Blue Owl Capital Inc at Barclays Global Financial Services Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Ben Budish - Barclays - Analyst : <_ALACRA_META_ABSTRACT>Great. Well, let's just start off with your traditional lending businesses where you guys get the most attention from investors. Can you give us a bit of color on the current macro backdrop? How are you thinking about deployment activity in the back half of the year into '26? How does credit quality look? Where are you worried? Where is the market too worried? Douglas Ostrover - Blue Owl Capital Inc - Chairman of the Board, Co-Chief Executive Officer, Co-Founder Well, why don't I -- there was a lot in there, so why don't I start with the market -- is the market too worried? So there's been a lot of press about direct lending and is it a bubble and where is it heading? So let me just describe our portfolio for a minute because I think that'll address that question. $120 billion of capital, 450 to 500 names. Loan to value is about 39%. Loan losses have been about 12 basis points per annum over a 10 year period. Last quarter, the revenue growth was 8.5%, EBITDA growth was 10%. We're not in deep cyclicals. We're not in retail. Long winded way of saying the portfolio today is in really good shape, really good shape. I think we maybe have five workouts out of that 450, 470 of companies, so roughly maybe 1%. We've had others. The recoveries have been good. So when I look at our direct lending business today, I look at a portfolio that well-positioned and I think most of you know companies when they start to have a downturn, it's not like unless there's fraud or something, it's not a cliff. So I can look at the portfolio and tell you over the next 12, 18, maybe 24 months performance should be relatively strong. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 08, 2025 / 6:00PM, OWL.N - Blue Owl Capital Inc at Barclays Global Financial Services Conference So what are the negatives? The negatives are like in any market, I'd say if I went back to '22 when rates started skyrocketing, public markets closed, we had an imbalance between the demand for capital and the supply of capital. That's changed. Public markets are strong. There's a bunch of dry powder and direct lending, lots of dry powder and private equity, but probably not enough M&A. So we've seen spreads compress a little bit. But remember for us with spreads, when we compress, it's really a function of where the syndicated market is trading. On average, a good direct lender should be able to get roughly 150 basis points or more over the public markets, and that's about what we're getting today. But compared to where spreads were two or three years ago, they've come in quite a bit. But I would tell you the market to me seems very rational. Pricing is reasonable, covenants are reasonable, so I'm still cautiously optimistic.

Question: Ben Budish - Barclays - Analyst : What about on the topic of competition? I mean bank retrenchment is sort of a key theme that's allowed direct lending to step function forward during COVID, during the regional banking crisis. What's sort of the latest there in terms of bank competition? We've seen some recent announcements, deals originally financed in the private markets getting refinanced in the leverage loan markets. Is that sort of a worrisome trend and generally how would you describe the state of competition there? Douglas Ostrover - Blue Owl Capital Inc - Chairman of the Board, Co-Chief Executive Officer, Co-Founder So in terms of competition, I think it's nothing's changed. And if you'll indulge me just for two minutes, just to give you an idea, and some of you who I know have heard me talk about this, but if I took you back to when I was at Credit Suisse running leverage finance, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 08, 2025 / 6:00PM, OWL.N - Blue Owl Capital Inc at Barclays Global Financial Services Conference I think it was 2000 so 25 years ago, I had a $5 billion line of credit to go make loans. And I would go, let's say, to a KKR, make a $5 billion loan. I would turn around and sell that loan as quickly as I could and make 3 points. That's $150 million. Oftentimes I would sell those loans before they even fund it. That's an infinite return on capital. So when you have a lot of capital markets activity, if you were to sit down with Goldman or JPMorgan or BofA and ask in fixed income, what's your most lucrative business? It's usually leverage finance because of that velocity of capital. That is not changing. They love that business and it makes a lot of money for all those firms in the right environment. So to answer your question, why do we see this movement from private markets to public markets? We view that as like the natural evolution of a company's life cycle. So I'll just give you an example. I don't know how many of you have gone and bought a home, especially an older home, and somebody comes in and does an inspection. And then you go in and start doing work and you're like, this is much worse than I thought. The roof is in worse shape. We found asbestos. There's all these problems we weren't anticipating. Think about buying a company today. I mentioned trillions of dry powder. And there's massive competition for good companies. The processes are shorter, the diligence is less, and you're prone, just like in buying that new house to find more problems. So if you're a P/E firm and you're buying that business, you have a choice. I could go do a syndicated deal through Goldman Sachs. I'm not really sure what I'm getting once I get in there, and if there's a problem, I could have 100 to 300 investors I have to deal with on the other side, or you could come work with somebody like us. And if there's a problem, you can call me, you call one of my partners within 48 hours, our goal would be to try to reach a reasonable deal. And so view us as a relatively cheap insurance policy. That's why direct lending is so popular. No roadshow, no rating agencies, and there's usually one, maybe two, maximum three parties you have to deal with. So maybe you're making a lot of acquisitions, you're integrating businesses. There's a chance for a problem, but once that business becomes a little bit more mature, hits equilibrium, you're thinking of owning it for another few years, very easy then to say what, I'm paying Doug and the Blue Owl team a little bit too much. Maybe what I'll do is I'll call Goldman or Morgan Stanley, go do a syndicated deal, lock in a low rate, and we covenants. So that shouldn't scare you when you see names leaving. And just to give you an idea, our average loans in our credit book are about five year maturity. Some are a little bit longer, but on average five years. The average duration is under three. So either it's M&A or refinancing in the public markets, something occurs and we get refinanced out.

Question: Ben Budish - Barclays - Analyst : Great, switching gears a little bit, you could talk a little bit about the 401(k) side. You mentioned as finance, but I think for you guys it's more than just investment grade credit that could sort of, take on a lot of different flavors. So you recently announced a partnership with Voya. Maybe talk about the genesis of that. Was it a competitive RFP process? Why was Blue Owl selected? And then I think something investors are quite curious about is, how do we think about the P&L opportunities, allocations to owl products, fee rates, that sort of thing? Douglas Ostrover - Blue Owl Capital Inc - Chairman of the Board, Co-Chief Executive Officer, Co-Founder Look, we got a nice amount of press on that. To answer your question, yes, it was incredibly competitive. It wasn't an RFP. The CEO and her number two went around to a handful of firms trying to figure out who would the right partner be. Their criteria were a great track record, but in assets that at least early on, had high current income and could be downside protected. They were less interested in private equity and venture, more the kind of things that we bring to market, and there are other firms who play in comparable products. Look, we're really proud to be chosen. I think it's going to be a great partnership, but you know one of the things you asked is when are we going to generate a lot of revenue, not just from this partnership, we will have other partnerships with providers who touch the 401(k) market. It's going to be years. It's going to take time and it's -- call it a $12 trillion to $15 trillion opportunity set. Again, not all those assets will go into halts, but we'll see money flow in. The way we're viewing it is this, 10 years ago we decided that the individual investor was going to be an important component to our business. And we've executed on that. Not only by selling into wires and other broker dealers, but just think about all the pensions we touch. We touch almost every major pension in the United States. It's millions of individuals. For some odd reason, there was this little group of people who were carved out the 401(k) market. I would tell you that the teachers at CalStar think their pension plans are just as important as the 401(k)s that Voya is touching, but that was a political issue. We didn't want to get involved in it, but when it started to open up, we said let's get positioned, and so we are really well-positioned because I believe strongly in the beginning the products that are going to be offered are things like credit, things like data centers, things like triple net lease, high current income, protect the principal. I said in one of our meetings earlier today, we joke where there's get rich products and stay rich products. Blue Owl is in the stay rich business, and we think that is what resonated with Voya and their client base, and I think it's fair to say we'll announce other partnerships as well.

Question: Ben Budish - Barclays - Analyst : Great. Maybe coming back to the data center a bit, you've obviously been quite bullish very publicly here. Your digital in for business recently wrapped up flagship fund, but clearly there's a lot more to do. I don't think the sort of investment thesis needs necessarily rehashed, but maybe give us a sense of if you'd like to, I can't help very fine and good. It's clearly a very important theme and a very large one. I'm curious, give us a sense of how this evolves over the next few years, where and how will you be raising, what does the cadence of deployment look like? There's a wealth product, in the works. Can you touch on all those bits? Douglas Ostrover - Blue Owl Capital Inc - Chairman of the Board, Co-Chief Executive Officer, Co-Founder Yeah, sure. I won't rehash the whole thing, but when I'm sitting down with Marc Lipschultz and the rest of the team, and we're looking at a potential acquisition. We're thinking to ourselves, is this a niche strategy that we can scale? Can we be a market leader? And can we get outsized returns? So we were looking at, I'm going to come to data center in a second, but you'll understand where I'm going with this. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 08, 2025 / 6:00PM, OWL.N - Blue Owl Capital Inc at Barclays Global Financial Services Conference So we started out in the triple net lease space a number of years ago. None of our clients had really focused on it. I think Angelo Gordon had $1 billion, $1.5 billion fund. I think Fortress had $1 billion fund. Nobody had been able to scale it. We found a team that had a great track record. They were definitely the market leader, and we thought, wow, this is a very significant opportunity. What are we doing? We're going to investment grade companies. Think of somebody maybe Whirlpool, Walgreens, firms like that. We're buying assets from them, primarily real estate, and they're leasing it back from us. It's sale-lease back model. Again, I won't go into too much detail on it. When I looked at that business, I thought IG partners, a very little credit risk, never had a loss over a long period of time, and has been able to every single year generate an excess of a 20% return on IG risk. And I just thought this is too good to be true. We did our work. We came to an agreement. We brought it on, and for all those of you who have invested with us, we've had 4, 5, 6-fold growth in that business. So I started learning about the data center business a number of years ago and getting equally excited because it's nothing more than a sale-lease back, but instead of having Walgreens as my tenant or Cracker Barrel or Whirlpool, I've got Apple, I've got Google, I've got Meta, I got Microsoft, a weak credit, $800 billion market cap, it's Oracle. So the best credit quality in the world, long dated leases coming at the same cap rates with same structure with 3% escalators. I will tell you I've sat down with CIOs of funds, one who's going to come in. Our last fund was $7 billion. They came in -- the fund was wrapping up as we made the acquisition. They'll give us a big order. I bet they come in for $500 million, $700 million which is a big ticket, but my pitch to that CIO was if I can get you a bunch of Microsoft and Google and Amazon effectively credit risk on an unlevered basis at 7.5%, why are you not doing $5 billion? And you know he kind of chuckled, but I was serious because we will look back on this five years, seven years from now. And by the way, these things oftentimes start at 7.5% cap rate and grow at 25 basis points per year. You can wake up in a number of years and have a Microsoft piece of paper that yields 9. And I really am saying to every CIO, you're going to wake up one day and say, why didn't I do more? And this goes back all the way back to where we started when you were asking me about supply, demand, and credit. Here we have such an imbalance between the demand for data centers, land that's entitled and power, and the supply, and so we're able to get these incredible cap rates, great structures. I'll give you an amazing stat, and this is why. I think it's resonating. We haven't launched the wealth product, but it's resonating. If I take our typical deal and we apply leverage to it, we can get, let's call it 12%, 14% type net returns. I can show an investor, let's say it's a 15 year lease, that with leverage and the escalator, if the land and the building that they're investing in is worth zero at the end of 15 years, they still make a high single digit return. Then I can boil it down to saying is Microsoft or Amazon or Google or Meta going to default. And I think we would all agree that's highly improbable. So anyways, very excited about the opportunity. We are about 60% done investing in our latest fund. We'll be back in the market with that fund next year. We've got really good feedback on the wealth product. We'll be in the market with that early next year, and I expect both of those to hopefully, yeah, exceed expectations of what investors are looking for.

Question: Ben Budish - Barclays - Analyst : What about on the asset back? So I think you mentioned $1 billion of capital and you'll start seeing more ongoing fundraising in the coming months. How do advisors think about it different from your sort of non-traded or traded BDCs? Is there enough differentiation that it's of interest? Like how do people kind of think about prioritizing that versus some of your other products? Douglas Ostrover - Blue Owl Capital Inc - Chairman of the Board, Co-Chief Executive Officer, Co-Founder Yeah, so that one is in terms of differentiation, there is zero overlap. That's going to require education because it's not as intuitive buying a pool of consumer loans from SoFi or going and making a loan on 15 jets that are leased to Emirates. So that is going to be a little bit more complicated. The nice thing for us is it's a lot less competitive in terms of deals. I would tell you the pricing is more attractive than direct lending today. And I think we're taking less risk in many cases. So I'm cautiously optimistic there as well. And there, as you think about what a BDC is, a BDC nothing more than a wrapper around a fund. And so we are launching in a structure that's called Interval fund. Many people have failed at this. There's been one or two firms successful. The beauty of it is it trades under. And so in the RIA space they really like it. So the training, the regulatory environment around it is much better. And that's how we're going after it in the asset back space and look, we, it, the billion -- just under $1 billion we raised is probably top five first fundraise in the interval space. All of our peers have raised materially less. And I think it's going to resonate.

Question: Ben Budish - Barclays - Analyst : One last topic while we've got you here. So Blue Owl is engaged in a significant amount of M&A over the past year or two. How do you think about additional capital priorities from here? Is there more to do? Do you feel you can achieve everything you want with the capabilities you currently have? How are you thinking about build versus buy as you're looking at over the next five years? Douglas Ostrover - Blue Owl Capital Inc - Chairman of the Board, Co-Chief Executive Officer, Co-Founder Yeah, a couple of thoughts on that because I get that question all the time. If you look in aggregate what we've spent, it's a very small percentage of our market cap. I can't remember who I was talking to, but I remember when TPG bought Angelo Gordon, TPG stock was depressed. It was over 20% of their value at the time. It was a big acquisition. We're nowhere near that. I mean, we're just -- it's a small fraction. So, we're always looking at the trade-off between organic, build it organically and buy it, and I would just tell you real quickly what we're looking for is I mentioned this niche product where we can be one of the market leaders and we can scale it and then most importantly, a team that's going to come in and buy into the broader vision of Blue Owl. And I know it's definitely caused stress for some investors. There's been a lot of focus on it, but I would tell you everything has been fully integrated, and I think over the next 12 to 24 months, just like with the real estate business, people are going to look at this and say wow, those were really good acquisitions. I have a quick question for you.

Question: Ben Budish - Barclays - Analyst : Well, what can I say, Doug? I mean, we have a buy on your stock. So that's why I agreed to speak. Douglas Ostrover - Blue Owl Capital Inc - Chairman of the Board, Co-Chief Executive Officer, Co-Founder I'm not trying to put you on the spot. I just wanted to mention that it just seems to me to be an exceptional entry point when we've lagged so much versus our peers.