Blue Owl Capital Inc.
(Prior to May 19, 2021, Owl Rock)
Notes to Consolidated and Combined Financial Statements (Unaudited)
Management fees also include a fee based on the net investment income of the Companys BDCs and
similarly structured products (Part I Fees), which are subject to performance hurdles. Such Part I Fees are classified as management fees in the consolidated and combined statements of operations as they are predictable and recurring in
nature, not subject to repayment and cash-settled each quarter.
Management fees for the Companys GP minority equity investments strategy are
generally based on a percentage of capital committed during the investment period, and thereafter generally based on the cost of unrealized investments. For the other GP Capital Solutions strategies, management fees are generally determined based on
a percentage of investment cost.
Management fees for the Companys net lease strategy are generally based on either a percentage of capital
committed and/or called during the investment period, and thereafter generally based on the total cost of unrealized investments, or net asset value.
Because management fees, including Part I Fees, are generally cash settled every quarter, the uncertainty underlying these fees are resolved each quarter. As
such, on a quarterly basis, a subsequent significant reversal in relation to the cumulative revenue recognized is not probable for the quarter in arrears.
As discussed above, amortization of the Strategic Revenue-Share Purchase consideration is recorded as a reduction of management fees, net in the
Companys consolidated and combined statements of operations.
Administrative, Transaction and Other Fees
Administrative, transaction and other fees primarily include fee income, administrative fees and dealer manager revenue.
Fee income is earned for services provided to portfolio companies, which may include arrangement, syndication, origination, structuring analysis, capital
structure and business plan advice and other services. The fees are generally recognized as income at the point in time when the services rendered are completed, as there is no ongoing performance requirement.
Administrative fees represent expenses incurred by certain professionals of the Company and reimbursed by products managed by the Company. The Company may
incur certain costs in connection with satisfying its performance obligations under administrative agreements including, but not limited to, employee compensation and travel costs for which it receives reimbursements from the products
it manages. The Company reports these expenses within compensation and benefits and general, administrative and other expenses and reports the related reimbursements as revenues within administrative, transaction and other fees (i.e., on a gross
basis) in the consolidated and combined statements of operations.
Dealer manager revenue consists of commissions earned for providing distribution
services to certain products. Dealer manager revenue is recorded on an accrual basis at the point in time when the services are completed, as there is no ongoing performance requirement.
Realized Performance Income
The Company is entitled to
receive certain realized performance income in the form of realized performance income and carried interest from the products that it manages. Realized performance income is based on the investment performance generated over time, subject to the
achievement of minimum return levels in certain products. Realized performance income from the Companys BDCs and certain products within the GP debt financing strategy (Part II Fees) are realized at the end of a measurement period,
typically quarterly or annually. Once realized, such realized performance income is no longer subject to reversal.
F-16