Blue Owl Capital Corporation

Good morning and welcome to Blue Owl Capital's third quarter 2025 earnings call. During the presentation, your lines will remain on listen only. After the presentation, there will be a question and answer session. To ask a question, please press star one on your telephone keypad. I'd like to advise all parties that this conference call is being recorded. I will now turn the call over to Anne Dye, Head of Investor Relations for Blue Owl.

Thanks, Operator, and good morning to everyone. Joining me today are Mark Lipschultz, our Co-Chief Executive Officer, and Alan Kirshenbaum, our Chief Financial Officer. I'd like to remind our listeners that remarks made during the calls may contain forward-looking statements which are not a guarantee of future performance or results and involve a number of risks and uncertainties that are outside the company's control. Actual results may differ materially from those in forward-looking statements as a result of a number of factors, including those described from time to time in Blue Owl Capital's filings with the Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statements. We'd also like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our earnings presentation, available on the shareholders section of our website at blueowl.com. Please note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Blue Owl funds. This morning, we issued our financial results for the third quarter of 2025, reporting fee-related earnings, or FRE, of 24 cents per share and distributable earnings, or DE, of 22 cents per share. We declared a dividend of 22.5 cents per share for the third quarter, payable on November 24th to holders of record as of November 10th. During the call today, we'll be referring to the earnings presentation, which we posted to our website this morning. So please have that on hand to follow along. With that, I'd like to turn the call over to Mark.

Great. Thank you so much, Anne. The results we reported for the third quarter of 2025 reflects strong growth and business performance across an increasingly diversified set of investment platforms. Not only are we beginning to see the benefits of the ongoing investments being made across our institutional and private wealth distribution channels, we have also had early successes in new product expansion efforts. We continue to see a comprehensive shift in how assets are being financed globally. Financing offered by the private markets is, more and more so, being recognized by borrowers as a compelling solution that offers the ability to execute with certainty and at scale and with terms tailored to the specific counterparty. This is a structural evolution for which Blue Owl is particularly well positioned, given our leading franchises, and one that we are increasingly able to meet in a cross-asset class fashion as a result of our acquisitions. Concurrently, investor focus has continued to shift toward credit and digital infrastructure, which are taking greater market share away from legacy categories. We're seeing this play out broadly across institutional, insurance, and private wealth channels and have already strategically positioned Blue Owl to be a beneficiary of these trends. We've skated to where the puck is going, and our investors are benefiting from that. Of course, in any period of meaningful structural change within markets, there's always a concern that some participants may act irresponsibly, resulting in negative outcomes. There have been some headlines over the past month detailing idiosyncratic credit issues, which have led to broader questions about the health of the corporate and asset-backed credit markets. Let me start by saying that Blue Owl has no exposure to tricolor or first brands. And broadly speaking, we do not view the events that have unfolded for those companies as canaries in the coal mine for the health of the private credit markets. However, we do believe that these two situations are reminders that vigilance is required in credit investing. As we have highlighted in previous earnings calls and continue to call out, the health of our credit portfolios remains excellent, with an average annual realized loss of just 13 basis points and no signs of meaningful stress. In direct lending, the modest level of non-accruals we have seen are not thematic in nature, and there has not been an uptick in our watch list levels. Similarly, in alternative credit, we're not seeing anything that would indicate weakness in consumer credit. In fact, you've heard numerous banks highlight the resilience of their consumer portfolios during recent earnings calls, despite some of the financial press headlines. The reaction that we have seen in public equity markets has not been consistent with the strong fundamental performance we see in our portfolios. and our software loans have remained the best sector performer with our direct lending portfolio, and we are very pleased with the credit quality and ongoing health of the underlying borrowers there. Moving on to business performance. During the quarter, we saw over $14 billion of new capital commitments, bringing us to another record last 12-month capital raise of $57 billion, the equivalent of 24% of our assets under management a year ago. This capital raising does not yet reflect any contributions from our acquisitions, from which we are anticipating significant growth over the next couple of years. And notably, we have a growing base of AUM not yet paying fees, $28 billion as of the third quarter, which we expect to largely deploy over the next couple of years and drive over $360 million of management fees upon deployment. In direct lending, we're seeing an uptick in the pipeline for deployment and continue to find high-quality investment opportunities, generally underwriting to a high single-digit unlevered return, despite tighter spread dynamics industry-wide. With the risk-free rate expected to end the year below 4% and with leverage loan and high yield currently offering 6% to 7%, we believe our direct lending strategy continues to offer meaningful spread premium and an attractive risk return versus other asset classes. Gross origination in the third quarter was roughly $11 billion, and net deployment increased to $3 billion, bringing last 12-month gross and net originations to $47 and $12 billion, respectively. In alternative credit, we continued to demonstrate scale benefits, deploying approximately $5 billion over the last 12 months, primarily focused on small business, equipment leasing, aviation, and consumer transactions. This is consistent with our broader asset-backed strategy of financing the Main Street economy. The team continues to make meaningful progress capitalizing on long-standing relationships to deliver for our insurance clients, for whom we have originated several billion dollars this year with a robust forward pipeline. And we continue to see the power of the integrated platform more broadly as the alternative credit team works closely with direct lending, real assets, and insurance to build focused efforts in areas such as equipment leasing. During the quarter, we announced a forward flow agreement with PayPal, their first partnership of this sort in the US. We thought it'd be worth spending a moment on how we structure forward flow agreements to create downside protection for our investors and why they're so compelling. One of the most important elements is the dynamic nature of these agreements, meaning we monitor performance of the portfolio on a daily basis, and we can turn off the flow if the assets are not performing as expected. In addition, our team is focused on partnering with best-in-class originators where we have a high degree of alignment. In other words, the originators are at a minimum owning risk side-by-side with us through their balance sheets and are often the first loss risk. Finally, these assets are typically shorter-lived, self-amortized assets with a duration of two years or less. This means that if there is weakness by vintage or originator, it runs off relatively quickly compared to other forms of credit. We underwrite to severely challenge economic conditions, and when we buy our land, our starting point is to assume that credit will get worse. To reiterate my earlier comments, we see no weakness of note. In real assets, we have continued to execute across a record pipeline of capital demand in the data center space specifically, with over $50 billion of investment announced over the past two months across two transactions, including $30 billion of capital investment with Meta in Louisiana and over $20 billion of capital investment with Oracle in New Mexico. This is in addition to the previously announced development with Oracle in Abilene, Texas, where BlueHollas anchored the financing of approximately $15 billion of project value through phase two. We are fortunate to be in the position to offer the scale of capital and deep sector expertise that together make BlueHollas the preferred partner for the hyperscalers representing the forefront of cloud and AI innovation, as highlighted by our leadership role in all three of the largest financings in the space. Across our diversified net lease and digital infrastructure strategies, we have raised more than $15 billion in aggregate capital over the past two years, reflecting strong interest for investors for what we're offering. And this only includes $1 billion of the $7 billion digital infrastructure fund we just finished raising. In diversified net lease alone, the $14 billion we have raised over that period compares to $26 billion of total AUM for that strategy two years ago. This includes the largest real estate fund raised in 2024, the top real estate product in private wealth on a net capital raise basis, and over $4 billion raised toward our next vintage and associated color vest. To add to that, during the third quarter, we announced a substantial strategic partnership with QIA, one of the largest sovereign wealth funds with a shared goal of further scaling and expanding BlueWallet's digital infrastructure business. Extending our progress on this front, subsequent to quarter end, we launched our digital infrastructure semi-liquid product ahead of schedule and anticipate a first close in December with significant investor interest already observed. We have built what we think is an outstanding business in private wealth, where we have raised over $16 billion over the last 12 months. more than doubling our fundraising pace from two years ago. I believe the strength of our results is indicative of the durable partnerships we've built over time and a long track record of bringing innovative solutions to market. Today, we have an installed base of over 160,000 individual investors in Blue Isle products and are adding highly complementary new products in digital infrastructure and alternative credit to the lineup. We're very excited about the runway for these new initiatives and look forward to providing more detail in the coming quarters. In GP Stakes, we closed on two investments during the third quarter, bringing us over 35% invested on our target size for our latest flagship vintage. We also completed our largest strip sale to date, selling about 18% of the assets in Fund 4 for proceeds of over $2.5 billion, delivering a 3.2x growth return on the assets sold across two transactions. As you've seen over the past year, we have been successful in delivering liquidity to the investors in these funds, while introducing innovative paths for new investors to participate in the strategy. In total, our GP Stakes flagship funds have distributed more than $5.5 billion over the last 18 months in a market increasingly focused on DPI, or distributions to pay it in, situating our funds squarely within the top quartile on this important metric. In considering the strong results we reported for the third quarter and the ongoing momentum across Pluau, we continue to center around a few guiding principles that anchor our accomplishments to date and inform our path forward. First, performance remains key. If we do right by our investors, growth will follow, and so our focus is always first and foremost on delivering exceptional return per unit of risk and protecting the downside. Second, Duration of capital is highly important to achieve positive investment outcomes over time. And we have an embedded base of permanent capital that not only supports the investors in our funds, but also creates meaningful visibility in earnings for the investors in our stock. And finally, we are hyper vigilant to the notion of complacency. We always look to be skating to where the puck is going, not where it has been. This focus on innovation and being ahead of the curve has brought us to our current position at the intersection of many of the largest secular trends happening across alternatives, and we believe it will continue to serve our investors well going forward. With that, let me turn it to Alan to discuss our financial results.