Blue Owl Capital Inc.

Good morning and welcome to the Blue Owl Capital second quarter 2023 earnings call. During the presentation, your lines will remain on listen only. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. To withdraw your question, again, press star one. I'd like to advise all parties that this conference call is being recorded. I will now turn the call over to Ann Dye, Head of Investor Relations for Blue Owl.

Thanks, Operator, and good morning, everyone. Joining me today are Doug Ostrover and Mark Whipshultz, Co-Chief Executive Officers, Michael Reese, Co-President, and Alan Kirschenbaum, Chief Financial Officer. I'd like to remind our listeners that remarks made during the call 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 Isle 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 investor resources section of our website at blueisle.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 Isle fund. This morning, we issued our financial results for the second quarter of 2023, reporting fee-related earnings, or FRE, of $0.17 per share, and Distributable Earnings, or DE, of 16 cents per share. We have declared a dividend of 14 cents per share for the second quarter, payable on August 31st to holders of record as of August 21st. 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 Doug.

Thank you, Anne, and good morning, everyone. Today we reported another strong quarter of results for Blue Owl, again demonstrating the steady and resilient growth that we believe sets us apart in the alternative asset management space. When we became a public company, the thesis that we laid out for our investors was a simple one. We would generate substantial growth through a variety of market environments anchored by our base of permanent capital. and we would provide an earning stream that looked much less volatile than peers, with earnings supported almost entirely by management fee streams. Over the past two years, markets have shifted rapidly from a zero interest rate environment and robust capital markets to over 500 basis point fed funds rates and meaningful declines in M&A and public issuance. The world changed overnight multiple times, and many companies face sizable challenges as a result, including supply chain difficulties, inflationary pressure, and capital funding issues. Over this period, Blue Owl was able to step up and increasingly demonstrate the value of our capital solutions to a broad slath of partners. we provided necessary capital to businesses across nearly every industry in our credit business and have seen minimal credit losses as a result of our disciplined underwriting our gp strategic capital platform supported the continued growth of the private markets ecosystem and in real estate we offered crucial and scaled alternative solutions to large companies seeking liquidity and capital flexibility. It has always been our perspective that robust private markets support the health of both public markets and the broader economy. And we feel these past two years have been a validation of that view. Also over this period, Blue Owl strategies provided much needed recurring income, downside protection, and inflation hedging to investors. Our credit and real estate returns have been in the double digits on a last 12 month basis, contrasted against very volatile public markets. We believe the trust that we've built with investors is reflected in the 32 billion of fee paying AUM we've raised so far in 2022 and 2023. which compares to our fee-paying AUM of 61 billion at the end of 2021, are over 50% growth. This is substantial growth in any market environment, much less the one we've faced over the past year and a half, and we continue to see strong demand for our strategies. In addition, the diversification of our business between institutional and wealth channels continues to serve us well, with roughly half of our fundraising over this period coming from each of these areas. On the institutional side, last year we completed or made significant progress towards raises for some of our larger funds, such as our GP Stakes 5 and our second vintage of Tech Lending BDC. As a result, we expect that our institutional fundraising for 2023 will be more diversified between separate account mandates, new product launches, and next vintages of smaller funds. In wealth, we have returned to seeing steady increases in monthly flows for our wire house distributed products. And we've continued to see very modest redemption requests from the small percentage of our products which offer a quarterly redemption feature with just over 160 million requested in the second quarter or half a percent of AUM in those products. This compares to over $1.3 billion raised in those same products, another very solid quarter of net inflows. If you take a step back to look at our flows across Blue Owl, from the first quarter of 22, to the first quarter of 23, we saw nearly six and a half times more inflows than we did outflows. In other words, for every dollar that left our system as a result of distributions or redemptions, we raised almost six and a half dollars. By comparison, our peers on average raised just two dollars for every dollar that left their platforms. During robust fundraising periods, this dynamic may not be as noticeable, but in a more challenging environment, such as the one we've been experiencing, you can clearly see that the assets we raise, which are higher fee, are also relatively stickier, and that is the advantage of permanent capital. So in summary, we continue to feel very well positioned for many different market and economic environments as investors seek trusted, scaled managers to provide safe yield and differentiated returns. We continue to see LPs growing their alternatives allocations and consolidating their asset manager relationships. And we are confident Blue Owl will be one of the beneficiaries of this long-term secular trend. All of this is captured in the steady yet extraordinary growth that we have achieved over the past two years, increasing AUM by 140% and distributable earnings by 110%. Recently, we completed a full rebrand towards a unified Blue Owl name. Going forward, the legacy brands of Owl Rock, Dial Capital, and Oak Street will be known as Blue Owl's credit, GP strategic capital, and real estate platforms. This evolution marks another milestone in Blue Owl's journey, driving towards our longstanding vision of synthesizing multiple complementary businesses into a market-leading provider of capital solutions. And we plan to continue adding to our capabilities. further broadening the ways in which Blue Owl can be valuable to our partners and the products that we offer to our investors. With that, I'd like to turn the call over to Mark to give you an update on our credit and real estate businesses. Mark. Great. Thank you, Doug.