Blue Owl Capital Inc.

Good morning and welcome to the Blue Owl Capital's fourth quarter and full year 2024 earnings call. During the presentation, your lines will remain on listen only mode. After the speaker's prepared remarks, there will be a question and answer session. If you'd like to ask a question by that time, please press star followed by one on your telephone keypad. I'd like to advise all parties that this conference call is being recorded. Thank you. I will now turn the call over to Ann Dye, Head of Investor Relations for Blue Owl. Please go ahead.

Thanks, Operator, and good morning to everyone. Joining me today are Mark Lipshultz, our Co-Chief Executive Officer, and Alan Kirshenbaum, our Chief Financial Officer. I'd like to remind our listeners that remarks made during the call may contain foreclosing 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 GAAP figures in our earnings presentation. available on the shareholder 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 Fund. This morning, we issued our financial results for the fourth quarter of 2024, reporting fee-related earnings, or FRE, of 23 cents per share and distributable earnings, or DE, of 21 cents per share. For the fall year 2024, we reported FRE of 86 cents per share and DE of 77 cents per share. We declared a dividend of 18 cents per share for the fourth quarter, payable on February 28th to holders of record as of February 19th. And we also announced an annual fixed dividend of 90 cents for 2025, or 22.5 cents per quarter, starting with our first quarter 2025 earnings, up 25% from the prior year. 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. We capped off a highly successful year for Blue Owl with a record quarter of fundraising, reflecting the ongoing diversification of our business and high levels of investor interest in our differentiated products. This brings our total equity raised in 2024 to $27.5 billion, about 75% higher than 2023, and including debt, we raised over $47 billion, also a record for us. On top of our robust fundraising, we deployed substantial amounts of capital across the business, including a record $52 billion in gross deployment and credit, driving 26% FRE growth for the year. Taking a step back, we have now grown FRE at least 25% each year since we've been public, despite highly inflationary periods, geopolitical events, rate volatility, and a significant slowdown in capital markets. To us, this has been an incredible test of the durability of our business and the power of permanent capital. We've had a very active year across the business with some simple themes that defined our direction of travel. innovation diversification and scale and thinking about what we've accomplished this year i'd like to call out a few highlights that exemplify these themes on innovation we've been very aligned with the ongoing evolution of the alternatives industry focused on asset classes such as direct lending and gp stakes that have expanded to meet the financing needs of the private markets net lease has followed a similar trajectory becoming a truly institutional category All of these market opportunities have significant runway ahead of them, and we expect to meaningfully participate in that growth given our leadership positions in each area. In thinking about where the puck is going next, we have made strategically important acquisitions in markets with growing capital needs, namely alternative credit and digital infrastructure. We've also expanded our insurance capabilities to deliver a more holistic solution in that market. and we brought on a real estate credit manager with an incredible 30-year record to take advantage of the disintermediation we're seeing there. It's clear to us that private solutions providers are going to take an increasingly larger role in the financing of all of these markets. We plan to meet these opportunities head-on with differentiated strategies, product innovation, and best-in-class market leaders that have invested in these asset classes for decades. On diversification, It's apparent, even in our 2024 results, how much more diversified our business is today than a couple of years ago. This diversification spans investment capabilities, sources of capital and geographic footprint. Looking ahead, we see tremendous growth for both the newer businesses under our umbrella and our existing capabilities. We plan to continue expanding our global distribution while introducing new strategies and product structures that further strengthen Blue Owl's value proposition for institutional, private wealth, and insurance clients. On scale, we ended the year at a quarter of a trillion dollars of AUM, and pro-forma for the acquisition of IPI, which closed on January 3rd, we now have $265 billion of AUM. Over the past decade, we have seen the largest managers consolidate market share in the alternatives industry. We expect this trend to continue for the next decade, and we fully expect to be one of those consolidated managers. With the full suite of capabilities we have today and our scaled permanent capital, we're able to create even more of the bespoke solutions that counterparties are looking for, further positioning ourselves to be the first call. And, subsequent to year-end, We closed the merger of OBDC and OBDE, our publicly traded diversified lending BDCs, resulting in the second largest publicly traded BDC with assets under management of about $21.5 billion. We're also working towards the proposed merger of OTF and OTF2. Once merged and listed, we expect to have the largest technology-focused BDC in the markets. Zooming in on the fourth quarter. We had our highest quarter fundraising with $9.5 billion equity capital raised and over $18 billion including debt raised. Private wealth fundraising remained very strong at nearly $4 billion, driven by our perpetually distributed products and fundraise for GP stakes. For the year, private wealth drove over $13.5 billion in equity commitments, an increase of 50% year over year. And we are excited about what 2025 will bring with an alternative credit product launching shortly and currency-specific solutions coming for OCIC and OREP, in addition to the ongoing cross-selling and expansion on existing platforms. We had our highest quarter of fundraising in our institutional channel, raising $5.6 billion across a variety of strategies, including a number of mandates within credit, large cap and mid cap GP stakes, insurance solutions, and real assets. For the year, institutional fundraising drove half of total capital raised and doubled from the prior year. As of this week, we are approaching $1 billion committed for our European at-least strategy, headed towards our $1.5 billion hard cap, and we are also approaching $1 billion of capital committed for our GP-led continuation strategy. Our fourth quarter results reflect the impact that both organic new product development and recent acquisitions are having on the range of fundraising across Blue Owl, and we see much more to come ahead. The over $47 billion we have raised organically across equity and debt over the past 12 months is equivalent to 29% of our AUM a year ago. Now turning to business performance. In credit, we had another solid quarter of deployment. Specifically for direct lending, gross and net originations were over $13 billion and $2 billion for the quarter, reflecting a high level of repayments and refinancings that stayed within our system. Taking a step back, Consider the environment we've been in this past year. The CLO market returned in full force at the beginning of 2024, supporting historically high levels of broadly syndicated market activity driven by refinances. In the midst of that environment, we deployed nearly $52 billion on a gross basis and $16.6 billion on a net basis in 2024. So even in a tepid M&A market with active broadly syndicated markets competing, We doubled net deployment year over year. And I think it's a great demonstration of the power of scale and incumbency coming together to drive strong origination outcomes for the investors in our province. Credit quality metrics and direct lending continue to reinforce the strength of our underwriting. On average, underlying revenue and EBITDA growth was high single digits across the portfolio, with no significant step ups in non-accruals or amendment requests, And we're at 11 basis point average annual realized loss rate. As for the alternative credit, the team is already well integrated and working with direct lending and insurance solutions on transactions. Having completed several deals that bring together the sourcing and execution capabilities of our combined credit platform. During the fourth quarter, we announced a sizable forward flow agreement with Upstart and have subsequently seen significant demand from large lending platforms looking to partner with us as a source of stable capital. More broadly, we view the additional alternative credit as a strategically important expansion of our credit capabilities, focused on lending to Main Street segments such as consumer spending, small business borrowing, and residential finance. These complement the corporate leaning of our direct lending businesses very nicely. Not only are the Main Street opportunity sets very significant in their own right, but having a scaled alternative credit capability under the umbrella sharpens our 30,000 foot view of the broader credit marketplace, enhancing outcomes for investors across the board. Finally, We're making great progress toward launching a new alternative credit product for both the wealth and institutional markets and look forward to providing an update in coming quarters. In GP Stakes, 2024 was a year that proved out our longstanding thesis that the largest and most diversified managers are best suited to navigate and thrive in this next stage of the alternatives industry. Over the past year, the AUM of our partner managers increased by approximately 11%, And we continue to see significant interest for managers looking to source growth capital for their businesses to better position themselves in a market landscape that favors scale. As we mentioned in our last earnings call, we completed two strip sales with 1.3 during the third and fourth quarters, returning significant capital to our LPs and bringing new investors into the strategy. These sales generated $1.4 billion of gross proceeds at a 4.1X gross multiple on invested capital, 2.7X net. Between the strip sales, other opportunistic liquidity events, and regular distributions for partner manager earnings from our flagship products, we distributed $2.4 billion to GPs take fund investors in 2024 during a period where many GPs struggled to provide liquidity to their LPs. does not only benefit the current investors in our strategy, but provides an excellent case study for prospective investors. In real assets, we continue to actively deploy across our drawdown fund, our non-traded REIT, and now real estate credit. In net lease, we are over 75% committed to fund six at year end after having just completed fundraising in the first quarter of 2024. This sets us up extremely well to be back in the market in 2025. Market dynamics in the net lease market remain fairly unchanged for us as we utilize our scale and proprietary relationships to drive premium cap rates and monetize a meaningful spread. During the fourth quarter, we deployed nearly $4 billion of capital, bringing full-year deployment to over $7.5 billion at an average 8% cap rate. Concurrently, we monetized over half a billion dollars during 2024 at an average 5.9% cap rate, reflecting incredible spread capture. As we look at the quarter and into the first half of 2025, we have a number of new products and structures to talk about, underscoring the ongoing diversification of real assets. For instance, we raised over a half a billion dollars during the fourth quarter for our European net lease strategy, which is now approaching our $1 billion target and well on our way to the $1.5 billion hard cap. On top of that, we anticipate a co-mingled real estate credit product to be launched in the first half of the year. And of course, the IPI acquisition closed on January 3rd, adding more than $14 billion of AUM on a pro forma basis. This figure reflects an incremental $3.3 billion raised during the fourth quarter prior to the closing of the transaction. Since the transaction announcement, AUM has already increased 35%, driven primarily by capital raising. We expect to finish up the current vintage of our flagship digital infrastructure fund at the hard cap of $7 billion in short order. And we are very excited to show the market what we can do with this business. In fact, you'll hear more about our plans tomorrow at Investor Day. Bringing it all together, we're highly confident in Albuval's position for the future. There's a lot more to say on this front, but I think we'll save that for Investor Day. We're looking forward to seeing you in person or on the webcast. And I think it will be a very illuminating and educational morning as we lay out our five-year strategic plan for Blue Owl and show you the chessboard we have in front of us. With that, let me turn it to Alan to discuss our financial results.