Blue Owl Capital Inc. Barclays 24th Annual Global Financial Services Conference

Thanks for having me. I'm looking forward to the conversation.

Sure. First of all, thanks, everybody, for spending a little time with us this morning. I'll try not to dwell on this too long because I could use 30 minutes to describe it. For those who are not familiar with us, Blue Owl, $320 billion alternative asset manager. We went public about 5 and a half years ago, around $60 billion. So we've had about 5 turns of growth over the last, let's call it 5 and a half years. We're pretty narrowly focused, and that's by design. When we started the firm, we really were focused on let's find areas where demand is greater than supply, meaning demand for capital, and we can come in and fill that void, and let's go after things where the asset class has high current income, good downside protection.

That is really what we wanted to do, and that is what we have largely achieved. We have three areas. The biggest area for us is credit, but it is not credit with the way all of you would think about it. About a third of our capital of the firm is in traditional direct lending. The other 15% is in asset-backed lending and a little investment-grade credit. The second biggest area, which is our fastest growing area, is our real assets business. We have two lines of business there. We have triple net lease and we have data centers, and I will touch on each of these in a moment. The third leg of the stool is GP stakes. If you look across the board at all of these businesses, and there is sub lines of business underneath them, we have had top quartile, and in many cases, top decile performance.

The GP stakes business, we are by far the market leader. For those who is not familiar with it, GP stakes is where we go. We take an ownership stake in a leading alternative asset manager. The capital is very long dated. We have no pressure like traditional private equity to sell that. We were just voted as the number one PE firm globally. It has had well in excess of 20% returns and a very high DPI. In our real assets business, which I am sure we will spend time talking about, that by far is our fastest growing business. I mentioned triple net lease. Triple net lease is where we go, we buy a mission-critical asset from an investment-grade counterparty, and we lease it back for upwards of 20 years. We bought that business under five years ago. We have grown it almost five-fold.

Again, in excess of 20% returns and really good DPI. Our data center business, we have 1,000-person team in that space. We have been at it for in excess of 10 years. We own and operate in excess of 140 facilities. About 15 gigawatts of capacity makes us one of the largest players globally there. In credit, as I mentioned, we have our direct lending business, our asset-based business. Asset-based, we bought a few years ago, generating today 13% in our core fund, close to 20% in opportunistic. Our credit business, which I am sure we will get into today, despite all the rhetoric in the press over the last six months, to give you an idea, credit has generated well in excess of 9% versus the leveraged loan index of 6% and the high-yield market, which is close to 4%.

I guess if I could leave you with just two thoughts about the business, since we are in conference season, I have not been up here for a while. One, the business is much more diversified than people realize and what they have been writing about. Secondly, if I took you back to the beginning, five and a half years ago, how we described our business, we are 100% of our revenue is from management fee. None of our peers have that. Not quite 100%. Let us call it 98%. Carry the bulk of it goes to the teams. We take the management fee. We pay that out. I believe what we have created is really an annuity stream for our investors. So when I come in with my Co-CEO, Marc Lipschultz, the beginning of 2027, we are looking at the year ahead.

We can look back at 2026 and say, "Okay, we know what we earned in 2026. We know we have tens of billions of dollars we've raised, and when that's deployed, we'll earn fees. So what's our deployment going to be?" The next two variables are key. What are our margins going to be? Alan has been very clear. I think we've talked about 58 and change. Let's call it 58.5, and we're trying to take that up slowly every year. The big variable on this annuity stream is, what's our growth rate? Given all the press this year, as you can imagine, growth has come down a little bit.

The question I think for everybody in the room is, can we get ourselves on a path in 2027 with our dividend, which is pretty high, we're yielding close to 9%? With that yield, can we accelerate growth again? If we can, I think we can have a stock that's poised to do pretty well.

Sure. Look, I am referencing the press, not to be defensive, just I want to talk about the reality of what is going on versus the perception. The reality of what has happened, and this I can talk with certainty through the first six months of the year. Many of our companies, I get monthly financials, so I think this is pretty accurate. You should assume our portfolio is going to see revenue and EBITDA growth somewhere in the range of 7%-10% on the high end. Let us call it 8%, 8 or 9 on average. The portfolio, we have about 400-odd line items. Average position size is about 20 basis points. That is by design. The idea is let us be highly diversified, so if we do get something wrong on a name, it does not have a material impact on the portfolio.

Average EBITDA or cash flow of the business is around $300 million. Average loan to value is right around 40%. So we have 60% subordination. Portfolio performance to date has been strong. As I mentioned, worst case, I get quarterly numbers. Many cases we are getting monthly numbers. When you are looking at a credit, usually when you own something, it is not doing okay and then it just drops. It is usually a slow decline. So we have a pretty good insight into what is happening in the portfolio. We also I talk to my peers to try to get a sense, the big peers, of what they are seeing, and they are experiencing similar trends. So I guess, the big takeaway hopefully from today is credit quality remains pretty strong. I cannot look out more than a year, maybe 18 months, but I am anticipating that that will continue to be the case.