		GP Strategic Capital		Real Estate		Total		Credit		GP Strategic Capital		Real Estate		Total
Beginning Balance	$	68,607	$	48,510	$	21,085	$	138,202	$	39,227	$	39,906	$	15,362	$	94,495
Acquisition	—		—		—		—		6,529		—		—		6,529
New capital raised	3,469		504		2,689		6,662		4,953		5,524		568		11,045
Change in debt	1,655		—		696		2,351		6,760		—		—		6,760
Distributions	(1,605)		(1,111)		(416)		(3,132)		(664)		(977)		(265)		(1,906)
Change in value / other	1,667		3,031		772		5,470		22		1,221		974		2,217
Ending Balance	$	73,793	$	50,934	$	24,826	$	149,553	$	56,827	$	45,674	$	16,639	$	119,140

Credit. Increase in AUM for the six months ended June 30, 2023 was driven by the following:

•$2.2 billion new capital raised in diversified lending, primarily driven by private wealth fundraising in OCIC and a separately managed account.

•$1.0 billion new capital raised in technology lending, driven by continued fundraising in OTF II and OTIC.

•$1.7 billion of overall appreciation across the platform.

•$1.7 billion of additional net debt commitments primarily in diversified lending and technology lending strategies, as we continue to opportunistically manage leverage in our BDCs.

•$1.6 billion in distributions, which primarily relate to dividends paid from our BDCs. Redemptions from these products were not material during the first half of 2023.

GP Strategic Capital. Increase in AUM for the six months ended June 30, 2023 was driven by the overall appreciation across all of our major products of $3.0 billion and new capital raised of $0.5 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.

Real Estate. Increase in AUM for the six months ended June 30, 2023 was driven by new capital raised of $2.7 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 $0.8 billion and additional debt commitments of $0.7 billion, primarily related to ONLP, partially offset by distributions in ONLP and Blue Owl Real Estate Capital Fund V.

Table of Contents

Changes in FPAUM


	Three Months Ended June 30, 2023								Three Months Ended June 30, 2022
(dollars in millions)	Credit		GP Strategic Capital		Real Estate		Total		Credit		GP Strategic Capital		Real Estate		Total
Beginning Balance	$	51,150	$	28,561	$	11,922	$	91,633	$	32,658	$	23,651	$	9,275	$	65,584
Acquisition	—		—		—		—		6,501		—		—		6,501
New capital raised / deployed	1,001		234		1,279		2,514		2,898		3,023		121		6,042
Fee basis step down	—		(333)		—		(333)		—		—		—		—
Distributions	(765)		—		(141)		(906)		(381)		4		(113)		(490)
Change in value / other	691		—		24		715		(267)		—		147		(120)
Ending Balance	$	52,077	$	28,462	$	13,084	$	93,623	$	41,409	$	26,678	$	9,430	$	77,517

	Six Months Ended June 30, 2023								Six Months Ended June 30, 2022
(dollars in millions)	Credit		GP Strategic Capital		Real Estate		Total		Credit		GP Strategic Capital		Real Estate		Total
Beginning Balance	$	49,041	$	28,772	$	10,997	$	88,810	$	32,029	$	21,212	$	8,203	$	61,444
Acquisition	—		—		—		—		6,501		—		—		6,501
New capital raised / deployed (1)	3,022		226		2,357		5,605		5,098		6,360		1,198		12,656
Fee basis step down (1)	—		(333)		—		(333)		—		(898)		—		(898)
Distributions	(1,497)		(203)		(292)		(1,992)		(659)		4		(274)		(929)
Change in value / other	1,511		—		22		1,533		(1,560)		—		303		(1,257)
Ending Balance	$	52,077	$	28,462	$	13,084	$	93,623	$	41,409	$	26,678	$	9,430	$	77,517

(1)The six months ended June 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.

Credit. Increase in FPAUM for the six months ended June 30, 2023 was driven by a combination of continued fundraising and the overall appreciation across the platform, partially offset by distributions, which primarily related to dividends paid from our BDCs.

GP Strategic Capital. FPAUM for the six months ended June 30, 2023 remained relatively unchanged.

Real Estate. Increase in FPAUM for the six months ended June 30, 2023 was driven primarily by capital raised in OREF VI and ORENT, and deployed in OREF VI.

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	$	14,975	$	5,970	$	5,970	$	2,554	$	5,917	$	8,471	1.62x	1.45x	13.0	%	9.4	%
Blue Owl Capital Corporation II (2)	2017	$	2,590	$	1,333	$	1,306	$	364	$	1,291	$	1,655	NM	1.30x	NM		7.3	%
Blue Owl Capital Corporation III	2020	$	4,044	$	1,812	$	1,812	$	282	$	1,846	$	2,128	1.22x	1.21x	12.6	%	11.6	%
Blue Owl Credit Income Corp. (2)	2020	$	13,982	$	6,156	$	5,860	$	466	$	5,872	$	6,338	NM	1.08x	NM		7.7	%

Technology Lending (1)
Blue Owl Technology Finance Corp.	2018	$	7,185	$	3,250	$	3,250	$	514	$	3,429	$	3,943	1.34x	1.25x	12.6	%	9.2	%
Blue Owl Technology Finance Corp. II	2021	$	6,527	$	4,054	$	1,222	$	40	$	1,252	$	1,292	NM	NM	NM		NM

First Lien Lending (3)
Blue Owl First Lien Fund Levered	2018	$	2,765	$	1,161	$	912	$	218	$	940	$	1,158	1.33x	1.28x	10.8	%	8.9	%
Blue Owl First Lien Fund Unlevered	2019	$	231	$	224	$	156	$	34	$	143	$	177	1.18x	1.14x	5.8	%	4.4	%

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

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

(3)Blue Owl First Lien Fund is comprised of three feeder funds: Onshore Levered, Offshore Levered and Insurance Unlevered. The gross and net MoIC and IRR presented in the chart are for Onshore Levered and Insurance Unlevered as those are the largest of the levered and unlevered feeder funds. The gross and net MoIC for the Offshore Levered feeder fund is 1.31x and 1.23x, respectively. The gross and net IRR for the Offshore Levered feeder is 10.1% and 7.2%, 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.

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	$	807	$	1,284	$	1,266	$	672	$	610	$	1,282	1.16x	1.01x	3.0	%	0.2	%
Blue Owl GP Stakes II	2014	$	3,078	$	2,153	$	1,857	$	672	$	2,238	$	2,910	1.86x	1.57x	14.8	%	9.9	%
Blue Owl GP Stakes III	2015	$	9,103	$	5,318	$	3,268	$	3,159	$	4,902	$	8,061	3.03x	2.47x	31.2	%	23.8	%
Blue Owl GP Stakes IV	2018	$	14,673	$	9,041	$	5,864	$	3,928	$	6,962	$	10,890	2.21x	1.86x	76.6	%	48.9	%
Blue Owl GP Stakes V	2020	$	13,675	$	12,852	$	2,609	$	498	$	2,787	$	3,285	1.47x	1.26x	52.9	%	27.7	%

(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.

(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	$	1,148	$	1,250	$	1,250	$	1,412	$	569	$	1,981	1.75x	1.57x	26.0	%	21.1	%
Blue Owl Real Estate Net Lease Property Fund	2019	$	6,829	$	3,388	$	3,388	$	776	$	3,732	$	4,508	1.27x	1.24x	15.3	%	13.9	%
Blue Owl Real Estate Fund V (1)	2020	$	3,790	$	2,500	$	2,137	$	649	$	2,000	$	2,649	1.32x	1.24x	30.1	%	23.0	%

Blue Owl Real Estate Net Lease Trust (2)	2022	$	3,558	$	1,418	$	1,418	$	21	$	1,383	$	1,404	NM	NM	NM		NM
Blue Owl Real Estate Fund VI (1)	2022	$	3,989	$	3,686	$	193	$	1	$	193	$	194	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 has not yet filed 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.

(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.

Table of Contents

GAAP Results of Operations Analysis

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


	Three Months Ended June 30,
(dollars in thousands)	2023		2022		$ Change
Revenues
Management fees, net (includes Part I Fees of $91,938 and $46,346)	$	371,829	$	284,325	$	87,504
Administrative, transaction and other fees	45,108		42,921		2,187

Total Revenues, Net	416,937		327,246		89,691
Expenses
Compensation and benefits	208,281		218,118		(9,837)
Amortization of intangible assets	115,917		64,885		51,032

General, administrative and other expenses	51,482		54,389		(2,907)
Total Expenses	375,680		337,392		38,288
Other Income (Loss)
Net gains (losses) on investments	3,030		(123)		3,153


Interest expense, net	(13,568)		(15,051)		1,483
Change in TRA liability	10,116		1,370		8,746
Change in warrant liability	450		20,723		(20,273)
Change in earnout liability	(1,844)		(208)		(1,636)
Total Other Income (Loss)	(1,816)		6,711		(8,527)
Income (Loss) Before Income Taxes	39,441		(3,435)		42,876
Income tax expense	5,402		5,631		(229)
Consolidated and Combined Net Income (Loss)	34,039		(9,066)		43,105
Net (income) loss attributable to noncontrolling interests	(21,180)		7,940		(29,120)
Net Income (Loss) Attributable to Blue Owl Capital Inc.	$	12,859	$	(1,126)	$	13,985

Revenues, Net

Management Fees. The increase in management fees was primarily driven by the drivers below. See Note 6 to our Financial Statements for additional details on our GAAP management fees by product and strategy.

•Credit increased $70.8 million due to continued fundraising and deployment of capital within new and existing Credit products, including an increase in Part I Fees of $45.3 million driven by higher interest rates.

•GP Strategic Capital increased $5.5 million, primarily driven by continued fundraising in Blue Owl GP Stakes V.

•Real Estate increased $11.2 million due to continued fundraising and deployment of capital within new and existing Real Estate products, primarily ONLP and ORENT.

Expenses

Compensation and Benefits. Compensation and benefits expenses decreased primarily due to the following:

•$33.6 million decrease in equity-based compensation, reflecting a $41.2 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 $8.2 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.

•$9.6 million decrease in acquisition-related cash compensation, primarily due to the settlement of the First Oak Street Earnout in January 2023.

•$35.1 million offsetting increase driven by higher compensation to existing employees, as well as increased headcount due to our continued growth.

Table of Contents

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.

General, Administrative and Other Expenses. General, administrative and other expenses decreased primarily due to the following:

•a favorable change of $8.7 million in expense support resulting from recoveries with certain products we manage.

•$6.8 million offsetting 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.

Other Income (Loss)

Change in TRA Liability. The change in the TRA liability was driven by the portion of the liability classified as contingent consideration, which amount is carried at fair value. The change in fair value was driven by a combination of a higher discount rate, as well as a change in the expected timing of future payments.

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 increase in the price of our Public Warrants. In August 2022, the Public Warrants were redeemed. See Note 1 to our Financial Statements for additional information.

Income Tax Expense

The change in Income tax expense 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 in the current year primarily represents the allocation to Common Units of their pro rata share of the Blue Owl Operating Group’s post-Business Combination net income due to the drivers discussed above. The Common Units represent an approximately 68% and 70% weighted average economic interest in the Blue Owl Operating Group for the three months ended June 30, 2023 and June 30, 2022, respectively.

Table of Contents

Six Months Ended June 30, 2023, Compared to the Six Months Ended June 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.


	Six Months Ended June 30,
(dollars in thousands)	2023		2022		$ Change
Revenues
Management fees, net (includes Part I Fees of $177,802 and $93,085)	$	730,654	$	531,957	$	198,697
Administrative, transaction and other fees	76,763		71,266		5,497
Realized performance income	506		—		506
Total Revenues, Net	807,923		603,223		204,700
Expenses
Compensation and benefits	405,899		412,010		(6,111)
Amortization of intangible assets	186,808		126,411		60,397

General, administrative and other expenses	107,616		97,683		9,933
Total Expenses	700,323		636,104		64,219
Other Income (Loss)
Net gains (losses) on investments	3,642		(118)		3,760


Interest expense, net	(27,141)		(27,885)		744
Change in TRA liability	8,152		(8,282)		16,434
Change in warrant liability	(1,500)		38,481		(39,981)
Change in earnout liability	(2,838)		(704)		(2,134)
Total Other Income (Loss)	(19,685)		1,492		(21,177)
Income (Loss) Before Income Taxes	87,915		(31,389)		119,304
Income tax expense	11,842		593		11,249
Consolidated and Combined Net Income (Loss)	76,073		(31,982)		108,055
Net (income) loss attributable to noncontrolling interests	(54,897)		19,041		(73,938)
Net Income (Loss) Attributable to Blue Owl Capital Inc.	$	21,176	$	(12,941)	$	34,117

Revenues, Net

•Credit increased $145.3 million due to continued fundraising and deployment of capital within new and existing Credit products, including an increase in Part I Fees of $84.1 million driven by higher interest rates.

•GP Strategic Capital increased $33.4 million, primarily driven by continued fundraising in Blue Owl GP Stakes V.

•Real Estate increased $20.0 million due to continued fundraising and deployment of capital within new and existing Real Estate products, primarily ONLP and ORENT.

Administrative, Transaction and Other Fees. The increase in administrative, transaction and other fees was driven primarily by the following:

•$10.9 million increase in administrative fees, driven by a higher level of reimbursable expenses due to growth of our products and business overall.

•$6.6 million increase in dealer manager revenues due to growth in the distribution of our retail BDCs.

•$12.0 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.

Table of Contents

Expenses

Compensation and Benefits. Compensation and benefits expenses decreased primarily due to the following:

•$56.5 million decrease in equity-based compensation, reflecting a $81.2 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 $26.7 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.

•$19.6 million decrease in acquisition-related cash compensation, primarily due to the settlement of the First Oak Street Earnout in January 2023.

•$71.3 million offsetting increase driven by higher compensation to existing employees, as well as increased headcount due to our continued growth.

General, Administrative and Other Expenses. General, administrative and other expenses increased driven by the following:

•$11.1 million increase in distribution costs due to fundraising in our Credit products.

•$12.6 million increase in occupancy costs driven by additional leased space to accommodate our continued growth.

•an offsetting favorable change of $17.6 million in expense support resulting from recoveries with certain products we manage. The remaining net change was across various categories, driven by our continued growth.

Other Income (Loss)

Income Tax Expense

The change in income tax expense 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 in the current period and prior period 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 71% weighted average economic interest in the Blue Owl Operating Group for the six months ended June 30, 2023 and June 30, 2022, respectively.

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. 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; 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 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.

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. 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.

Table of Contents

Fee-Related Earnings and Distributable Earnings Summary


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2023		2022		2023		2022
FRE revenues	$	401,476	$	317,811	$	778,879	$	590,409
FRE expenses	154,732		122,106		306,362		223,841
Net income (loss) allocated to noncontrolling interests included in Fee-Related Earnings	(2,147)		1,359		(2,021)		1,879
Fee-Related Earnings	$	244,597	$	197,064	$	470,496	$	368,447
Distributable Earnings	$	227,016	$	180,402	$	436,030	$	336,128

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.

FRE Revenues


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2023		2022		2023		2022
Credit Strategies
Diversified lending	$	155,086	$	108,909	$	301,181	$	214,361
Technology lending	48,097		23,803		95,787		46,833
First lien lending	4,748		3,973		9,233		7,654
Opportunistic lending	2,475		2,730		4,875		4,271
Liquid credit	6,136		6,295		13,654		6,295
Management Fees, Net	216,542		145,710		424,730		279,414
Administrative, transaction and other fees	18,509		23,396		26,033		37,869
FRE Revenues - Credit Strategies	235,051		169,106		450,763		317,283

GP Strategic Capital Strategies
GP minority stakes	130,424		124,434		260,720		226,534
GP debt financing	3,626		3,366		7,377		6,458
Professional sports minority stakes	565		513		967		1,013
Management Fees, Net	134,615		128,313		269,064		234,005
Administrative, transaction and other fees	1,306		1,168		2,509		2,739
FRE Revenues - GP Strategic Capital Strategies	135,921		129,481		271,573		236,744

Real Estate Strategies
Net lease	30,442		19,224		56,399		36,382
Management Fees, Net	30,442		19,224		56,399		36,382
Administrative, transaction and other fees	62		—		144		—
FRE Revenues - Real Estate Strategies	30,504		19,224		56,543		36,382
Total FRE Revenues	$	401,476	$	317,811	$	778,879	$	590,409

FRE Management Fees. For the three and six months ended June 30, 2023, the increase in FRE management fees was primarily driven by the drivers below:

•Credit increased due to continued fundraising and deployment of capital within new and existing Credit products, including higher Part I Fees due to higher interest rates as discussed above in “—GAAP Results of Operations Analysis.”

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

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

Table of Contents

FRE Administrative, Transaction and Other Fees. For the three and six months ended June 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 earn such fees.

FRE Expenses


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2023		2022		2023		2022
FRE compensation and benefits	$	115,621	$	85,809	$	219,221	$	160,778
FRE general, administrative and other expenses	39,111		36,297		87,141		63,063
Total FRE Expenses	$	154,732	$	122,106	$	306,362	$	223,841

FRE Compensation and Benefits. For the three and six months ended June 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 General, Administrative and Other Expenses. For the three months ended June 30, 2023, FRE general, administrative and other expenses increased, primarily driven by an increase in occupancy costs driven by additional leased space to accommodate our continued growth, partially offset by a decrease in distribution costs related to our Credit products. For the six months ended June 30, 2023, FRE general, administrative and other expenses increased, primarily driven by an increase in occupancy costs driven by additional leased space to accommodate our continued growth and an increase in distribution costs due to higher distribution costs related to fundraising in our Credit products, with the remaining net increase across various categories, driven by our continued growth.

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)	2023		2022		2023		2022
GAAP Net Income (Loss) Attributable to Class A Shares	$	12,859	$	(1,126)	$	21,176	$	(12,941)
Net income (loss) attributable to noncontrolling interests	21,180		(7,940)		54,897		(19,041)
Income tax expense	5,402		5,631		11,842		593
GAAP Income (Loss) Before Income Taxes	$	39,441	$	(3,435)	$	87,915	$	(31,389)
Net income (loss) allocated to noncontrolling interests included in Fee-Related Earnings	(2,147)		1,359		(2,021)		1,879
Strategic Revenue-Share Purchase consideration amortization	9,770		8,922		19,539		17,844
Realized performance income	—		—		(506)		—
Realized performance compensation	—		—		177		—
Equity-based compensation - other	32,204		24,293		67,832		41,819
Equity-based compensation - acquisition related	20,897		62,139		41,576		122,793
Equity-based compensation - Business Combination grants	17,725		18,253		34,693		36,674
Acquisition-related cash earnout amortization	6,498		16,111		12,596		32,193
Capital-related compensation	1,860		850		3,558		1,680
Amortization of intangible assets	115,917		64,885		186,808		126,411
Transaction Expenses	3,701		4,737		3,817		7,162
Expense support	(3,085)		5,661		(5,173)		12,873
Net gains (losses) on investments	(3,030)		123		(3,642)		118

Change in TRA liability	(10,116)		(1,370)		(8,152)		8,282
Change in warrant liability	(450)		(20,723)		1,500		(38,481)
Change in earnout liability	1,844		208		2,838		704
Interest expense, net	13,568		15,051		27,141		27,885
Fee-Related Earnings	244,597		197,064		470,496		368,447
Realized performance income	—		—		506		—
Realized performance compensation	—		—		(177)		—
Interest expense, net	(13,568)		(15,045)		(27,141)		(27,879)
Taxes and TRA payments	(4,013)		(1,617)		(7,654)		(4,440)
Distributable Earnings	227,016		180,402		436,030		336,128
Interest expense, net	13,568		15,045		27,141		27,879
Taxes and TRA payments	4,013		1,617		7,654		4,440
Fixed assets depreciation and amortization	2,581		241		4,503		459
Adjusted EBITDA	$	247,178	$	197,305	$	475,328	$	368,906


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2023		2022		2023		2022
GAAP Revenues	$	416,937	$	327,246	$	807,923	$	603,223
Strategic Revenue-Share Purchase consideration amortization	9,770		8,922		19,539		17,844
Realized performance income	—		—		(506)		—
Reimbursed expenses	(25,231)		(18,357)		(48,077)		(30,658)
FRE Revenues	$	401,476	$	317,811	$	778,879	$	590,409

Table of Contents


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2023		2022		2023		2022
GAAP Compensation and Benefits	$	208,281	$	218,118	$	405,899	$	412,010
Realized performance compensation	—		—		(177)		—
Equity-based compensation - other	(32,204)		(23,984)		(67,832)		(41,097)
Equity-based compensation - acquisition related	(20,897)		(62,139)		(41,576)		(122,793)
Equity-based compensation - Business Combination grants	(17,725)		(18,253)		(34,693)		(36,674)
Acquisition-related cash earnout amortization	(6,498)		(16,111)		(12,596)		(32,193)
Capital-related compensation	(1,860)		(849)		(3,558)		(1,679)
Reimbursed expenses	(13,476)		(10,973)		(26,246)		(16,796)
FRE Compensation and Benefits	$	115,621	$	85,809	$	219,221	$	160,778


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2023		2022		2023		2022
GAAP General, Administrative and Other Expenses	$	51,482	$	54,389	$	107,616	$	97,683
Equity-based compensation - other	—		(309)		—		(722)
Transaction Expenses	(3,701)		(4,737)		(3,817)		(7,162)
Expense support	3,085		(5,661)		5,173		(12,873)
Reimbursed expenses	(11,755)		(7,385)		(21,831)		(13,863)
FRE General, Administrative and Other Expenses	$	39,111	$	36,297	$	87,141	$	63,063

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, we incorporate our own assumptions and involves 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. 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.

Table of Contents

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). 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 9 to our Financial Statements for additional details.

Earnout Liability and Warrant Liability

The fair values of our earnout liability and warrant liability were determined using various significant unobservable inputs, including a discount rate and our best estimate of expected volatility and expected holding periods. Changes in the estimated fair values of these liabilities may have material impacts on our results of operations in any given period, as any increases in these liabilities have a corresponding negative impact on our GAAP results of operations. See Note 9 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.

For the Oak Street Earnout Units that were classified as equity-based compensation for GAAP, we determines the grant date fair value using Monte Carlo simulations that had various significant unobservable inputs. The assumptions used have a material impact on the valuation of these grants, and include our best estimate of expected volatility, expected holding periods and appropriate discounts for lack of marketability. The higher the expected volatility, the higher the compensation expense taken for these grants. 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.

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.

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.

Table of Contents

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, general economic conditions, and various other factors 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, 2023, or that have been issued but that we have not yet adopted, are expected to materially impact our future trends.

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 2023 with $41.3 million of cash and cash equivalents and approximately $1.3 billion available under our Revolving Credit Facility. Based on management’s experience and our current level of liquidity and assets under management, we believe that our current liquidity position and cash generated from management fees will continue to be sufficient to meet our anticipated working capital needs for at least the next 12 months.

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

•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.

Table of Contents

•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, 2023, our long-term debt obligations consisted of $59.8 million ag