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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 10-Q
___________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-39653
___________________________
owl-20220630_g1.jpg
BLUE OWL CAPITAL INC.
(Exact name of registrant as specified in its charter)
___________________________
Delaware 86-3906032
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
399 Park Avenue, New York, NY 10022
(address of principal executive offices)
(212) 419-3000
(Registrant’s telephone number, including area code)
___________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Class A common stock OWL New York Stock Exchange
Warrants to purchase Class A common stock OWL.WS New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No o


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
o
Emerging growth company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
Outstanding at August 2, 2022
Class A common stock, par value $0.0001 420,563,261 
Class B common stock, par value $0.0001 — 
Class C common stock, par value $0.0001 657,808,589 
Class D common stock, par value $0.0001 319,132,127 


TABLE OF CONTENTS


DEFINED TERMS
Assets Under Management or AUM
Refers to the assets that we manage, and are generally equal to the sum of (i) net asset value (“NAV”); (ii) drawn and undrawn debt; (iii) uncalled capital commitments; (iv) total managed assets for certain Real Estate products; and (v) par value of collateral for collateralized loan obligations (“CLOs”).
Annual Report Refers to our annual report for the year ended December 31, 2021, filed with the SEC on Form 10-K on February 28, 2022.
our BDCs Refers to our business development companies, as regulated under the Investment Company Act of 1940, as amended: Owl Rock Capital Corporation (NYSE: ORCC) (“ORCC”), Owl Rock Capital Corporation II (“ORCC II”), Owl Rock Capital Corporation III (“ORCC III”), Owl Rock Technology Finance Corp. (“ORTF”), Owl Rock Technology Finance Corp. II (“ORTF II”), Owl Rock Core Income Corp. (“ORCIC”) and Owl Rock Technology Income Corp. (“ORTIC”).
Blue Owl, the Company, the firm, we, us, and our Refers to the Registrant and its consolidated subsidiaries.
Blue Owl Carry Refers to Blue Owl Capital Carry LP.
Blue Owl GP Refers collectively to Blue Owl Capital Holdings GP LLC and Blue Owl Capital GP LLC, which are directly or indirectly wholly owned subsidiaries of the Registrant that hold the Registrants interests in the Blue Owl Operating Partnerships.
Blue Owl Holdings Refers to Blue Owl Capital Holdings LP.
Blue Owl Operating Group Refers collectively to the Blue Owl Operating Partnerships and their consolidated subsidiaries.
Blue Owl Operating Group Units Refers collectively to a unit in each of the Blue Owl Operating Partnerships.
Blue Owl Operating Partnerships Refers to Blue Owl Carry and Blue Owl Holdings, collectively.
Blue Owl Securities
Refers to Blue Owl Securities LLC, a Delaware limited liability company. Blue Owl Securities is a broker-dealer registered with the SEC, a member of FINRA and the SIPC. Blue Owl Securities is wholly owned by Blue Owl and provides distribution services to all Blue Owl Divisions.
Business Combination
Refers to the transactions contemplated by the Business Combination Agreement, which were completed on May 19, 2021.
Business Combination Agreement or BCA Refers to the agreement dated as of December 23, 2020 (as the same has been or may be amended, modified, supplemented or waived from time to time), by and among Altimar Acquisition Corporation, Owl Rock Capital Group LLC, Owl Rock Capital Feeder LLC, Owl Rock Capital Partners LP and Neuberger Berman Group LLC.
Business Combination Date Refers to May 19, 2021.
Class A Shares Refers to the Class A common stock, par value $0.0001 per share, of the Registrant.
Class B Shares Refers to the Class B common stock, par value $0.0001 per share, of the Registrant.
Class C Shares Refers to the Class C common stock, par value $0.0001 per share, of the Registrant.
Class D Shares Refers to the Class D common stock, par value $0.0001 per share, of the Registrant.
Class E Shares Refers to the Class E common stock, par value $0.0001 per share, of the Registrant.
CLOs Refers to collateralized loan obligations.
Direct Lending Refers to our Direct Lending products, which offer private credit solutions to middle-market companies through four investment strategies: diversified lending, technology lending, first lien lending, opportunistic lending, and also includes our CLOs. Direct Lending products are managed by the Owl Rock division of Blue Owl.
Dyal Capital Refers to the Dyal Capital Partners business, which was acquired from Neuberger Berman Group LLC in connection with the Business Combination, and is now a division of Blue Owl.
4

Fee-Paying AUM or FPAUM Refers to the AUM on which management fees are earned. For our BDCs, FPAUM is generally equal to total assets (including assets acquired with debt but excluding cash). For our other Direct Lending products, excluding CLOs, FPAUM is generally equal to NAV or investment cost. FPAUM also includes uncalled committed capital for products where we earn management fees on such uncalled committed capital. For CLOs, FPAUM is generally equal to the par value of collateral. For our GP Capital Solutions products, FPAUM for the GP minority equity investments strategy is generally equal to capital commitments during the investment period and the cost of unrealized investments after the investment period. For GP Capital Solutions’ other strategies, FPAUM is generally equal to investment cost. For Real Estate, FPAUM is generally based on total assets (including assets acquired with debt).
Financial Statements Refers to our consolidated and combined financial statements included in this report.
GP Capital Solutions Refers to our GP Capital Solutions products, which primarily focus on acquiring equity stakes in, or providing debt financing to, large, multi-product private equity and private credit platforms through two existing investment strategies: GP minority equity investments and GP debt financing, and also including our professional sports minority investment strategy. GP Capital Solutions products are managed by the Dyal Capital division of Blue Owl.
NYSE Refers to the New York Stock Exchange.
Oak Street Refers to the investment advisory business of Oak Street Real Estate Capital, LLC that was acquired on December 29, 2021, and is now a division of Blue Owl.
Oak Street Acquisition Refers to the acquisition of Oak Street completed on December 29, 2021.
Owl Rock Refers collectively to the combined businesses of Owl Rock Capital Group LLC (“Owl Rock Capital Group”) and Blue Owl Securities LLC (formerly, Owl Rock Capital Securities LLC), which was the predecessor of Blue Owl for accounting and financial reporting purposes. References to the Owl Rock division refer to Owl Rock Capital Group and its subsidiaries that manage our Direct Lending products.
Partner Manager Refers to alternative asset management firms in which the GP Capital Solution products invest.
Part I Fees Refers to quarterly performance income on the net investment income of our BDCs and similarly structured products, subject to a fixed hurdle rate. These fees are classified as management fees throughout this report, as they are predictable and recurring in nature, not subject to repayment, and cash-settled each quarter.
Part II Fees Generally refers to fees from our BDCs and similarly structured products that are paid in arrears as of the end of each measurement period when the cumulative aggregate realized capital gains exceed the cumulative aggregate realized capital losses and aggregate unrealized capital depreciation, less the aggregate amount of Part II Fees paid in all prior years since inception. Part II Fees are classified as realized performance income throughout this report.
Permanent Capital
Refers to AUM in products that do not have ordinary redemption provisions or a requirement to exit investments and return the proceeds to investors after a prescribed period of time. Some of these products, however, may be required or can elect to return all or a portion of capital gains and investment income, and some may have periodic tender offers. Permanent capital includes certain products that are subject to management fee step downs or roll-offs or both over time.
Principals
Refers to our founders and senior members of management who hold, or in the future may hold, Class B Shares and Class D Shares. Class B Shares and Class D Shares collectively represent 80% of the total voting power of all shares.
Real Estate Refers, unless context indicates otherwise, to our Real Estate products, which primarily focus on providing investors with predictable current income, and potential for appreciation, while focusing on limiting downside risk through a unique net lease strategy. Real Estate products are managed by the Oak Street division of Blue Owl.
Registrant Refers to Blue Owl Capital Inc.
SEC Refers to the U.S. Securities and Exchange Commission.
Tax Receivable Agreement or TRA Refers to the Amended and Restated Tax Receivable Agreement, dated as of October 22, 2021, as may be amended from time to time by and among the Registrant, Blue Owl Capital GP LLC, the Blue Owl Operating Partnerships and each of the Partners (as defined therein) party thereto.
Wellfleet Acquisition Refers to the acquisition of Wellfleet Credit Partners LLC completed on April 1, 2022.
5

AVAILABLE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with the SEC. We make available free of charge on our website (www.blueowl.com) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other filing as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. We also use our website to distribute company information, including assets under management and performance information, and such information may be deemed material. Accordingly, investors should monitor our website, in addition to our press releases, SEC filings and public conference calls and webcasts.
Also posted on our website in the “Investor Relations—Governance” section is the charter for our Audit Committee, as well as our Corporate Governance Guidelines and Code of Business Conduct governing our directors, officers and employees. Information on or accessible through our website is not a part of or incorporated into this report or any other SEC filing. Copies of our SEC filings or corporate governance materials are available without charge upon written request to Blue Owl Capital Inc., 399 Park Avenue, 38th Floor, New York, New York 10022, Attention: Office of the Secretary. Any materials we file with the SEC are also publicly available through the SEC’s website (www.sec.gov).
No statements herein, available on our website or in any of the materials we file with the SEC constitute, or should be viewed as constituting, an offer of any fund.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, which reflect our current views with respect to, among other things, future events, operations and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “projects,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words, other comparable words or other statements that do not relate to historical or factual matters. The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Such forward-looking statements are subject to various risks, uncertainties (some of which are beyond our control) or other assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Some of these factors are described under the headings “Item 1A. Risk Factors” and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These factors should not be construed as exhaustive and should be read in conjunction with the risk factors and other cautionary statements that are included in this report and in our other periodic filings. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these forward-looking statements. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Therefore, you should not place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
6

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The information required by this item is included in the Financial Statements set forth in the F-pages of this report.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), should be read in conjunction with the unaudited consolidated and combined financial statements and the related notes included in this report. For a description of our business, please see “Business of Blue Owl” in the Annual Report.
2022 Second Quarter Overview
Three Months Ended June 30, Six Months Ended June 30,
(dollars in thousands) 2022 2021 2022 2021
Net Loss Attributable to Blue Owl Capital Inc. (After May 19, 2021) / Owl Rock (Prior to May 19, 2021) $ (1,126) $ (362,344) $ (12,941) $ (322,930)
Fee-Related Earnings(1)
$ 197,064  $ 98,133  $ 368,447  $ 144,481 
Distributable Earnings(1)
$ 180,402  $ 85,138  $ 336,128  $ 125,390 
(1) For the specific components and calculations of these Non-GAAP measures, as well as a reconciliation of these measures to the most comparable measure in accordance with GAAP, see “—Non-GAAP Analysis” and “—Non-GAAP Reconciliations.”
Our results for the second quarter of 2021 do not include the results Oak Street or Wellfleet, and include partial results for of Dyal Capital; therefore, prior period amounts are not comparable to current period. Please see “—GAAP Results of Operations Analysis” and “—Non-GAAP Analysis” for a detailed discussion of the underlying drivers of our results, including the accretive impacts of the Dyal Acquisition, Oak Street Acquisition and Wellfleet Acquisition.
Assets Under Management
Blue Owl
AUM: $119.1 billion
FPAUM: $77.5 billion
Direct Lending Products
AUM: $56.8 billion
FPAUM: $41.4 billion
GP Capital Solutions Products
AUM: $45.7 billion
FPAUM: $26.7 billion
Real Estate Products
AUM: $16.6 billion
FPAUM: $9.4 billion
Diversified Lending
Commenced 2016
AUM: $32.1 billion
FPAUM: $22.4 billion
GP Minority Equity
Commenced 2010
AUM: $44.0 billion
FPAUM: $25.7 billion
Net Lease
Commenced 2009
AUM: $16.6 billion
FPAUM: $9.4 billion
Technology Lending
Commenced 2018
AUM: $12.1 billion
FPAUM: $8.1 billion
GP Debt Financing
Commenced 2019
AUM: $1.4 billion
FPAUM: $0.7 billion
First Lien Lending
Commenced 2018
AUM: $3.4 billion
FPAUM: $2.6 billion
Professional Sports
Minority Investments
Commenced 2021
AUM: $0.2 billion
FPAUM: $0.2 billion
Opportunistic Lending
Commenced 2020
AUM: $2.2 billion
FPAUM: $1.3 billion
CLOs
Commenced 2022
AUM: $7.0 billion
FPAUM: $7.0 billion
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We finished the quarter with $119.1 billion of AUM, which included $77.5 billion of FPAUM. During the second quarter of 2022, approximately 92% of our management fees were earned on AUM from Permanent Capital. As of June 30, 2022, we have approximately $8.8 billion in AUM not yet paying fees, providing over $105 million of annualized management fees once deployed or upon the expiration of certain fee holidays. See “—Assets Under Management” for additional information, including important information on how we define these metrics.
Business Environment
Our business is impacted by conditions in the financial markets and economic conditions in the U.S., and to a lesser extent, elsewhere in the world.
In a continuation of the trends seen during the first quarter of 2022, inflation, interest rates, global GDP growth, the ongoing Russia-Ukraine conflict and the impact of COVID-19 variants on economic growth have remained in the spotlight, driving ongoing volatility in the public markets. We have seen U.S. inflation continue to rise during 2022, which has been driven by various factors, including supply chain disruptions, consumer demand, employment levels, low mortgage interest rates and a severely distorted supply/demand housing imbalance, and residential vacancy rates. As expected, the Federal Reserve voted to increase the federal funds rate during the first two quarters of 2022.
We have benefited from this market volatility as an increasing number of sponsors and private companies have looked to our Direct Lending products for flexible and dependable financing, and capital that managers need to expand and diversify their platforms through our GP Capital Solutions products.
We have patient and Permanent Capital and resilient management fees, providing underlying support to our existing earnings
profile even as we continue to grow. We anticipate a net positive impact to earnings as rates rise, particularly for our Direct
Lending business, where Part I Fees benefit from higher rates. At the strategy level, that same Permanent Capital allows us to provide flexible, certain financing solutions to sponsors, corporations, and alternative asset managers during a time when liquidity is scarce and public markets are closed or much more expensive than they used to be. And for the investors in our
strategies, our products offer attractive qualities in volatile, uncertain markets: income generation, downside protection, positive leverage to rising rates, and structural inflation hedges.
We are continuing to closely monitor developments related to COVID-19, inflation, rising interest rates and the Russia-Ukraine conflict, and to assess the impact on financial markets and on our business. Our future results may be adversely affected by slowdowns in fundraising activity and the pace of capital deployment, which could result in delayed or decreased management fees. It is currently not possible to predict the ultimate effects of these events on the financial markets, overall economy and our consolidated financial statements. See “Risk Factors—Risks Related to Our Business and Operations—The COVID-19 pandemic has caused severe disruptions in the U.S. and global economy, has disrupted, and may continue to disrupt, industries in which we, our products and our products’ investments operate and could potentially negatively impact us, our products or our products’ investments” and “—Difficult market and political conditions may reduce the value or hamper the performance of the investments made by our products or impair the ability of our products to raise or deploy capital, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition in our Annual Report.”
We believe that we are well positioned to navigate the current market environment. Pipelines remain robust across the business as we continue to see market share come our way in Direct Lending, despite lower industry M&A volumes, and across our businesses, we believe our scale and capital base create meaningful competitive advantages.
Assets Under Management
We present information regarding our AUM, FPAUM and various other related metrics throughout this MD&A to provide context around our fee generating revenues results, as well as indicators of the potential for future earnings from existing and new products. Our calculations of AUM and FPAUM may differ from the calculation methodologies of other asset managers, and as a result these measures may not be comparable to similar measures presented by other asset managers. In addition, our calculation of AUM includes amounts that are fee exempt (i.e., not subject to fees).
As of June 30, 2022, our assets under management included approximately $3.1 billion related to us, our executives and other employees. A portion of these assets under management relate to accrued carried interests and other amounts that are not charged fees.
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Composition of Assets Under Management
Our AUM consists of FPAUM, AUM not yet paying fees, fee-exempt AUM and net appreciation and leverage in products on which fees are based on commitments or investment cost. AUM not yet paying fees generally relates to unfunded capital commitments (to the extent such commitments are not already subject to fees), undeployed debt (to the extent we earn fees based on total asset values or investment cost, inclusive of assets purchased using debt) and AUM that is subject to a temporary fee holiday. Fee-exempt AUM represents certain investments by us, our employees, other related parties and third parties, as well as certain co-investment vehicles on which we do not earn fees.
Management uses AUM not yet paying fees as an indicator of management fees that will be coming online as we deploy existing assets in products that charge fees based on deployed and not uncalled capital, as well as AUM that is currently subject to a fee holiday that will expire at a predetermined time in the future. AUM not yet paying fees could provide over $105 million of additional annualized management fees once deployed or upon the expiration of the relevant fee holidays.
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Permanency and Duration of Assets Under Management
Our capital base is heavily weighted toward Permanent Capital. We view the permanency and duration of the products that we manage as a differentiator in our industry and as a means of measuring the stability of our future revenues stream. The chart below presents the composition of our management fees by remaining product duration. Changes in these relative percentages will occur over time as the mix of products we offer changes. For example, our Real Estate products have a higher concentration in long-dated funds, which in isolation may cause our percentage of management fees from Permanent Capital to decline.
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Changes in AUM
Three Months Ended June 30, 2022 Three Months Ended June 30, 2021
(dollars in millions) Direct Lending GP Capital Solutions Real Estate Total Direct Lending GP Capital Solutions Real Estate Total
Beginning Balance $ 44,775  $ 41,153  $ 16,090  $ 102,018  $ 27,777  $ 30,196  $   $ 57,973 
Acquisition 6,529  —  —  6,529  —  —  —  — 
New capital raised 3,015  3,958  208  7,181  749  481  —  1,230 
Change in debt 3,142  —  —  3,142  2,402  —  —  2,402 
Distributions (380) (219) (100) (699) (196) (130) —  (326)
Change in value / other (254) 782  441  969  424  664  —  1,088 
Ending Balance $ 56,827  $ 45,674  $ 16,639  $ 119,140  $ 31,156  $ 31,211  $   $ 62,367 
Six Months Ended June 30, 2022 Six Months Ended June 30, 2021
(dollars in millions) Direct Lending GP Capital Solutions Real Estate Total Direct Lending GP Capital Solutions Real Estate Total
Beginning Balance $ 39,227  $ 39,906  $ 15,362  $ 94,495  $ 27,101  $ 26,220  $   $ 53,321 
Acquisition 6,529  —  —  6,529  —  —  —  — 
New capital raised 4,953  5,524  568  11,045  984  1,392  —  2,376 
Change in debt 6,760  —  —  6,760  2,731  —  —  2,731 
Distributions (664) (977) (265) (1,906) (377) (204) —  (581)
Change in value / other 22  1,221  974  2,217  717  3,803  —  4,520 
Ending Balance $ 56,827  $ 45,674  $ 16,639  $ 119,140  $ 31,156  $ 31,211  $   $ 62,367 

Direct Lending. Increase in AUM for the six months ended June 30, 2022 was driven by a combination of the Wellfleet Acquisition, continued fundraising and debt deployment across the strategy.
$6.5 billion from the Wellfleet Acquisition
$2.8 billion new capital raised in Diversified Lending, primarily driven by retail fundraising in ORCIC.
$1.6 billion new capital raised in Technology Lending, driven by continued fundraising in ORTF II and ORTIC.
$6.8 billion of debt deployment across all of Direct Lending, as we continue to opportunistically deploy leverage in our BDCs.
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GP Capital Solutions. Increase in AUM was driven by new capital raised, primarily in Dyal Fund V and related co-investment vehicles, and overall appreciation across all of our major products.
Real Estate. There was no material increase or decrease in AUM.
Changes in FPAUM
Three Months Ended June 30, 2022 Three Months Ended June 30, 2021
(dollars in millions) Direct Lending GP Capital Solutions Real Estate Total Direct Lending GP Capital Solutions Real Estate Total
Beginning Balance $ 32,658  $ 23,651  $ 9,275  $ 65,584  $ 21,471  $ 18,630  $   $ 40,101 
Acquisition 6,501  —  —  6,501  —  —  —  — 
New capital raised / deployed 2,898  3,023  121  6,042  2,506  272  —  2,778 
Distributions (381) (113) (490) (210) (245) —  (455)
Change in value / other (267) —  147  (120) 395  —  —  395 
Ending Balance $ 41,409  $ 26,678  $ 9,430  $ 77,517  $ 24,162  $ 18,657  $   $ 42,819 
Six Months Ended June 30, 2022 Six Months Ended June 30, 2021
(dollars in millions) Direct Lending GP Capital Solutions Real Estate Total Direct Lending GP Capital Solutions Real Estate Total
Beginning Balance $ 32,029  $ 21,212  $ 8,203  $ 61,444  $ 20,862  $ 17,608  $   $ 38,470 
Acquisition 6,501  —  —  6,501  —  —  —  — 
New capital raised / deployed 5,098  4,194  1,198  10,490  2,988  1,283  —  4,271 
Fee basis change —  1,268  —  1,268  —  —  —  — 
Distributions (659) (274) (929) (359) (234) —  (593)
Change in value / other (1,560) —  303  (1,257) 671  —  —  671 
Ending Balance $ 41,409  $ 26,678  $ 9,430  $ 77,517  $ 24,162  $ 18,657  $   $ 42,819 

Direct Lending. Increase in FPAUM was driven by a combination of the Wellfleet Acquisition, continued fundraising and debt deployment as discussed in the AUM section above, partially offset by a change in methodology that reduced FPAUM by approximately $1.5 billion.
GP Capital Solutions. Increase in FPAUM was driven by new capital raised, primarily in Dyal Fund V, and the expiration of certain fee holidays on January 1, 2022. The expiration of the fee holiday drove an increase in FPAUM of $2.2 billion, which was partially offset by a decrease in FPAUM for a step down in fee basis in Dyal Fund III of $0.9 billion.
Real Estate. Increase in FPAUM was driven primarily by capital raised in the Oak Street Real Estate Capital Net Lease Property Fund.
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Product Performance
Product performance for certain of our products is included throughout this discussion with analysis to facilitate an understanding of our results of operations for the periods presented. The performance information of our products reflected is not indicative of our performance. An investment in Blue Owl is not an investment in any of our products. Past performance is not indicative of future results. As with any investment, there is always the potential for gains as well as the possibility of losses. There can be no assurance that any of these products or our other existing and future products will achieve similar returns. MoIC and IRR data has not been presented for products that have launched within the last two years as such information is generally not meaningful (“NM”).
Direct Lending
MoIC IRR
(dollars in millions) Year of
Inception
AUM Capital
Raised
(1)
Invested
Capital
 (2)
Realized
Proceeds
(3)
Unrealized
Value 
(4)
Total
Value
Gross (5) Net (6) Gross (7) Net (8)
Diversified Lending
ORCC 2016 $ 14,168  $ 6,019  $ 6,019  $ 2,146  $ 5,704  $ 7,850  1.42x 1.30x 11.4  % 8.3  %
ORCC II (9) 2017 $ 2,569  $ 1,367  $ 1,340  $ 292  $ 1,290  $ 1,582  NM 1.18x NM 6.1  %
ORCC III 2020 $ 3,544  $ 1,783  $ 1,783  $ 136  $ 1,749  $ 1,885  NM NM NM NM
ORCIC 2020 $ 9,970  $ 4,094  $ 4,041  $ 135  $ 3,862  $ 3,997  NM NM NM NM
Technology Lending
ORTF 2018 $ 6,871  $ 3,208  $ 3,208  $ 325  $ 3,279  $ 3,604  1.18x 1.12x 10.8  % 7.2  %
First Lien Lending (10)
Owl Rock First Lien Fund Levered 2018 $ 2,929  $ 1,161  $ 813  $ 128  $ 803  $ 931  1.20x 1.15x 8.3  % 6.2  %
Owl Rock First Lien Fund Unlevered 2019 $ 152  $ 150  $ 150  $ $ 157  $ 165  1.10x 1.06x 4.5  % 2.8  %
(1)Includes reinvested dividends and share repurchases, if applicable.
(2)Invested capital includes capital calls, reinvested dividends and periodic investor closes, as applicable.
(3)Realized proceeds represent the sum of all cash distributions to investors.
(4)Unrealized value represents the product’s NAV. There can be no assurance that unrealized values will be realized at the valuations indicated.
(5)Gross multiple of invested capital (“MoIC”) is calculated by adding total realized proceeds and unrealized values of a product’s investments and dividing by the total amount of invested capital. Gross MoIC is before giving effect to management fees (including Part I Fees) and Part II Fees, as applicable.
(6)Net MoIC measures the aggregate value generated by a product’s investments in absolute terms. Net MoIC is calculated by adding total realized proceeds and unrealized values of a product’s investments and dividing by the total amount of invested capital. Net MoIC is calculated after giving effect to management fees (including Part I Fees) and Part II Fees, as applicable, and all other expenses.
(7)Gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the product and the product’s residual value at the end of the measurement period. Gross IRRs are calculated before giving effect to management fees (including Part I Fees) and Part II Fees, as applicable.
(8)Net IRRs are calculated consistent with gross IRRs, but after giving effect to management fees (including Part I Fees) and Part II Fees, as applicable, and all other expenses. An individual investor’s IRR may be different to the reported IRR based on the timing of capital transactions.
(9)For the purposes of calculating Gross IRR, the expense support provided to the fund would be impacted when assuming a performance excluding management fees (including Part I Fees) and Part II Fees, and therefore is not meaningful for ORCC II.
(10)Owl Rock First Lien Fund is comprised of three feeder funds: Onshore Levered, Offshore Levered and Insurance Unlevered. The gross and net MoIC and IRR presented in the chart are for Onshore Levered and Insurance Unlevered as those are the largest of the levered and unlevered feeder funds. The gross and net MoIC for the Offshore Levered feeder fund is 1.19x and 1.12x, respectively. The gross and net IRR for the Offshore Levered feeder is 8.1% and 5.0%, respectively. All other values for Owl Rock First Lien Fund Levered are for Onshore Levered and Offshore Levered combined. AUM is presented as the aggregate of the three Owl Rock First Lien Fund feeders. Owl Rock First Lien Fund Unlevered Investor equity and note commitments are both treated as capital for all values.
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GP Capital Solutions
MoIC IRR
(dollars in millions) Year of
Inception
AUM Capital
Raised
Invested
Capital
 (2)
Realized
Proceeds
(3)
Unrealized
Value 
(4)
Total
Value
Gross (5) Net (6) Gross (7) Net (8)
GP Minority Equity (1)
Dyal Fund I 2011 $ 975  $ 1,284  $ 1,248  $ 583  $ 741  $ 1,324  1.21x 1.06x 4.0  % 1.1  %
Dyal Fund II 2014 $ 2,808  $ 2,153  $ 1,846  $ 502  $ 2,075  $ 2,577  1.60x 1.40x 13.4  % 8.7  %
Dyal Fund III 2015 $ 8,211  $ 5,318  $ 3,246  $ 2,959  $ 4,009  $ 6,968  2.58x 2.15x 31.2  % 23.4  %
Dyal Fund IV 2018 $ 14,449  $ 9,041  $ 4,807  $ 2,494  $ 6,623  $ 9,117  2.28x 1.90x 112.1  % 71.1  %
Dyal Fund V 2020 $ 10,901  $ 9,763  $ 1,112  $ —  $ 2,019  $ 2,019  NM NM NM NM
(1)Valuation-related amounts and performance metrics are presented on a quarter lag and are exclusive of investments made by us and the related carried interest vehicles of the respective products.
(2)Invested capital includes capital calls.
(3)Realized proceeds represent the sum of all cash distributions to investors.
(4)Unrealized value represents the product's NAV. There can be no assurance that unrealized values will be realized at the valuations indicated.
(5)Gross MoIC is calculated by adding total realized proceeds and unrealized values of a product’s investments and dividing by the total amount of invested capital. Gross MoIC is before giving effect to management fees and carried interest, as applicable.
(6)Net MoIC measures the aggregate value generated by a product's investments in absolute terms. Net MoIC is calculated by adding total realized proceeds and unrealized values of a product's investments and dividing by the total amount of invested capital. Net MoIC is calculated after giving effect to management fees and carried interest, as applicable, and all other expenses.
(7)Gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the product and the product’s residual value at the end of the measurement period. Gross IRRs are calculated before giving effect to management fees and carried interest, as applicable.
(8)Net IRR is an annualized since inception net internal rate of return of cash flows to and from the product and the product's residual value at the end of the measurement period. Net IRRs reflect returns to all investors. Net IRRs are calculated after giving effect to management fees and carried interest, as applicable, and all other expenses. An individual investor's IRR may be different to the reported IRR based on the timing of capital transactions.
Real Estate
MoIC IRR
(dollars in millions) Year of Inception AUM Capital Raised Invested Capital
(2)
Realized
Proceeds
(3)
Unrealized
Value
(4)
Total
Value
Gross (5) Net (6) Gross (7) Net (8)
Net Lease (1)
Oak Street Real Estate Capital Fund IV 2017 $ 1,438  $ 1,250  $ 1,250  $ 1,078  $ 855  $ 1,933  1.70x 1.53x 29.1  % 23.3  %
Oak Street Real Estate Capital Net Lease Property Fund 2019 $ 5,908  $ 3,161  $ 2,600  $ 213  $ 2,980  $ 3,193  1.24x 1.23x 20.5  % 19.4  %
Oak Street Real Estate Capital Fund V 2020 $ 3,632  $ 2,500  $ 1,147  $ 322  $ 1,103  $ 1,425  NM NM NM NM
Oak Street Asset-Backed Securitization (9) 2020 $ 3,003  $ 2,713  $ 342  $ 60  $ 370  $ 430  NM NM NM NM
(1)Valuation-related amounts and performance metrics, as well as invested capital and realized proceeds, are presented on a quarter lag where applicable.
(2)Invested capital includes investments by the general partner, capital calls, dividends reinvested and periodic investors closes, as applicable.
(3)Realized proceeds represent the sum of all cash distributions to all investors.
(4)Unrealized value represents the fund’s NAV. There can be no assurance that unrealized values will be realized at the valuations indicated.
(5)Gross MoIC is calculated by adding total realized proceeds and unrealized values of a product’s investments and dividing by the total amount of invested capital. Gross MoIC is before giving effect to management fees and carried interest, as applicable.
(6)Net MoIC measures the aggregate value generated by a product's investments in absolute terms. Net MoIC is calculated by adding total realized proceeds and unrealized values of a product's investments and dividing by the total amount of invested capital. Net MoIC is calculated after giving effect to management fees and carried interest, as applicable, and all other expenses.
(7)Gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the product and the product’s residual value at the end of the measurement period. Gross IRRs are calculated before giving effect to management fees and carried interest, as applicable.
(8)Net IRR is an annualized since inception net internal rate of return of cash flows to and from the product and the product's residual value at the end of the measurement period. Net IRRs reflect returns to all investors. Net IRRs are calculated after giving effect to management fees and carried interest, as applicable, and all other expenses. An individual investor's IRR may be different to the reported IRR based on the timing of capital transactions.
(9)Capital raised for this product includes the par value of notes issued in the securitization. Invested capital, realized proceeds, unrealized and total values relate to the subordinated notes/equity of the securitization.
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GAAP Results of Operations Analysis
As a result of the Dyal Acquisition, Oak Street Acquisition and Wellfleet Acquisition, prior year amounts are not comparable to current year amounts or expected future trends. Dyal Capital’s, Oak Street’s and Wellfleet’s results of operations are included from the Business Combination Date, December 29, 2021, and April 1, 2022, respectively.
Three Months Ended June 30, 2022, Compared to the Three Months Ended June 30, 2021
Three Months Ended June 30,
(dollars in thousands) 2022 2021 $ Change
Revenues
Management fees, net (includes Part I Fees of $46,346 and $36,073)
$ 284,325  $ 142,135  $ 142,190 
Administrative, transaction and other fees 42,921  37,125  5,796 
Total Revenues, Net 327,246  179,260  147,986 
Expenses
Compensation and benefits 218,118  1,221,565  (1,003,447)
Amortization of intangible assets 64,885  21,336  43,549 
General, administrative and other expenses 54,389  51,520  2,869 
Total Expenses 337,392  1,294,421  (957,029)
Other Income (Loss)
Net losses on investments (123) —  (123)
Net losses on retirement of debt —  (16,145) 16,145 
Interest expense (15,051) (5,817) (9,234)
Change in TRA liability 1,370  (1,146) 2,516 
Change in warrant liability 20,723  (15,300) 36,023 
Change in earnout liability (208) (462,970) 462,762 
Total Other Income (Loss) 6,711  (501,378) 508,089 
Loss Before Income Taxes (3,435) (1,616,539) 1,613,104 
Income tax expense (benefit) 5,631  (29,199) 34,830 
Consolidated and Combined Net Loss (9,066) (1,587,340) 1,578,274 
Net loss attributable to noncontrolling interests 7,940  1,224,996  (1,217,056)
Net Loss Attributable to Blue Owl Capital Inc. $ (1,126) $ (362,344) $ 361,218 
Revenues, Net
Management Fees. The increase in our management fees compared to the same period for the prior year was primarily driven by increased management fees across the Direct Lending products of $40.7 million, which includes both the accretive impact of the Wellfleet Acquisition as well as continued fundraising and deployment of capital within new and existing Direct Lending products, the accretive impact of our GP Capital Solutions’ management fees of $82.3 million and our Real Estate management fees of $19.2 million. See Note 6 to our Financial Statements for additional details on our GAAP management fees by product and strategy.
Administrative, Transaction and Other Fees. The increase in administrative, transaction and other fees was driven primarily by an increase in administrative services provided to products managed by the Company.
Expenses
Compensation and Benefits. Compensation and benefits expenses decreased compared to the same period for the prior year due to a $1.1 billion decrease in acquisition related compensation charges from equity-based compensation charges in connection with Blue Owl Operating Group Units issued in connection with the Business Combination, partially offset by acquisition related compensation related to Oak Street and Wellfleet. Excluding these acquisition related charges, compensation and benefits increased $76.9 million, driven by a 78% growth in headcount from June 30, 2021 to June 30, 2022, which is inclusive of the increase in headcount related to the Dyal, Oak Street and Wellfleet Acquisitions.
Amortization of Intangible Assets. The Company incurred certain expenses related to the amortization of intangible assets acquired in connection with the Dyal, Oak Street and Wellfleet Acquisitions. See Note 3 to our Financial Statements for additional information.
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General, Administrative and Other Expenses. General, administrative and other expenses increased primarily driven by $13.4 million increase in distribution costs as well as an increase in expenses due to our continued growth as a public company and transitioning back to the office from working remotely, offset by a decrease in transaction expenses of $24.8 million that were not eligible to be netted against proceeds for GAAP.
Other Loss
Interest Expense. Interest expense increased compared to the same period for the prior year due to the issuance of $400.0 million 2032 Notes and $350.0 million 2051 Notes.
Change in TRA liability. The change in TRA liability was due to the impact of the time value of money on the portion of the TRA that is carried at fair value (i.e., Dyal Acquisition contingent consideration).
Change in warrant liability. The change in the warrant liability for the current period was driven by the decrease in the price of our Class A Shares, as such price directly impacts the value of our warrants. The change in warrant liability for the same period in the prior year was driven by the increase in the price of our Class A Shares.
Change in earnout liability. There was no material change to the earnout liability for the current period. The change in the fair value of the earnout liability for the same period in the prior year was primarily due to the increase in our Class A Share price, as such input is a material driver of the valuation of the Earnout Securities carried at fair value.
Income Tax Expense
Prior to the Business Combination, our income was generally subject to New York City Unincorporated Business Tax (“UBT”), as the operating entities are partnerships for U.S. federal income tax purposes. As a result of the Business Combination, the portion of income allocable to the Registrant is now also generally subject to corporate tax rates at the U.S. federal and state and local levels. For the period, the income tax expense increased due to increased pre-tax income as well as nondeductible compensation. Please see Note 10 to our Financial Statements for a discussion of the significant tax differences that impacted our effective tax rate.
Net Loss Attributable to Noncontrolling Interests
Net loss attributable to noncontrolling interests in the current year primarily represents the allocation to Common Units of their pro rata share of the Blue Owl Operating Group’s post-Business Combination net loss due to the drivers discussed above. The Common Units represent an approximately 70% interest in the Blue Owl Operating Group during the second quarter of 2022. Prior to the Business Combination, amounts attributable to noncontrolling interests were not significant.
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Six Months Ended June 30, 2022, Compared to the Six Months Ended June 30, 2021
Six Months Ended June 30,
(dollars in thousands) 2022 2021 $ Change
Revenues
Management fees, net (includes Part I Fees of $93,085 and 64,987)
$ 531,957  $ 236,848  $ 295,109 
Administrative, transaction and other fees 71,266  50,636  20,630 
Total Revenues, Net 603,223  287,484  315,739 
Expenses
Compensation and benefits 412,010  1,269,549  (857,539)
Amortization of intangible assets 126,411  21,336  105,075 
General, administrative and other expenses 97,683  66,380  31,303 
Total Expenses 636,104  1,357,265  (721,161)
Other Income (Loss)
Net losses on investments (118) —  (118)
Net losses on retirement of debt —  (16,145) 16,145 
Interest expense (27,885) (11,675) (16,210)
Change in TRA liability (8,282) (1,146) (7,136)
Change in warrant liability 38,481  (15,300) 53,781 
Change in earnout liability (704) (462,970) 462,266 
Total Other Income (Loss) 1,492  (507,236) 508,728 
Loss Before Income Taxes (31,389) (1,577,017) 1,545,628 
Income tax expense (benefit) 593  (29,011) 29,604 
Consolidated and Combined Net Loss (31,982) (1,548,006) 1,516,024 
Net loss attributable to noncontrolling interests 19,041  1,225,076  (1,206,035)
Net Loss Attributable to Blue Owl Capital Inc. $ (12,941) $ (322,930) $ 309,989 
Revenues, Net
Management Fees. The increase in our management fees compared to the same period for the prior year was primarily driven by increased management fees across the Direct Lending product strategies of $79.6 million, which includes both the accretive impact of the Wellfleet Acquisition as well as continued fundraising and deployment of capital within new and existing Direct Lending products, the accretive impact of our GP Capital Solutions’ management fees of $179.1 million and and our Real Estate management fees of $36.4 million. See Note 6 to our Financial Statements for additional details on our GAAP management fees by product and strategy.
Administrative, Transaction and Other Fees. The increase in administrative, transaction and other fees was driven primarily by an increase in administrative services provided to products managed by the Company.
Expenses
Compensation and Benefits. Compensation and benefits expenses decreased compared to the same period for the prior year due to a $1.0 billion decrease in acquisition related compensation charges from the non-cash equity-based compensation charges in connection with Blue Owl Operating Group Units issued in connection with the Business Combination, partially offset by acquisition related compensation related to Oak Street and Wellfleet. Excluding these acquisition related charges, compensation and benefits increased $146.1 million, driven by a 78% growth in headcount from June 30, 2021 to June 30, 2022, which is inclusive of the increase in headcount related to the Dyal, Oak Street and Wellfleet Acquisitions.
Amortization of Intangible Assets. These expenses relate to the amortization of intangible assets acquired in connection with the Dyal, Oak Street and Wellfleet Acquisitions.
General, Administrative and Other Expenses. General, administrative and other expenses increased primarily driven by an increase of $21.1 million increase in distribution costs as well as an increase in expenses due to our continued growth as a public company and transitioning back to the office from a remote workforce, offset by a decrease in transaction expenses of $16.0 million that were not eligible to be netted against proceeds for GAAP.
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Other Loss
Interest expense. The increase in interest expense was driven by higher average debt outstanding, as in 2021 our long-term debt outstanding related to the $250.0 million term loan agreement (the “Term Loan”) that was repaid in the second quarter of 2021 using proceeds from the $700.0 million of 2031 Notes, a larger size facility. Further, we issued $350.0 million of 2051 Notes during the fourth quarter of 2021 and $400.0 million of 2032 Notes during the first quarter of 2022. The impact of higher average borrowing outstanding in fiscal quarter 2022 was partially offset by lower average borrowing rates on the Notes in 2022 compared to the Term Loan in 2021.
Change in TRA liability. The change in TRA liability in 2022 was due to the impact of the time value of money on the portion of the TRA that is carried at fair value (i.e., Dyal Acquisition contingent consideration). The TRA was entered into in connection with the Business Combination in May 2021.
Change in warrant liability. The change in the warrant liability for the current period was driven by the decrease in the price of our Class A Shares, as such price directly impacts the value of our warrants. The change in warrant liability for the same period in the prior year was driven by the increase in the price of our Class A Shares.
Change in earnout liability. There was no material change to the earnout liability for the current period. The change in the fair value of the earnout liability for the same period in the prior year was primarily due to the increase in our Class A Share price, as such input is a material driver of the valuation of the Earnout Securities carried at fair value.n earnout liability was primarily due to an increase in the Oak Street Earnouts revenue volatility assumptions offset by the passage of time.
Income Tax Expense
Prior to the Business Combination, our income was generally subject to New York City UBT, as the operating entities are partnerships for U.S. federal income tax purposes. As a result of the Business Combination, the portion of income allocable to the Registrant is now also generally subject to corporate tax rates at the U.S. federal and state and local levels. For the period, the income tax expense increased due to increased pre-tax income as well as nondeductible compensation. Please see Note 10 to our Financial Statements for a discussion of the significant tax differences that impacted our effective tax rate.
Net Loss Attributable to Noncontrolling Interest
Net loss attributable to noncontrolling interests in the current year primarily represents the allocation to Common Units of their pro rata share of the Blue Owl Operating Group’s post-Business Combination net loss due to the drivers discussed above. The Common Units represented an approximately 71% weighted average economic interest in the Blue Owl Operating Group during the six months ended June 30, 2022. Prior to the Business Combination, amounts attributable to noncontrolling interests were not significant, and related primarily to third-party interests held in certain of our consolidated investment advisor holding companies.
Non-GAAP Analysis
In addition to presenting our consolidated and combined results in accordance with GAAP, we present certain other financial measures that are not presented in accordance with GAAP. Management uses these measures to assess the performance of our business, and we believe that this information enhances the ability of shareholders to analyze our performance from period to period. These non-GAAP financial measures supplement and should be considered in addition to and not in lieu of our GAAP results, and such measures should not be considered as indicative of our liquidity. Our non-GAAP measures may not be comparable to other similarly titled measured used by other companies. Please see “—Non-GAAP Reconciliations” for reconciliations of these measures to the most comparable measures prepared in accordance with GAAP.
Fee-Related Earnings and Related Components
Fee-Related Earnings is a supplemental non-GAAP measure of operating performance used to make operating decisions and assess our operating performance. Fee-Related Earnings excludes certain items that are required for the presentation of our results on a GAAP basis. Management also reviews the components that comprise Fee-Related Earnings (i.e., FRE Revenues and FRE Expenses) on the same basis used to calculate Fee-Related Earnings, and such components are also non-GAAP measures and have been identified with the prefix “FRE” in the tables and discussion below. Management believes that by excluding these items, which are described below, Fee-Related Earnings and its components can be useful as supplemental measures to our GAAP results in assessing our operating performance and focusing on whether our recurring revenues, primarily consisting of management fees, are sufficient to cover our recurring operating expenses.
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Fee-Related Earnings exclude various items that are required for the presentation of our results under GAAP, including the following: noncontrolling interests in the Blue Owl Operating Partnerships; equity-based compensation expense; compensation expenses related to capital contributions in certain subsidiary holding companies that are in-turn paid as compensation to certain employees, as such contributions are not included in Fee-Related Earnings or Distributable Earnings; amortization of acquisition-related earnouts; amortization of intangible assets; “Transaction Expenses” as defined below; net gains (losses) on investments, changes in TRA liability, earnout and warrant liabilities; net losses on retirement of debt; interest and taxes. In addition, management reviews revenues by reducing GAAP administrative, transaction and other fees for certain expenses related to reimbursements from our products, which are presented gross for GAAP but net for non-GAAP measures. Transaction Expenses are expenses incurred in connection with the Business Combinations and other acquisitions and strategic transactions, including subsequent adjustments related to such transactions, that were not eligible to be netted against consideration or recognized as acquired assets and assumed liabilities in the relevant transaction. Starting in the first quarter of 2022, Transaction Expenses also include expenses paid on behalf of certain products that are expected to be reimbursed in subsequent periods; such amounts were not material to the prior periods presented, and therefore such periods have not be restated for this change.
Distributable Earnings
Distributable Earnings is a supplemental non-GAAP measure of operating performance that equals Fee-Related Earnings plus or minus, as relevant, realized performance income and related compensation, interest expense, as well as amounts payable for taxes and payments made pursuant to the TRA. Amounts payable for taxes presents the current income taxes payable related to the respective period’s earnings, assuming that all Distributable Earnings were allocated to the Registrant, which would occur following the exchange of all Blue Owl Operating Group Units for Class A Shares. Current income taxes payable and payments made pursuant to the TRA reflect the benefit of tax deductions that are excluded when calculating Distributable Earnings (e.g., equity-based compensation expenses, net losses on retirement of debt, Transaction Expenses, tax goodwill, etc.). If these tax deductions were to be excluded from amounts payable for taxes, Distributable Earnings would be lower and our effective tax rate would appear to be higher, even though a lower amount of income taxes would have been paid or payable for a period’s earnings. We make these adjustments when calculating Distributable Earnings to more accurately reflect the net realized earnings that are expected to be or become available for distribution or reinvestment into our business. Management believes that Distributable Earnings can be useful as a supplemental performance measure to our GAAP results assessing the amount of earnings available for distribution.
Fee-Related Earnings and Distributable Earnings Summary
Three Months Ended June 30, Six Months Ended June 30,
(dollars in thousands) 2022 2021 2022 2021
FRE revenues $ 317,811  $ 171,541  $ 590,409  $ 275,310 
FRE expenses (122,106) (71,556) (223,841) (129,055)
Net loss (income) allocated to noncontrolling interests included in Fee-Related Earnings 1,359  (1,852) 1,879  (1,774)
Fee-Related Earnings $ 197,064  $ 98,133  $ 368,447  $ 144,481 
Distributable Earnings $ 180,402  $ 85,138  $ 336,128  $ 125,390 
Fee-Related Earnings and Distributable Earnings increased year-over-year as a result of the accretive impact of the Dyal Acquisition and Oak Street Acquisition, as well as higher FRE revenues from our Direct Lending products. These increases were offset by higher FRE expenses, primarily due to compensation and benefits as discussed further below.
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FRE Revenues
Three Months Ended June 30, Six Months Ended June 30,
(dollars in thousands) 2022 2021 2022 2021
Direct Lending Products
Diversified lending $ 108,909  $ 83,773  $ 214,361  $ 160,251 
Technology lending 23,803  16,727  46,833  30,584 
First lien lending 3,973  3,817  7,654  7,632 
Opportunistic lending 2,730  741  4,271  1,304 
CLOs 6,295  —  6,295  — 
Management Fees, Net 145,710  105,058  279,414  199,771 
Administrative, transaction and other fees 23,396  29,406  37,869  38,462 
FRE Revenues - Direct Lending Products 169,106  134,464  317,283  238,233 
GP Capital Solutions Products
GP minority equity investments 124,434  36,341  226,534  36,341 
GP debt financing 3,366  736  6,458  736 
Professional sports minority investments 513  —  1,013  — 
Management Fees, Net 128,313  37,077  234,005  37,077 
Administrative, transaction and other fees 1,168  —  2,739  — 
FRE Revenues - GP Capital Solutions Products 129,481  37,077  236,744  37,077 
Real Estate Products
Net lease 19,224  —  36,382  — 
Management Fees, Net 19,224    36,382   
FRE Revenues - Real Estate Products 19,224    36,382   
Total FRE Revenues $ 317,811  $ 171,541  $ 590,409  $ 275,310 
FRE revenues increased due to the accretive impact of the Dyal, Oak Street and Wellfleet Acquisitions. FRE revenues also increased as a result of overall growth in FPAUM across all of our Direct Lending products.
FRE Expenses
Three Months Ended June 30, Six Months Ended June 30,
(dollars in thousands) 2022 2021 2022 2021
FRE compensation and benefits $ (85,809) $ (56,141) $ (160,778) $ (100,681)
FRE general, administrative and other expenses (36,297) (15,415) (63,063) (28,374)
Total FRE Expenses $ (122,106) $ (71,556) $ (223,841) $ (129,055)
FRE expenses increased due to the accretive impact of the Dyal, Oak Street and Wellfleet Acquisitions. FRE expenses increased, primarily due to higher FRE compensation and benefits as a result of increased headcount. FRE general, administrative and other expenses increased, primarily due to increased distribution costs, increased costs related to being a public company and increased travel and office-related expenses as we transition from working remotely back to the office. See “—GAAP Results of Operations Analysis” for additional information on these drivers.
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Non-GAAP Reconciliations
The table below presents the reconciliation of the non-GAAP measures presented throughout this MD&A. Please see “—Non-GAAP Analysis” for important information regarding these measures.
  Three Months Ended June 30, Six Months Ended June 30,
(dollars in thousands) 2022 2021 2022 2021
GAAP (Loss) Income Before Income Taxes $ (3,435) $ (1,616,539) $ (31,389) $ (1,577,017)
Net loss (income) allocated to noncontrolling interests included in Fee-Related Earnings 1,359  (1,852) 1,879  (1,774)
Strategic Revenue-Share Purchase consideration amortization 8,922  —  17,844  — 
Realized performance compensation —  —  —  — 
Equity-based compensation - other 24,293  —  41,819  — 
Equity-based compensation - acquisition related 62,139  1,158,597  122,793  1,158,597 
Equity-based compensation - Business Combination grants 18,253  —  36,674  — 
Capital-related compensation 850  —  1,680  — 
Acquisition-related cash earnout amortization 16,111  —  32,193  — 
Amortization of intangible assets 64,885  21,336  126,411  21,336 
Transaction Expenses 10,398  35,213  20,035  36,103 
Interest expense 15,051  5,817  27,885  11,675 
Realized performance income —  —  —  — 
Net losses (gains) on investments 123  —  118  — 
Net losses on early retirement of debt —  16,145  —  16,145 
Change in TRA liability (1,370) 1,146  8,282  1,146 
Change in warrant liability (20,723) 15,300  (38,481) 15,300 
Change in earnout liability 208  462,970  704  462,970 
Fee-Related Earnings 197,064  98,133  368,447  144,481 
Realized performance income —  —  —  — 
Realized performance compensation —  —  —  — 
Interest expense (15,045) (5,817) (27,879) (11,675)
Taxes and TRA payments (1,617) (7,178) (4,440) (7,416)
Distributable Earnings 180,402  85,138  336,128  125,390 
Interest expense 15,045  5,817  27,879  11,675 
Taxes and TRA payments 1,617  7,178  4,440  7,416 
Fixed assets depreciation and amortization 241  135  459  265 
Adjusted EBITDA $ 197,305  $ 98,268  $ 368,906  $ 144,746 
Three Months Ended June 30, Six Months Ended June 30,
(dollars in thousands) 2022 2021 2022 2021
GAAP Revenues $ 327,246  $ 179,260  $ 603,223  $ 287,484 
Strategic Revenue-Share Purchase consideration amortization 8,922  —  17,844  — 
Administrative and other fees (18,357) (7,719) (30,658) (12,174)
FRE Revenues $ 317,811  $ 171,541  $ 590,409  $ 275,310 
Three Months Ended June 30, Six Months Ended June 30,
(dollars in thousands) 2022 2021 2022 2021
GAAP Compensation and Benefits $ 218,118  $ 1,221,565  $ 412,010  $ 1,269,549 
Equity-based compensation - other (23,984) —  (41,097) — 
Equity-based compensation - acquisition related (62,139) (1,158,597) (122,793) (1,158,597)
Equity-based compensation - Business Combination grants (18,253) —  (36,674) — 
Capital-related compensation (849) —  (1,679) — 
Acquisition-related cash earnout amortization (16,111) —  (32,193) — 
Administrative and other expenses (10,973) (6,827) (16,796) (10,271)
FRE Compensation and Benefits $ 85,809  $ 56,141  $ 160,778  $ 100,681 
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Three Months Ended June 30, Six Months Ended June 30,
(dollars in thousands) 2022 2021 2022 2021
GAAP General, Administrative and Other Expenses $ 54,389  $ 51,520  $ 97,683  $ 66,380 
Transaction Expenses (10,398) (35,213) (20,035) (36,103)
Equity-based compensation (309) —  (722) — 
Administrative and other expenses (7,385) (892) (13,863) (1,903)
FRE General, Administrative and Other Expenses $ 36,297  $ 15,415  $ 63,063  $ 28,374 
Liquidity and Capital Resources
Overview
We rely on management fees as the primary source of our operating liquidity. From time to time we may rely on the use of revolving credit facilities between management fee collection dates, which generally occur on a quarterly basis. We may also rely on our Revolving Credit Facility for liquidity needed to fund acquisitions, which we may replace with longer-term financing, subject to market conditions. To the extent that we have excess liquidity, we may invest such excess liquidity in corporate bonds, agency securities and other investments.
We ended the second quarter of 2022 with $48.7 million of cash and cash equivalents and $1.1 billion available under our Revolving Credit Facility. Based on management’s experience and our current level of liquidity and assets under management, we believe that our current liquidity position and cash generated from management fees will continue to be sufficient to meet our anticipated working capital needs for at least the next 12 months.
Over the short and long term, we may use cash and cash equivalents, issue additional debt or equity securities, or may seek other sources of liquidity to:
Grow our existing investment management business.
Expand, or acquire, into businesses that are complementary to our existing investment management businesses or other strategic growth initiatives.
Pay operating expenses, including cash compensation to our employees.
Repay debt obligations and interest thereon.
Opportunistically repurchase Class A Shares pursuant to the share repurchase program discussed below.
Pay income taxes and amounts due under the TRA.
Pay dividends to holders of our Class A Shares, as well as make corresponding distributions to holders of Common Units at the Blue Owl Operating Group level.
Fund investment commitments to existing or future products.
Debt Obligations
As of June 30, 2022, our long-term debt obligations consisted of $700.0 million of 2031 Notes, $400.0 million of 2032 Notes and $350.0 million of 2051 Notes. We expect to use cash on hand to pay interest and principal due on our financing arrangements over time, which would reduce amounts available for dividends and distributions to our shareholders. We may choose to refinance all or a portion of any amounts outstanding on or prior to their respective maturity dates by issuing new debt, which could result in higher borrowing costs. We may also choose to repay borrowing by using proceeds from the issuance of equity or other securities, which would dilute shareholders. See Note 4 to our Financial Statements in this report for additional information regarding our debt obligations.
Management regularly reviews Adjusted EBITDA to assess our ability to service our debt obligations. Adjusted EBITDA is equal to Distributable Earnings plus interest expense, taxes payable and TRA payments, and fixed assets depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure that supplements and should be considered in addition to and not in lieu of our GAAP results, and such measure should not be considered as indicative of our liquidity. Adjusted EBITDA may not be comparable to other similarly titled measured used by other companies. Adjusted EBITDA was $197.3 million for the quarter ended June 30, 2022. Please see “—Non-GAAP Reconciliations” for reconciliations of Adjusted EBITDA to the most comparable measures prepared in accordance with GAAP.
21

Share Repurchase Program
On May 4, 2022, Blue Owl’s Board authorized the repurchase of up to $150.0 million of Class A Shares. Under the repurchase program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual numbers repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. The share repurchase program may be changed, suspended or discontinued at any time and will terminate upon the earlier of (i) the purchase of all shares available under the repurchase program or (ii) December 31, 2024. As of June 30, 2022, no share repurchases had been made under the program. This program replaced the previously authorized program, under which program we repurchased 2,000,000 shares during the first quarter of 2022 using cash on hand. Future share repurchases may be funded using cash on hand, which would reduce amounts available for dividends and distributions, or by incurring additional debt.
Tax Receivable Agreement
As discussed in Note 11 to our Financial Statements in this report, we may in the future be required to make payments under the TRA. As of June 30, 2022, assuming no material changes in the relevant tax law and that we generate sufficient taxable income to realize the full tax benefit of the increased amortization resulting from the increase in tax basis of certain Blue Owl Operating Group assets, we expect to pay approximately $847.3 million under the TRA. Future cash savings and related payments under the TRA in respect of subsequent exchanges of Blue Owl Operating Group Units for Class A or B Shares would be in addition to these amounts.
Payments under the TRA are anticipated to increase the tax basis adjustment and, consequently, result in increasing annual amortization deductions in the taxable years of and after such increases to the original basis adjustments, and potentially will give rise to increasing tax savings with respect to such years and correspondingly increasing payments under the TRA.
The obligation to make payments under the TRA is an obligation of Blue Owl GP, and any other corporate taxpaying entities that in the future may hold GP Units, and not of the Blue Owl Operating Group. We may need to incur debt to finance payments under the TRA to the extent the Blue Owl Operating Group does not distribute cash to Registrant or Blue Owl GP in an amount sufficient to meet our obligations under the TRA.
The actual increase in tax basis of the Blue Owl Operating Group assets resulting from an exchange or from payments under the TRA, as well as the amortization thereof and the timing and amount of payments under the TRA, will vary based upon a number of factors, including the following:
The amount and timing of our taxable income will impact the payments to be made under the TRA. To the extent that we do not have sufficient taxable income to utilize the amortization deductions available as a result of the increased tax basis in the Blue Owl Operating Partnerships’ assets, payments required under the TRA would be reduced.
The price of our Class A Shares at the time of any exchange will determine the actual increase in tax basis of the Blue Owl Operating Partnerships’ assets resulting from such exchange; payments under the TRA resulting from future exchanges, if any, will be dependent in part upon such actual increase in tax basis.
The composition of the Blue Owl Operating Group assets at the time of any exchange will determine the extent to which we may benefit from amortizing the increased tax basis in such assets and thus will impact the amount of future payments under the TRA resulting from any future exchanges.
The extent to which future exchanges are taxable will impact the extent to which we will receive an increase in tax basis of the Blue Owl Operating Group assets as a result of such exchanges, and thus will impact the benefit derived by us and the resulting payments, if any, to be made under the TRA.
The tax rates in effect at the time any potential tax savings are realized, which would affect the amount of any future payments under the TRA.
Depending upon the outcome of these and other factors, payments that we may be obligated to make under the TRA in respect of exchanges could be substantial. In light of the numerous factors affecting our obligation to make payments under the TRA, the timing and amounts of any such actual payments are not reasonably ascertainable.
22

Warrants
We classify the warrants issued in connection with the Business Combination as liabilities in our consolidated and combined statements of financial condition, as in the event of a change in control, warrant holders have the ability to demand cash settlement from us. In addition, we have the option to cash settle outstanding warrants when certain criteria is met, as described in Note 2 to our Financial Statements. To the extent we have insufficient cash on hand or that we opt to, we may rely on debt or equity financing to facilitate these transactions in the future if needed.
On July 18, 2022, we announced that we will redeem all of the outstanding Public Warrants on August 18, 2022 (the “Redemption Date”). Holders may exercise Public Warrants and receive Class A Shares in exchange for payment in cash for the warrant exercise price. Alternatively, a holder may surrender Public Warrants for 0.239 Class A Shares for each Public Warrant. Any Public Warrants outstanding on the Redemption Date will be redeemed in cash at a price of $0.10 per Public Warrant. The Private Placement Warrants are not redeemable at our option and will continue to remain outstanding following the Redemption Date.
Oak Street Cash Earnout and Wellfleet Earnout
A portion of the Oak Street Cash Earnout and the Wellfleet Earnout (each as defined in Note 3 to our Financial Statements) is classified as a liability and represents the fair value of the obligation to make future cash payments that would need to be made if all the respective Oak Street Triggering Events and Wellfleet Triggering Events occur. As we approach each Triggering Event, we generally would expect the respective liabilities to increase due to the passage of time, which would result in mark-to-market losses being recognized in our consolidated statement of operations. Further, the cash portion classified as compensation expense will be expensed and a corresponding accrued compensation liability will be recorded over the service period. To the extent we have insufficient cash on hand or that we opt to, we may rely on debt or equity financing to facilitate these transactions in the future. For details on the Oak Street Cash Earnout see Note 3 to the consolidated and combined audited financial statements included in the Company’s Annual Report for additional information. For the Wellfleet Earnout see Note 3 to our Financial Statements for additional information.
Dividends and Distributions
We intend to continue to pay to Class A Shareholders (and Class B Shareholders in the future to the extent any Class B Shares are outstanding) a quarterly dividend representing approximately 85% of Distributable Earnings following the end of each quarter. Blue Owl Capital Inc.’s share of Distributable Earnings, subject to adjustment as determined by our Board to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and products, to comply with applicable law, any of our debt instruments or other agreements, or to provide for future cash requirements such as tax-related payments, operating reserves, clawback obligations and dividends to shareholders for any ensuing quarter. All of the foregoing is subject to the qualification that the declaration and payment of any dividends are at the sole discretion of our Board, and our Board may change our dividend policy at any time, including, without limitation, to reduce or eliminate dividends entirely.
The Blue Owl Operating Partnerships will make cash distributions (“Tax Distributions”) to the partners of such partnerships, including to Blue Owl GP, if we determine that the taxable income of the relevant partnership will give rise to taxable income for its partners. Generally, Tax Distributions will be computed based on our estimate of the taxable income of the relevant partnership allocable to a partner multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, New York State and New York City income tax rates prescribed for an individual or corporate resident in New York City (taking into account certain assumptions set forth in the relevant partnership agreements). Tax Distributions will be made only to the extent distributions from the Blue Owl Operating Partnerships for the relevant year were otherwise insufficient to cover the estimated assumed tax liabilities.
Holders of our Class A and B Shares may not always receive distributions or may receive lower distributions on a per share basis at a time when we, indirectly through Blue Owl GP, and holders of our Common Units are receiving distributions on their interests, as distributions to the Registrant and Blue Owl GP may be used to settle tax and TRA liabilities, if any, and other obligations.
Dividends are expected to be treated as qualified dividends under current law to the extent of the Company’s current and accumulated earnings and profits, with any excess dividends treated as a return of capital to the extent of a shareholder’s basis, and any remaining excess generally treated as gain realized on the sale or other disposition of stock.
23

Risks to our Liquidity
Our ability to obtain financing provides us with additional sources of liquidity. Any new financing arrangement that we may enter into may have covenants that impose additional limitations on us, including with respect to making distributions, entering into business transactions or other matters, and may result in increased interest expense. If we are unable to secure financing on terms that are favorable to us, our business may be adversely impacted. No assurance can be given that we will be able to issue new debt, enter into new credit facilities or issue equity or other securities in the future on attractive terms or at all.
Adverse market conditions, including from unexpectedly high and persistent inflation, an increasing interest rate environment, geopolitical events, and ongoing impact from COVID-19 globally, may negatively impact our liquidity. Cash flows from management fees may be impacted by a slowdown or a decline in fundraising and deployment, as well as declines in the value of investments held in certain of our products.
LIBOR Transition
On March 5, 2021, the UK Financial Conduct Authority announced that it would phase out LIBOR as a benchmark immediately after December 31, 2021, for sterling, euro, Japanese yen, Swiss franc and 1-week and 2-month U.S. Dollar settings and immediately after June 30, 2023, the remaining U.S. Dollar settings. Our Notes are fixed rate borrowings, and therefore the LIBOR phase out will not have an impact on this borrowing. The Revolving Credit Facility is subject to SOFR rates at our option, or alternative rates that are not tied to LIBOR. Certain of our products hold investments and have borrowings that are tied to LIBOR, and we continue to focus on managing any risk related to those exposures. Our senior management has oversight of these transition efforts. See “Risk Factors—Risks Related to Legal and Regulatory Environment—Changes to the method of determining the London Interbank Offered Rate (“LIBOR”) or the selection of a replacement for LIBOR may affect the value of investments held by our products and could affect our results of operations and financial results” in our Annual Report.
Cash Flows Analysis
Six Months Ended June 30,
(dollars in thousands) 2022 2021 $ Change
Net cash provided by (used in):
Operating activities $ 245,494  $ 18,320  $ 227,174 
Investing activities (175,111) (977,440) 802,329 
Financing activities (64,220) 1,383,523  (1,447,743)
Net Change in Cash and Cash Equivalents $ 6,163  $ 424,403  $ (418,240)
Operating Activities. Our net cash flows from operating activities are generally comprised of management fees, less cash used for operating expenses, including interest paid on our debt obligations. One of our largest operating cash outflows generally relates to bonus expense, which are generally paid out during the first quarter of the year following the expense.
Net cash flows from operating activities increased from the prior year period due to the inclusion of the GP Capital Solutions and Real Estate related cash flows, as well as higher management fees from our Direct Lending products. These increases were partially offset by higher 2021 discretionary bonuses, which were paid in the first quarter of 2022, as compared to discretionary bonuses in 2020, which were paid in the first quarter of 2021.
Investing Activities. Cash flows from investing activities for 2022 were primarily related to cash consideration paid in connection with the Wellfleet Acquisition. In addition, investment activities also included cash outflows related to office space-related leasehold improvements and investments by us into our Direct Lending products. In 2021, cash flows from investing activities were primarily related to the cash consideration paid in connection with the Dyal Acquisition.
Financing Activities. Cash flows from financing activities for 2022 were primarily driven by dividends on our Class A Shares and related distributions on our Common Units (noncontrolling interests). Our cash flows from financing activities also benefited from a net increase related to the proceeds from our 2032 Notes, which were used to finance working capital needs and general capital purposes, partially offset by repayments under our Revolving Credit Facility.

24

Cash flows related to financing activities for the first half of 2021 were primarily driven by cash proceeds from the Business Combination, as well as related cash consideration paid to certain pre-Business Combination Owl Rock owners. Additionally, distributions of pre-Business Combination-related earnings were also made during the first half of 2021, with a final distribution of $52.0 million related to pre-Business Combination-related earnings to be made during the third quarter of 2021 (i.e., not included in the cash flows presented above). Cash flows related to financing activities in the first half of 2021 also included the proceeds from our 2031 Notes, which proceeds were used in part to repay our previously outstanding Term Loan. We also made various borrowings and repayments under our previously outstanding revolving credit facilities.
Critical Accounting Estimates
We prepare our Financial Statements in accordance with U.S. GAAP. In applying many of these accounting principles, we make estimates that affect the reported amounts of assets, liabilities, revenues and expenses in our consolidated and combined financial statements. We base our estimates on historical experience and other factors that we believe are reasonable under the circumstances. These estimates, however, are subjective and subject to change, and actual results may differ materially from our current estimates due to the inherent nature of these estimates, including uncertainty in the current economic environment due to unexpectedly high and persistent inflation, a shifting interest rate environment, geopolitical events, and ongoing impact from COVID-19 globally. For a summary of our significant accounting policies, see Note 2 to our Financial Statements.
Estimation of Fair Values
Investments Held by our Products
The fair value of the investments held by our Direct Lending products is the primary input to the calculation for the majority of our management fees. Management fees from our GP Capital Solutions and Real Estate products are generally based on commitments or investment cost, so our management fees are generally not impacted by changes in the estimated fair values of investments held by these products. However, to the extent that management fees are calculated based on investment cost of the product’s investments, the amount of fees that we may charge will increase or decrease from the effect of changes in the cost basis of the product’s investments, including potential impairment losses. In the absence of observable market prices, we use valuation methodologies applied on a consistent basis and assumptions that we believe market participants would use to determine the fair value of the investments. For investments where little market activity exists, the determination of fair value is based on the best information available, we incorporate our own assumptions and involves a significant degree of judgment, and the consideration of a combination of internal and external factors.
Our products generally value their investments at fair value, as determined in good faith by each product’s respective board of directors or valuation committee, as applicable, based on, among other things, the input of third party valuation firms and taking into account the nature and realizable value of any collateral, an investee’s ability to make payments and its earnings, the markets in which the investee operates, comparison to publicly traded companies, discounted cash flows, current market interest rates and other relevant factors. Because such valuations are inherently uncertain, the valuations may fluctuate significantly over time due to changes in market conditions. These valuations would, in turn, have corresponding proportionate impacts on the amount of management fees that we may earn from certain products on which revenues are based on the fair value of investments.
TRA Liability
We carry a portion of our TRA liability at fair value, as it is contingent consideration related to the Dyal Acquisition. The valuation of this portion of the TRA liability is mostly sensitive to our expectation of future cash savings that we may ultimately realize related to our tax goodwill and other intangible assets deductions. We then apply a discount rate that we believe is appropriate given the nature of and expected timing of payments of the liability. A decrease in the discount rate assumption would result in an increase in the fair value estimate of the liability, which would have a correspondingly negative impact on our GAAP results of operations. However, payments under the TRA are ultimately only made to the extent we realize the offsetting cash savings on our income taxes due to the tax goodwill and other intangibles deduction. See Note 9 to our Financial Statements for additional details.
25

Earnout Liability and Private Placement Warrants Liability
The fair values of our Earnout Securities liability and Private Placement Warrants liability were determined using various significant unobservable inputs. The assumptions used could have a material impact on the valuation of these liabilities, and include our best estimate of expected volatility, expected holding periods and appropriate discounts for lack of marketability. Changes in the estimated fair values of these liabilities may have material impacts on our results of operations in any given period, as any increases in these liabilities have a corresponding negative impact on our GAAP results of operations in the period in which the changes occur. See Note 9 to our Financial Statements for additional details.
Equity-based Compensation
The fair values of our equity-based compensation RSU, Incentive Unit grants and Wellfleet Earnout are generally determined using our Class A Share price on the grant date, adjusted for the lack of dividend participation during the vesting period, and the application of a discount for lack of marketability on RSUs and Incentive Units that are subject to a one-year post-vesting transfer restriction. The higher these discounts, the lower the compensation expense taken over time for these grants.
For the Oak Street Earnout Units that were classified as equity-based compensation for GAAP, we used Monte Carlo simulations that had various significant unobservable inputs. The assumptions used have a material impact on the valuation of these grants, and include our best estimate of expected volatility, expected holding periods and appropriate discounts for lack of marketability. The higher the expected volatility, the higher the compensation expense taken each period for these grants. The higher the expected holding periods and discount for lack of marketability, the lower the compensation expense taken each period for these grants. See Note 8 to our Financial Statements for additional details.
Deferred Tax Assets
Substantially all of our deferred tax assets relate to the goodwill and other intangible assets deductible for tax purposes, as well as subsequent payments expected to be made under the TRA. In accordance with relevant tax rules, we expect to take substantially all of these goodwill and other intangible deductions over a 15-year period following the applicable transaction. To the extent we generate insufficient taxable income to take the full deduction in any given year, we will generate a net operating loss (“NOL”) that is available for us to use over an indefinite carryforward period in order to fully realize the deferred tax assets.
When evaluating the realizability of deferred tax assets, all evidence—both positive and negative—is considered. This evidence includes, but is not limited to, expectations regarding future earnings, future reversals of existing temporary tax differences and tax planning strategies. We did not take into account any tax planning strategies when arriving at this conclusion; however, the other assumptions underlying the taxable income estimates, are based on our near-term operating model. If we experience a significant decline in AUM for any extended time during the period for which these estimates relate and we do not otherwise experience offsetting growth rates in other periods, we may not generate taxable income sufficient to realize the deferred tax assets and may need to record a valuation allowance. However, given the indefinite carryforward period available for NOLs and the conservative estimates used to prepare the taxable income projections, the sensitivity of our estimates and assumptions are not likely to have a material impact on our conclusion that a valuation allowance is not needed.
Impairment of Goodwill and Other Intangible Assets
Our ongoing accounting for goodwill and other intangible assets acquired as part of the Business Combination requires us to make significant estimates and assumptions as we exercise judgement to evaluate these assets for impairment. We generally undertake a qualitative review of factors that may indicate whether an impairment exists. We take into account factors such as the growth in AUM and FPAUM, general economic conditions, and various other factors that require judgement in deciding whether a quantitative analysis should be undertaken. Our evaluation for indicators of impairment may not capture a potential impairment, which could result in an overstatement of the carrying values of goodwill and other intangible assets.
26

Variable Interest Entities
The determination of whether to consolidate a variable interest entity (“VIE”) under GAAP requires a significant amount of judgment concerning the degree of control over an entity by its holders of variable interests. To make these judgments, we conduct an analysis, on a case-by-case basis, of whether we are the primary beneficiary and are therefore required to consolidate an entity. We continually reconsider whether we should consolidate a VIE. Upon the occurrence of certain events, such as modifications to organizational documents and investment management agreements of our products, we will reconsider our conclusion regarding the status of an entity as a VIE. Our judgement when analyzing the status of an entity and whether we consolidate an entity could have a material impact on individual line items within our consolidated and combined statements, as a change in our conclusion would have the effect of grossing up the assets, liabilities, revenues and expenses of the entity being evaluated. In light of the relevantly insignificant direct and indirect investments into our products, the likelihood of a reasonable change in our estimation and judgement would likely not result in a change in our conclusions to consolidate or not consolidate any VIEs to which we have exposure.
Impact of Changes in Accounting on Recent and Future Trends
We believe that none of the changes to GAAP that went into effect during the three months ended June 30, 2022, or that have been issued but that we have not yet adopted, are expected to substantively impact our future trends.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Our primary exposure to market risk is the indirect impact that movements in the fair value of investments in products has on our management fees. In our Direct Lending products, our management fees are generally based on the fair value of the gross assets held by such products, and therefore changes in the fair value of those assets impacts the management fees we earn in any given period. These management fees will be increased (or reduced) in direct proportion to the effect of changes in the market value of our investments in the related funds. The proportion of our management fees that are based on fair value is dependent on the number and types of investment funds in existence and the current stage of each fund’s life cycle. Management fees from our GP Capital Solutions and Real Estate products, however, are generally based on capital commitments or investment cost, and therefore management fees are not materially impacted by changes in fair values of the underlying investments held by those products. To the extent that management fees are calculated based on investment cost of the product’s investments, the amount of fees that we may charge will increase or decrease from the effect of changes in the cost basis of the product’s investments, including potential impairment losses.
Interest Rate Risk
Our Notes bear interest at fixed rates. Our Revolving Credit Facility bears interest at a variable rate based on SOFR (or an alternative base rate at our option). As of the date of this report, we have no borrowings outstanding under our Revolving Credit Facility, and therefore changes in interest rates would not have a material impact on interest expense.
 
Credit Risk
We generally endeavor to minimize our risk of exposure by limiting to reputable financial institutions the counterparties with which we enter into financial transactions. As of June 30, 2022 and December 31, 2021, we had cash balances with financial institutions in excess of Federal Deposit Insurance Corporation insured limits. We seek to mitigate this exposure by monitoring the credit standing of these financial institutions.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives.
27

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2022. Based upon that evaluation and subject to the foregoing, our principal executive officer and principal financial officer concluded that, as of June 30, 2022, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We may from time to time be involved in litigation and claims incidental to the conduct of our business. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings against us. See “— Item 1A. Risk Factors.” We are not currently subject to any pending legal (including judicial, regulatory, administrative or arbitration) proceedings that we expect to have a material impact on our consolidated and combined financial statements. However, given the inherent unpredictability of these types of proceedings and the potentially large and/or indeterminate amounts that could be sought, an adverse outcome in certain matters could have a material effect on our financial results in any particular period. See Note 11 to our Financial Statements for additional information.
Item 1A. Risk Factors.
Some factors that could cause our actual results to differ materially from those results in this report are described as risks in our Annual Report. Any of these factors could materially and adversely affect our business, financial condition, results of operations and cash flows. As of the date of this report, there have been no material changes to the risk factors previously disclosed in the Annual Report. We may, however, disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits
Exhibit Number Description
101*
Interactive data files pursuant to Rule 405 of Regulation S-T, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated and Combined Statements of Financial Condition as of June 30, 2022 and December 31, 2021, (ii) the Consolidated and Combined Statements of Operations for the three and six months ended June 30, 2022 and 2021, (iii) the Consolidated and Combined Statements of Changes in Shareholders’ Equity (Deficit) for the three and six months ended June 30, 2022 and 2021, (iv) the Consolidated and Combined Statements of Cash Flows for the six months ended June 30, 2022 and 2021, and (v) the Notes to the Consolidated and Combined Financial Statements
104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Filed herewith

30


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 4, 2022
Blue Owl Capital Inc.
By: /s/ Alan Kirshenbaum
Alan Kirshenbaum
Chief Financial Officer
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INDEX TO FINANCIAL STATEMENTS (UNAUDITED)
Page
Consolidated and Combined Statements of Financial Condition as of June 30, 2022 and December 31, 2021
Consolidated and Combined Statements of Operations for the three and six months ended ended June 30, 2022 and 2021
Consolidated and Combined Statements of Changes in Shareholders’ Equity (Deficit) for the three and six months ended ended June 30, 2022 and 2021
Consolidated and Combined Statements of Cash Flows for the six months ended June 30, 2022 and 2021
Notes to Consolidated and Combined Financial Statements
F-1


Blue Owl Capital Inc.
(Prior to May 19, 2021, Owl Rock)
Consolidated and Combined Statements of Financial Condition (Unaudited)
(Dollars in Thousands, Except Per Share Data)
  June 30,
2022
December 31,
2021
Assets  
Cash and cash equivalents $ 48,730  $ 42,567 
Due from related parties 281,863  224,576 
Operating lease assets 84,532  86,033 
Strategic Revenue-Share Purchase consideration, net 477,478  495,322 
Deferred tax assets 683,308  635,624 
Intangible assets, net 2,535,920  2,611,411 
Goodwill 4,205,159  4,132,245 
Other assets, net (includes investments of $— and $1,311 at fair value, respectively)
101,692  38,620 
Total Assets $ 8,418,682  $ 8,266,398 
Liabilities
Debt obligations, net $ 1,413,211  $ 1,174,167 
Accrued compensation 163,966  155,606 
Operating lease liabilities 89,872  88,480 
Deferred tax liabilities 49,850  48,962 
TRA liability (includes $119,608 and $111,325 at fair value, respectively)
734,720  670,676 
Warrant liability, at fair value 30,317  68,798 
Earnout liability, at fair value 159,255  143,800 
Accounts payable, accrued expenses and other liabilities 90,453  68,339 
Total Liabilities 2,731,644  2,418,828 
Commitments and Contingencies (Note 11)
Shareholders’ Equity
Class A Shares, par value $0.0001 per share, 2,500,000,000 authorized, 420,102,492 and 404,919,411 issued and outstanding, respectively
42  40 
Class C Shares, par value $0.0001 per share, 1,500,000,000 authorized, 657,808,589 and 674,766,200 issued and outstanding, respectively
66  67 
Class D Shares, par value $0.0001 per share, 350,000,000 authorized, 319,132,127 and 319,132,127 issued and outstanding, respectively
32  32 
Additional paid-in capital 2,214,274  2,160,934 
Accumulated deficit (591,727) (497,506)
Total Shareholders’ Equity Attributable to Blue Owl Capital Inc. 1,622,687  1,663,567 
Shareholders’ equity attributable to noncontrolling interests 4,064,351  4,184,003 
Total Shareholders’ Equity 5,687,038  5,847,570 
Total Liabilities and Shareholders’ Equity $ 8,418,682  $ 8,266,398 
The accompanying notes are an integral part of these consolidated and combined financial statements.
F-2


Blue Owl Capital Inc.
Consolidated and Combined Statements of Operations (Unaudited)
(Prior to May 19, 2021, Owl Rock)
(Dollars in Thousands, Except Per Share Data) 
  Three Months Ended June 30, Six Months Ended June 30,
  2022 2021 2022 2021
Revenues
Management fees, net (includes Part I Fees of $46,346, $36,073, $93,085 and $64,987, respectively)
$ 284,325  $ 142,135  $ 531,957  $ 236,848 
Administrative, transaction and other fees 42,921  37,125  71,266  50,636 
Total Revenues, Net 327,246  179,260  603,223  287,484 
Expenses
Compensation and benefits 218,118  1,221,565  412,010  1,269,549 
Amortization of intangible assets 64,885  21,336  126,411  21,336 
General, administrative and other expenses 54,389  51,520  97,683  66,380 
Total Expenses 337,392  1,294,421  636,104  1,357,265 
Other Income (Loss)
Net losses on investments (123) —  (118) — 
Net losses on retirement of debt —  (16,145) —  (16,145)
Interest expense (15,051) (5,817) (27,885) (11,675)
Change in TRA liability 1,370  (1,146) (8,282) (1,146)
Change in warrant liability 20,723  (15,300) 38,481  (15,300)
Change in earnout liability (208) (462,970) (704) (462,970)
Total Other Income (Loss) 6,711  (501,378) 1,492  (507,236)
Loss Before Income Taxes (3,435) (1,616,539) (31,389) (1,577,017)
Income tax expense (benefit) 5,631  (29,199) 593  (29,011)
Consolidated and Combined Net Loss (9,066) (1,587,340) (31,982) (1,548,006)
Net loss attributable to noncontrolling interests 7,940  1,224,996  19,041  1,225,076 
Net Loss Attributable to Blue Owl Capital Inc. (After May 19, 2021) / Owl Rock (Prior to May 19, 2021) $ (1,126) $ (362,344) $ (12,941) $ (322,930)
May 19, 2021 through
June 30, 2021
May 19, 2021 through
June 30, 2021
Net Loss Attributable to Class A Shares $ (1,126) $ (397,189) $ (12,941) $ (397,189)
Net Loss per Class A Share
Basic $ 0.00  $ (1.21) $ (0.03) $ (1.21)
Diluted $ 0.00  $ (1.23) $ (0.03) $ (1.23)
Weighted-Average Class A Shares
Basic(1)
422,631,967 329,055,258 419,896,221 329,055,258
Diluted 1,407,843,503 1,252,092,338 419,896,221 1,252,092,338
(1)Included in the weighted-average Class A Shares outstanding were RSUs that have vested but have not been settled in Class A Shares. These RSUs do not participate in dividends until settled in Class A Shares. See Note 13.
The accompanying notes are an integral part of these consolidated and combined financial statements.
F-3


Blue Owl Capital Inc.
Consolidated and Combined Statements of Changes in Shareholders’ Equity (Deficit) (Unaudited)
(Prior to May 19, 2021, Owl Rock)
(Dollars in Thousands, Except Per Share Data) 
  Three Months Ended June 30, Six Months Ended June 30,
2022 2021