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 ~~September 30, 2021~~March 31, 2022


☐			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

___________________________

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

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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

o☒

Accelerated filer

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 ~~November 5, 2021~~May 4, 2022
Class A common stock, par value $0.0001						~~364,697,135~~407,682,203
Class B common stock, par value $0.0001						—
Class C common stock, par value $0.0001						~~688,914,013~~670,147,025
Class D common stock, par value $0.0001						319,132,127

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TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION	17
Item 1.	Financial Statements ~~- Unaudited~~	1
	~~Consolidated and Combined Statements of Financial Condition as of~~ ~~September~~ ~~30, 2021 and December 31, 2020~~	1
	~~Consolidated and Combined Statements of Operations for the Three and~~ ~~Nine~~ ~~Months Ended~~ ~~September~~ ~~30, 2021 and 2020~~	2
	~~Consolidated and Combined Statements of Changes in Shareholders’ Equity (Deficit) for the Three and~~ ~~Nine~~ ~~months Ended~~ ~~September~~ ~~30, 2021 and 2020~~	3
	~~Consolidated and Combined Statements of Cash Flows for the~~ ~~Nine~~ ~~Months Ended~~ ~~September~~ ~~30, 2021 and 2020~~	6
	~~Notes to Consolidated and Combined Financial Statements~~	7





Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	367
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5723
Item 4.	Controls and Procedures	5724

PART II	OTHER INFORMATION	5825
Item 1.	Legal Proceedings	5825
Item 1A.	Risk Factors	5825
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5925
Item 3.	Defaults Upon Senior Securities	5925
Item 4.	Mine Safety Disclosures	~~Mine Safety Disclosures~~	5925
Item 5.	Other Information	5926
Item 6.	Exhibits	6026
~~SIGNATURES~~Signatures		6127
Index to Financial Statements		F -1

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~~Defined Terms~~

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; ~~and~~ (iii) uncalled capital ~~commitments.~~commitments; and (iv) total managed assets for certain Real Estate products.

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”) ~~and~~, Owl Rock Technology Finance Corp. II (“ORTF II”), Owl Rock Core Income Corp. (“ORCIC”).

~~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 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.

~~Registrant~~						~~Refers to Blue~~ Owl ~~Capital Inc.~~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 ~~Capital~~ Holdings, collectively.

Blue Owl ~~Carry~~Securities						Refers to Blue Owl ~~Capital Carry LP.~~Securities LLC,

a Delaware limited liability company. Blue Owl ~~Capital Holdings~~Securities is a broker-dealer registered with the SEC, a member of FINRA and the						~~Refers to~~SIPC. Blue Owl ~~Capital Holdings LP.~~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.

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 and opportunistic lending. Direct Lending products ~~comprise~~are managed by the ~~pre-Business combination~~ Owl Rock ~~business.~~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.~~Combination, and is now a division of Blue Owl.

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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, 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 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 three existing ~~and one emerging~~ investment strategies: GP minority equity investments, GP debt financing and professional sports minority ~~investments and co-investments and structured equity.~~investments. GP Capital Solutions products ~~comprise~~are managed by the ~~pre-Business Combination~~ Dyal Capital ~~business.~~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 ~~(excluding certain assets)~~(“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.

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 ~~May 19,~~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.

~~iii~~

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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 ~~any amendments to those filings~~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 ~~and is not~~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 ~~in this report and in the Current Report on Form 8-K filed on May 21, 2021~~ under the headings ~~“Owl Rock’s~~“Item 1A. Risk Factors” and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations,” included in Exhibit 99.5, and “Dyal’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in Exhibit 99.6, and “Risk Factors.~~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.

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PART I—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.

~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Consolidated~~Item 2. Management’s Discussion and ~~Combined Statements~~Analysis of Financial Condition ~~(Unaudited)~~

~~(Dollars in Thousands, Except Per Share Data)~~

September 30, 2021 December 31, 2020
Assets
Cash and cash equivalents $ 138,875 $ 11,630
Investments (includes $292,602 and $— at fair value) 300,649 2,678
Due from related parties 184,349 92,698
Operating lease assets 66,605 —
Strategic Revenue-Share Purchase consideration, net 504,244 —
Deferred tax assets 514,098 800
Intangible assets, net 2,150,473 —
Goodwill 3,563,422 —
Other assets, net 27,434 13,791
Total Assets $ 7,450,149 $ 121,597
Liabilities
Debt obligations, net $ 683,557 $ 356,386
Accrued compensation 173,493 207,957
Operating lease liabilities 67,846 —
Deferred tax liabilities 50,386 —
TRA liability (includes $123,122 and $— at fair value) 482,510 —
Warrant liability, at fair value 67,891 —
Earnout Securities liability, at fair value 661,707 —
Accounts payable, accrued expenses and other liabilities 81,166 58,415
Total Liabilities 2,268,556 622,758
Commitments and Contingencies (Note 11) 0 0
Shareholders’ Equity (Deficit)
Members’ deficit prior to the Business Combination — (507,687)
Class A Shares, par value $0.0001 per share, 2,500,000,000 and none authorized, 357,201,703 and none issued and outstanding 36 —
Class C Shares, par value $0.0001 per share, 1,500,000,000 and none authorized, 658,647,360 and none issued and outstanding 66 —
Class D Shares, par value $0.0001 per share, 350,000,000 and none authorized, 306,894,250 and none issued and outstanding 31 —
Class E Shares, par value $0.0001 per share, 100,000,000 and none authorized, 7,495,432 and none issued and outstanding 1 —
Additional paid-in capital 1,879,040 —
Accumulated deficit (463,612) —
Total Shareholders’ Equity Attributable to Blue Owl Capital Inc. 1,415,562 —
Shareholders’ equity attributable to noncontrolling interests 3,766,031 6,526
Total Shareholders’ Equity (Deficit) 5,181,593 (501,161)
Total Liabilities and Shareholders’ Equity (Deficit) $ 7,450,149 $ 121,597
and Results of Operations.

The ~~accompanying notes are an integral part~~following Management’s Discussion and Analysis of ~~these~~Financial Condition and Results of Operations (“MD&A”), should be read in conjunction with the unaudited consolidated and combined financial ~~statements.~~

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 First Quarter Overview


	Three Months Ended March 31,
(dollars in thousands)		2022		2021
Net (Loss) Income Attributable to Blue Owl Capital Inc. (After May 19, 2021) / Owl Rock (Prior to May 19, 2021)		$	(11,815)	$	39,414



Fee-Related Earnings(1)		$	171,383	$	46,350

Distributable Earnings(1)		$	155,726	$	40,254

~~Table~~(1) For the specific components and calculations of ~~Contents~~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.”

~~Blue Owl~~Our results for first quarter of 2021 do not include the results of Dyal Capital ~~Inc.~~

~~Consolidated and Combined Statements~~or Oak Street; therefore, prior period amounts are not comparable to current period. Please see “—GAAP Results of Operations ~~(Unaudited)~~

~~(Prior to May 19, 2021, Owl Rock)~~

Analysis” ~~(Dollars in Thousands, Except Per Share Data)~~and “—Non-GAAP Analysis”

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Revenues
Management fees, net (includes Part I Fees of $43,659, $2,701, $108,646 and $9,052) $ 203,750 $ 39,146 $ 440,598 $ 112,830
Administrative, transaction and other fees 44,125 14,897 94,761 30,979
Total Revenues, Net 247,875 54,043 535,359 143,809
Expenses
Compensation and benefits 96,910 44,214 1,366,459 108,658
Amortization of intangible assets 46,191 — 67,527 —
General, administrative and other expenses 28,438 13,642 94,818 48,457
Total Expenses 171,539 57,856 1,528,804 157,115
Other Loss
Net losses on investments (145) — (145) —
Net losses on retirement of debt — — (16,145) —
Interest expense (6,112) (6,127) (17,787) (18,007)
Change in TRA liability (4,733) — (5,879) —
Change in warrant liability (27,462) — (42,762) —
Change in Earnout Securities liability (293,122) — (756,092) —
Total Other Loss (331,574) (6,127) (838,810) (18,007)
Loss Before Income Taxes (255,238) (9,940) (1,832,255) (31,313)
Income tax benefit (14,391) (26) (43,402) (119)
Consolidated and Combined Net Loss (240,847) (9,914) (1,788,853) (31,194)
Net loss attributable to noncontrolling interests 187,524 1,292 1,412,600 3,069
Net Loss Attributable to Blue Owl Capital Inc. (After May 19, 2021) / Owl Rock (Prior to May 19, 2021) $ (53,323) $ (8,622) $ (376,253) $ (28,125)
Three Months Ended September 30, 2021
May 19, 2021 through
September 30, 2021
Net Loss Attributable to Class A Shares $ (53,323) $ (450,512)
Net Loss per Class A Share
Basic $ (0.16) $ (1.34)
Diluted $ (0.16) $ (1.36)
Weighted-Average Class A Shares
Basic(1)
338,472,456 335,472,904
Diluted 338,472,456 1,281,179,067

~~(1)Includes 9,050,000 fully vested RSUs that do not participate in dividends until settled. See Note 13.~~

~~The accompanying notes are an integral part of these consolidated and combined financial statements.~~

~~Table of Contents~~

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 September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Additional Paid-in Capital
Beginning balance $ 1,496,826 $ — $ — $ —
Transfer of predecessor Owl Rock members’ deficit to additional paid-in capital and noncontrolling interests — — (138,133) —
Cash proceeds from the Business Combination — — 1,738,478 —
Offering costs related to the Business Combination (114) — (126,423) —
Allocation of cash proceeds to warrant liability — — (25,128) —
Allocation to earnout liability for Class E Shares issued in connection with the Business Combination — — (83,949) —
Deferred taxes and TRA liability recognized in the Business Combination (excluding Dyal Acquisition) — — 145,163 —
Reallocation between additional paid-in capital and noncontrolling interests related to the Business Combination — — (325,222) —
Reallocation between additional paid-in capital and noncontrolling interests due to changes in Blue Owl Operating Group ownership and related tax impacts 67,582 — 67,582 —
Equity-based compensation — — 311,926 —
Share issuance in connection with Strategic Revenue-Share Purchase and related tax impacts 200,434 — 200,434 —
Settlement of Earnout Securities liability and related tax and TRA impacts 114,312 — 114,312 —
Ending Balance $ 1,879,040 $ — $ 1,879,040 $ —
Accumulated Deficit
Beginning balance $ (397,189) $ — $ — $ —
Cash dividends declared on Class A Shares (13,100) — (13,100) —
Comprehensive loss following the Business Combination Date (53,323) — (450,512) —
Ending Balance $ (463,612) $ — $ (463,612) $ —
Total Shareholders' Equity Attributable to Blue Owl Capital Inc. $ 1,415,562 $ — $ 1,415,562 $ —
Shareholders’ Equity Attributable to Noncontrolling Interests
Beginning balance $ 3,283,985 $ 4,908 $ 6,526 $ 2,259
Transfer of predecessor Owl Rock member’ deficit to additional paid-in capital and noncontrolling interests — — (398,438) —
Common Units issued as consideration related to the Dyal Acquisition — — 4,285,359 —
Acquisition of noncontrolling interests in the Blue Owl Operating Group in connection with the Business Combination — — (491,956) —
Allocation to earnout liability for Seller Earnout Units issued in connection with the Business Combination — — (160,540) —
Reallocation between additional paid-in capital and noncontrolling interests related to the Business Combination — — 325,222 —
Reallocation between additional paid-in capital and noncontrolling interests due to changes in Blue Owl Operating Group ownership (71,257) — (71,257) —
Contributions 3,566 2,483 10,737 7,085
Distributions (47,688) (319) (49,167) (495)
Equity-based compensation 15,722 — 952,918 —
Share issuance in connection with Strategic Revenue-Share Purchase 331,903 — 331,903 —
Settlement of Earnout Securities liability 437,324 — 437,324 —
Comprehensive loss (187,524) (1,292) (1,412,600) (3,069)
Ending Balance $ 3,766,031 $ 5,780 $ 3,766,031 $ 5,780
Total Shareholders' Equity $ 5,181,593 $ 5,780 $ 5,181,593 $ 5,780
Cash Dividends Paid per Class A Share $ 0.04 $ — $ 0.04 $ —

~~Table of Contents~~

~~The accompanying notes are an integral part of these consolidated and combined financial statements.~~

~~Table of Contents~~

~~Blue Owl Capital Inc.~~

~~Consolidated and Combined Statements of Cash Flows (Unaudited)~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~(Dollars in Thousands)~~

Nine Months Ended September 30,
2021 2020
Cash Flows from Operating Activities
Consolidated and combined net loss $ (1,788,853) $ (31,194)
Adjustments to reconcile consolidated and combined net loss to net cash from operating activities:
Amortization of intangible assets 67,527 —
Equity-based compensation 1,174,319 12,300
Depreciation and amortization of fixed assets 456 689
Amortization of debt discounts and deferred financing costs 1,125 556
Amortization of investment discounts and premiums 451 —
Non-cash lease expense 625 —
Net losses on retirement of debt 16,145 —
Net (gains) losses on investments, net of dividends 185 —
Change in TRA liability 5,879 —
Change in warrant liability 42,762 —
Change in Earnout Securities liability 756,092 —
Deferred income taxes (43,793) —
Changes in operating assets and liabilities:
Due from related parties (78,209) (4,292)
Strategic Revenue-Share Purchase consideration (49,563) —
Other assets, net (8,480) (2,831)
Accrued compensation 48,685 17,612
Accounts payable, accrued expenses and other liabilities (17,983) (10,393)
Net Cash Provided by (Used in) Operating Activities 127,370 (17,553)
Cash Flows from Investing Activities
Purchase of fixed assets (2,043) (328)
Purchase of investments (304,221) —
Proceeds from investment sales and maturities 5,613 —
Cash consideration paid for Dyal Capital, net of cash consideration received (973,457) —
Net Cash Used in Investing Activities (1,274,108) (328)
Cash Flows from Financing Activities
Cash proceeds from the Business Combination 1,738,603 —
Offering costs related to the Business Combination (126,423) —
Acquisition of noncontrolling interests in the Blue Owl Operating Group in connection with the Business Combination (491,956) —
Proceeds from debt obligations 896,008 125,313
Debt issuance costs (9,862) (405)
Repayments of debt obligations, including prepayment costs (577,713) (88,846)
Contributions from members prior to the Business Combination — 7,072
Dividends paid on Class A Shares (13,100) —
Distributions to members prior to the Business Combination (103,144) (25,320)
Contributions from noncontrolling interests 10,737 —
Distributions to noncontrolling interests (49,167) —
Net Cash Provided by Financing Activities 1,273,983 17,814
Net Increase (Decrease) in Cash and Cash-equivalents 127,245 (67)
Cash and cash-equivalents, beginning of period 11,630 7,343
Cash and Cash-equivalents, End of Period $ 138,875 $ 7,276
Supplemental Information
Cash paid for interest $ 13,822 $ 13,638
Cash paid for income taxes $ 4,355 $ —

~~The accompanying notes are an integral part of these consolidated and combined financial statements.~~

~~Table of Contents~~

~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~1. ORGANIZATION~~

~~Blue Owl Capital Inc. (the “Registrant”),~~for a Delaware corporation, together with its consolidated subsidiaries (collectively, the “Company” or “Blue Owl”), is a leading alternative asset management firm that provides investors access to asset management capital solutions through its Direct Lending and GP Capital Solutions products. The Company’s breadth of offerings and permanent capital base enables it to offer a differentiated, holistic platform of capital solutions to both middle market companies and large alternative asset managers. The Company provides these solutions through permanent capital vehicles, and long-dated private funds, which underly a high degree of earnings stability and predictabilitydetailed discussion of the ~~Company’s business.~~

~~The Registrant was initially incorporated in~~underlying drivers of our results, including the Cayman Islands as Altimar Acquisition Corporation (“ALT”), a special purpose acquisition company. Pursuant to the Business Combination Agreement dated December 23, 2020, as amended, modified, supplemented or waived from time to time, (the “Business Combination Agreement”), on May 19, 2021 (“Business Combination Date”) (i) ALT was redomiciled as a Delaware corporation and changed its name to Blue Owl Capital Inc., (ii) ALT merged with Owl Rock (as defined below) and (iii) the Company acquired Dyal Capital Partners (“Dyal Capital”), a former divisionaccretive impacts of ~~Neuberger Berman Group LLC (the “Dyal Acquisition”) (collectively, the “Business Combination”). As further discussed in Note 2, for both the ALT merger and~~ the Dyal Acquisition ~~Owl Rock was deemed to be the acquirer for accounting purposes. Therefore, the predecessor to Blue Owl is “Owl Rock,” a combined carve-out of Owl Rock Capital Group LLC~~ and ~~Blue Owl Securities LLC (formerly, Owl Rock Capital Securities LLC) (“Securities”).~~

The Company’s primary sources of revenues are management fees, which are generally based on the amount of the Company’s fee-paying assets under management. The Company generates substantially all of its revenues in the United States. The Company operates through 1 operating and reportable segment. This single reportable segment reflects how the chief operating decision makers allocate resources and assess performance under the Company’s “one-firm approach,” which includes operating collaboratively across product lines, with predominantly a single expense pool.

The Company conducts its operations through Blue Owl Capital Holdings LP (“Blue Owl Capital Holdings”) and Blue Owl Capital Carry LP (“Blue Owl Carry”). Blue Owl Holdings and Blue Owl Carry are referred to, collectively, as the “Blue Owl Operating Partnerships,” and collectively with their consolidated subsidiaries, as the “Blue Owl Operating Group.” The Registrant holds its controlling financial interests in the Blue Owl Operating Group indirectly through Blue Owl Capital GP LLC (“Blue Owl GP”), a wholly owned subsidiary of the Registrant.

~~Capital Structure~~

~~The Registrant has the following share classes and other instruments outstanding:~~

•~~Class A Shares~~—Shares of Class A common stock that are publicly traded and entitle the holders to 1 vote per share on all matters submitted to a vote of shareholders. The Class A Shareholders are entitled to distributions declared on the Class A Shares by the Registrant’s board of directors (the “Board”).Oak Street Acquisition.

•~~Class B Shares~~—Shares of Class B common stock that are not publicly traded. Class B Shareholders are entitled to a number of votes per share that when combined with Class D Shares, equal 90% of the total voting power of all shares. The Class B Shareholders are entitled to distributions declared on the Class B Shares by the Board. No Class B Shares have been issued as of September 30, 2021. Common Units (as defined below) held by certain senior members of management (“Principals”) are exchangeable on a 1-for-one basis for Class B Shares.

•~~Class C Shares~~—Shares of Class C common stock that are not publicly traded. Class C Shareholders are entitled to 1 vote per share on matters submitted to a vote of shareholders. The Class C Shareholders do not participate in the earnings of the Registrant, as the holders of such shares participate directly in the economics of the Blue Owl Operating Group through their Common Units holdings. For every Common Unit held by non-Principals, 1 Class C Share is issued to such holder to grant them a corresponding voting interest in the Registrant.

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~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

•~~Class D Shares~~—Shares of Class D common stock that are not publicly traded. Class D Shareholders are entitled to a number of votes per share that when combined with Class B Shares, equal 90% of the total voting power of all shares. The Class D Shareholders do not participate in the earnings of the Registrant, as the holders of such shares participate directly in the economics of the Blue Owl Operating Group through their Common Units holdings. For every Common Unit held by Principals, 1 Class D Share is issued to such holder to grant them a corresponding voting interest in the Registrant.

•~~Class E Shares~~—Shares of Class E common stock that are not publicly traded. Class E Shareholders are not entitled to a vote. Class E Shares accrue distributions equal to amounts declared per Class A Share; however, such distributions are paid if and when Triggering Events (defined below) have been met. Class E Shares and Seller Earnout Units (defined below) are collectively referred to as “Earnout Securities.”

In connection with the Business Combination, the Company issued two series of Class E Shares: Series E-1 and Series E-2. Series E-1 and E-2 vest upon a “Triggering Event,” which occurs upon the earlier of (i) the volume weighted-average price of Class A Share exceeds $12.50 or $15.00 per share, respectively, for any 20 consecutive trading days; or (ii) the consideration payable per share of Class A Shares or per Blue Owl Operating Group Units (as defined below) in connection with a merger, consolidation, tender offer, exchange offer or business combination or sale of all or substantially all of the Company’s assets exceeds $12.50 or $15.00 per share, respectively. Any Class E Shares that have not vested by the fifth anniversary of the completion of the Business Combination Date will automatically be cancelled.

The Series E-1 Class E Shares had a Triggering Event on July 21, 2021, as the volume weighted average Class A Share price exceeded $12.50 per share for 20 consecutive trading days. As a result, 7,495,432 Class E Shares were converted into an equal number of Class A Shares.

~~The Series E-2 Class E Shares had a Triggering Event on November 3, 2021. Please see Note 14 for additional details.~~

•~~RSUs~~—The Company grants Class A restricted share units (“RSUs”) to its employees and independent Board members. An RSU entitles the holder to receive a Class A Share, or cash equal to the fair value of a Class A Share at the election of the Board, upon completion of a requisite service period. All of the RSUs granted as of the date of this report do not accrue dividend equivalents. No RSUs were issued prior to the Business Combination. RSU grants are accounted for as equity-based compensation. See Note 8 for additional information.

•~~Warrants~~—In connection with the Business Combination, the Company has issued and outstanding warrants to purchase Class A Shares at a price of $11.50 per share. The warrants expire five years from the completion of the Business Combination and are exercisable starting October 22, 2021. A portion of the outstanding warrants are held by the sponsor of ALT (“Private Placement Warrants”) and the remaining warrants are held by other third-party investors (“Public Warrants”).

Once the warrants become exercisable, the Company may redeem for $0.01 per warrant the outstanding Public Warrants if the Company’s Class A Share price equals or exceeds $18.00 per share, subject to certain conditions and adjustments.

If the Company’s Class A Share price is greater than $10.00 per share but less than $18.00 per share, then the Company may redeem the Public Warrants for $0.10 per warrant, subject to certain conditions and adjustments. Holders may elect to exercise their warrants on a cashless basis.

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~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~The following table presents the number of shares of the Registrant, RSUs and warrants that were outstanding as of September 30, 2021:~~Assets Under Management

~~September 30, 2021~~

Blue Owl

AUM: $102.0 billion

FPAUM: $65.6 billion

~~Class A Shares~~

Direct Lending Products

AUM: $44.8 billion

FPAUM: $32.7 billion

~~357,201,703~~

GP Capital Solutions Products

AUM: $41.2 billion

FPAUM: $23.7 billion

Real Estate Products

AUM: $16.1 billion

FPAUM: $9.3 billion

~~Class C Shares~~

Diversified Lending

Commenced 2016

AUM: $30.4 billion

FPAUM: $21.1 billion

~~658,647,360~~

GP Minority Equity

Commenced 2010

AUM: $39.6 billion

FPAUM: $22.8 billion

Net Lease

Commenced 2009

AUM: $16.1 billion

FPAUM: $9.3 billion

Technology Lending

Commenced 2018

AUM: $8.9 billion

FPAUM: $7.7 billion

GP Debt Financing

Commenced 2019

AUM: $1.3 billion

FPAUM: $0.7 billion

~~Class D Shares~~

First Lien Lending

Commenced 2018

AUM: $3.5 billion

FPAUM: $2.5 billion

~~306,894,250~~

Professional Sports Minority Investments

Commenced 2021

AUM: $0.2 billion

FPAUM: $0.2 billion

Opportunistic Lending

Commenced 2020

AUM: $2.1 billion

FPAUM: $1.4 billion

~~Class E Shares - Series E-2~~

~~7,495,432~~

~~RSUs~~

~~9,050,000~~

~~Warrants~~

~~14,159,381~~

~~The Blue Owl Operating Partnerships have~~

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We finished the ~~following equity interests outstanding as~~quarter with $102.0 billion of ~~September 30, 2021,~~AUM, which ~~interests along with any future interests issued by~~included $65.6 billion of FPAUM. During the ~~Blue Owl Operating Partnerships (unless context requires otherwise) are collectively referred~~first quarter of 2022, approximately 95% of our management fees were earned on AUM that we refer to as ~~“Blue Owl Operating Group Units”:~~permanent capital. As of March 31, 2022, we have approximately $7.7 billion in AUM not yet paying fees, providing approximately $105.0 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.

•~~GP Units—The Registrant indirectly holds a general partner interest and all of the GP Units in each of the Blue Owl Operating Partnerships. The GP Units are equity interests~~

Business Environment

Our business is impacted by conditions in the ~~Blue Owl Operating Partnerships that represent the Registrant’s~~financial markets and economic ~~ownership~~conditions in the ~~Blue Owl Operating Group. For each Class A Share~~U.S., and ~~Class B Share outstanding,~~to a lesser extent, elsewhere in the ~~Registrant indirectly holds~~world.

The public markets have witnessed volatility and dispersion in the first quarter of 2022 resulting from unexpectedly high and persistent inflation, a shifting interest rate environment, geopolitical events, and ongoing impact from COVID-19 globally. Allocations to alternative strategies have unsurprisingly created some near-term headwinds to industry-wide M&A and capital markets activity as investors paused to react to updated information, market expectations, and a changing investment landscape. We have benefited from this market volatility as an ~~equal~~increasing number of sponsors and private companies have looked to Direct Lending for flexible and dependable financing, and capital that managers need to expand and diversify their platforms through our GP ~~Units. References~~Capital Solutions products.

Higher than expected inflation has impacted expectations for the pace of rate hikes, driving market volatility and adjusting investors’ views on earnings growth for many public companies. We anticipate a net positive effect on our business from a rising rate environment. We expect our Direct Lending products to be a beneficiary of rising rates, as investor demand increases for senior secured floating rate assets focused on downside protection, and over time, the effect of rising rates would be positive for the net interest income of our Direct Lending products’ loan portfolios. For GP ~~Units refer collectively~~Capital Solutions, market volatility should drive demand for products managed by large, diversified managers, benefiting the types of firms our GP Capital Solutions products have typically taken stakes in. With respect to our Real Estate products, we believe there will continue to be strong demand for real estate strategies with long-term, contractual income that are positively correlated to inflation and backed by investment grade tenants, and that rising corporate borrowing costs will drive incremental demand for our Real Estate net lease solutions.

We believe that our disciplined investment philosophy across our distinct but complementary products contributes to the stability of our performance throughout market cycles. Our products have a ~~GP Unit~~stable base of permanent or long-term capital enabling us to invest in ~~each of the Blue Owl Operating Partnerships~~assets with a long-term focus over different points in a market cycle.

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 ~~any Common Units (as defined below) held directly~~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 March 31, 2022, our assets under management include approximately $2.2 billion related to us, our executives and other employees. A portion of these assets under management relate to accrued carried interests, as well as investments that are not charged fees.

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 ~~indirectly~~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.

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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 approximately $105.0 million of additional annualized management fees once deployed or upon the expiration of the relevant fee holidays. Approximately $2.2 billion of AUM not yet paying fees moved to FPAUM on January 1, 2022, driven primarily by the ~~Registrant.~~

•~~Common Units—Common Units are limited partner interests held by~~expiration of certain ~~members of management, employees and other third parties~~fee holidays in ~~the Blue Owl Operating Partnerships. Subject to certain restrictions, Common Units are exchangeable on a 1-for-one basis for either Class A Shares if held~~Dyal Fund V, which was offset by a ~~non-Principal~~decrease in FPAUM for a step down in fee basis in Dyal Fund III of $0.9 billion.

Permanency and Duration of Assets Under Management

Our capital base is heavily weighted toward permanent capital. We use the term “permanent capital” to refer to AUM in our products that do not have ordinary redemption provisions or ~~Class B Shares if held by~~ a ~~Principal. Common Unit exchanges~~requirement to exit investments and return the proceeds to investors after a prescribed period of time. Some of these products, however, may be ~~settled~~required, or elect, to return all or a portion of capital gains and investment income. Permanent capital includes certain products that are subject to management fee step downs and/or roll-offs over time. Substantially all of our remaining AUM is in ~~cash only at~~what we refer to as “long-dated funds.” These are funds in which the ~~election of the Company’s Exchange Committee, which~~contractual remaining life is comprised of independent members of the Board, and can only be funded from proceeds of a new permanent equity offering. Common Units held by non-Principals are exchangeable for shares of the Registrant after the six-month anniversary of the Business Combination Date. Common Units held by Principals are exchangeable after the two-year anniversary of the Business Combination Date. References to Common Units refer collectively to a Common Unit in each of the Blue Owl Operating Partnerships. Upon an exchange of Common Units for an equal number of Class Afive years or ~~B Shares, a corresponding number of Class C or D Shares, as applicable, will be cancelled.~~

•~~Seller Earnout Units~~—Seller Earnout Units are interests held in the Blue Owl Operating Partnerships that have the same Triggering Events, forfeiture provisions and distribution restrictions as the Class E Shares. In connection with the Business Combination, recipients of Earnout Securities had the option of selecting either Class E Shares or Seller Earnout Units. For recipients that elected to receive Class E Shares, a corresponding number of Seller Earnout Units are indirectly held by the Registrant. Upon meeting the respective Triggering Events, Seller Earnout Units not held directly or indirectly by the Registrant automatically become Common Units, whereas the Seller Earnout Units held directly or indirectly by the Registrant automatically become GP Units.

The Series E-1 Seller Earnout Units had a Triggering Event on July 21, 2021. As a result, (i) 7,495,432 Seller Earnout Units underlying an equal number of Series E-1 Class E Shares were converted into an equal number of GP Units, (ii) 42,504,530 Seller Earnout Units were converted into an equal number of Common Units, and (iii) 42,504,530 non-economic, voting shares of the Registrant were issued to the holders of the converted Common Units (30,266,653 Class C Shares and 12,237,877 Class D Shares).

~~The Series E-2 Seller Earnout Units had a Triggering Event on November 3, 2021. Please see Note 14 for additional details.~~more.

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~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated~~We view the permanency and ~~Combined Financial Statements (Unaudited)~~

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 ~~following table~~chart below presents the ~~number~~composition of ~~Blue Owl Operating Group Units that were outstanding~~our management fees by remaining product duration. Changes in these relative percentages will occur over time as the mix of ~~September 30, 2021:~~


~~Units~~						~~September 30, 2021~~
~~GP Units~~						~~357,201,703~~
~~Common Units~~						~~965,541,610~~

~~Seller Earnout Units - Series E-2(1)~~						~~49,999,962~~

~~(1)Includes 7,495,432 units held indirectly by the Registrant, representing the indirect pro rata economic interests of Series E-2 Class E Shares~~products we offer changes. For example, our Real Estate products have a higher concentration in ~~the Blue Owl Operating Group.~~

~~Share Repurchase Program~~

~~On May 19, 2021, Blue Owl’s Board authorized the repurchase of up to $100.0 million of Class A Shares. Under the repurchase program, repurchases~~long-dated funds, which in isolation 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 repurchase program may be changed, suspended or discontinued at any time and will terminate upon the earlier of May 19, 2022 and the purchase of all shares available under the repurchase program. As of September 30, 2021, the Company had not repurchased any of its Class A Shares.

~~2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

~~Basis of Presentation~~

Changes in AUM


	Three Months Ended March 31, 2022								Three Months Ended March 31, 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	—		—		—		—		—		—		—		—
New capital raised	1,938		1,566		360		3,864		235		911		—		1,146
Change in debt	3,618		—		—		3,618		329		—		—		329
Distributions	(284)		(758)		(165)		(1,207)		(181)		(74)		—		(255)
Change in value / other	276		439		533		1,248		293		3,139		—		3,432
Ending Balance	$	44,775	$	41,153	$	16,090	$	102,018	$	27,777	$	30,196	$	—	$	57,973

Direct Lending. Increase in AUM was driven by a combination of continued fundraising and debt deployment across the strategy.

•$1.2 billion new capital raised in Diversified Lending, primarily driven by retail fundraising in ORCIC.

•$0.7 billion new capital raised in Technology Lending, driven by continued fundraising in ORTF II, our second technology-focused BDC.

•$3.6 billion of debt deployment across all ~~adjustments necessary for a fair presentation~~ of ~~the Company’s unaudited, interim, consolidated~~Direct Lending, as we continue to opportunistically deploy leverage in our BDCs.

GP Capital Solutions. Increase in AUM was driven by new capital raised, primarily in Dyal Fund V, and ~~combined financial statements have been included and are~~overall appreciation across all of ~~a normal and recurring nature. The Company’s comprehensive income (loss) is comprised solely of consolidated and combined net income (i.e., the Company has~~our major products.

Real Estate. There was no ~~other comprehensive income).~~

Prior to the Business Combination, Blue Owl’s financial statements were prepared on a consolidated and combined basis. As part of the Business Combination, Securities was contributed to the Blue Owl Operating Group. Following the Business Combination, the financial statements are prepared on a consolidated basis. The consolidated and combined financial statements of Blue Owl should be readmaterial increase or decrease in connection with the consolidated and combined financial statements of Owl Rock as of December 31, 2020 included in the Company’s Current Report on Form 8-K, relating to the Business Combination, filed with the SEC on May 21, 2021.

The merger between Owl Rock and ALT was accounted for as a reverse asset acquisition, with no step-up to fair value on any assets or liabilities, and therefore no goodwill or other intangible assets were recorded. The Dyal Acquisition was accounted for using the acquisition method of accounting. The Company recorded the fair value of the net assets acquired as of the Business Combination Date. Operating results for Dyal Capital are included starting from the Business Combination Date. See Note 3 for additional information regarding the Dyal Acquisition.

During the third quarter of 2021, the Company began presenting investments separately on its consolidated and combined statements of financial condition. Prior period amounts have been reclassified to conform to the current period presentation.AUM.

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Changes in FPAUM


	Three Months Ended March 31, 2022								Three Months Ended March 31, 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	—		—		—		—		—		—		—		—
New capital raised / deployed	2,200		1,171		1,077		4,448		482		1,011		—		1,493
Fee basis change	—		1,268		—		1,268		—		—		—		—
Distributions	(278)		—		(161)		(439)		(149)		11		—		(138)
Change in value / other	(1,293)		—		156		(1,137)		276		—		—		276
Ending Balance	$	32,658	$	23,651	$	9,275	$	65,584	$	21,471	$	18,630	$	—	$	40,101

Direct Lending. Increase in FPAUM was driven by a combination of 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. There was no material increase or decrease in FPAUM.

Product Performance

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~Use~~is not an investment in any of ~~Estimates~~

~~The preparation~~our products. Past performance is not indicative of ~~financial statements in conformity~~future results. As with ~~GAAP requires management to make assumptions and estimates~~any investment, there is always the potential for gains as well as the possibility of losses. There can be no assurance that ~~affect the amounts reported in the consolidated and combined financial statements of the Company. The most critical~~any of these ~~estimates are related~~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	$	14,616	$	6,018	$	6,030	$	2,024	$	5,871	$	7,895	1.41x	1.31x	11.8	%	8.9	%
ORCC II (9)	2017	$	2,614	$	1,383	$	1,355	$	269	$	1,342	$	1,611	NM	1.19x	NM		7.0	%
ORCC III	2020	$	3,651	$	1,709	$	1,659	$	101	$	1,664	$	1,765	NM	NM	NM		NM
ORCIC	2020	$	8,376	$	2,810	$	2,780	$	71	$	2,763	$	2,834	NM	NM	NM		NM

Technology Lending
ORTF	2018	$	7,185	$	3,195	$	3,196	$	278	$	3,457	$	3,735	1.22x	1.17x	15.2	%	11.2	%

First Lien Lending (10)
Owl Rock First Lien Fund Levered	2018	$	2,948	$	1,161	$	813	$	116	$	836	$	952	1.22x	1.18x	10.2	%	8.1	%
Owl Rock First Lien Fund Unlevered	2019			$	150	$	144	$	7	$	147	$	154	1.11x	1.08x	5.3	%	3.5	%

(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 ~~(i)~~investors.

(4)Unrealized value represents the ~~fair value~~product’s NAV. There can be no assurance that unrealized values will be realized at the valuations indicated.

(5)Gross multiple of ~~the~~invested capital (“MoIC”) is calculated by adding total realized proceeds and unrealized values of a product’s investments ~~held~~and dividing by the ~~products the Company manages, as for many products, this impacts the~~total amount of ~~revenues~~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 ~~Company recognizes each period; (ii) the fair~~aggregate value generated by a product’s investments in absolute terms. Net MoIC is calculated by adding total realized proceeds and unrealized values of ~~the Company’s~~a product’s investments and ~~liabilities with respect to~~dividing by the TRA (the portion considered contingent consideration), warrants and Earnout Securities, as changes in these fair values have a direct impact on the Company’s consolidated and combined net income (loss); (iii) the estimate of future taxable income, which impacts the realizability and carryingtotal amount of the Company’s deferred income tax assets; (iv) the qualitative and quantitative assessments of whether impairments of acquired intangible assets and goodwill exist; and (v) the determination of whetherinvested capital. Net MoIC is calculated after giving effect to consolidate a variable interest entity (“VIE”). Inherent in such estimates and judgements relating to future cash flows, which include the Company’s interpretation of current economic indicators and market valuations, and assumptions about the Company’s strategic plans with regard to its operations. While management believes that the estimates utilized in preparing the consolidated and combined financial statements are reasonable and prudent, actual results could differ materially from those estimates.

~~Principles of Consolidation~~

The Company consolidates those entities in which it has a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. The Company determines whether an entity should be consolidated by first evaluating whether it holds a variable interest in the entity. Entities that are not VIEs are further evaluated for consolidation under the voting interest model (“VOE”).

An entity is considered to be a VIE if any of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) the holders of equity investment at risk, as a group, lack either the direct or indirect ability through voting rights or similar rights to make decisions that have a significant effect on the success of the entity or the obligation to absorb the expected losses or right to receive the expected residual returns, or (c) the voting rights of some equity investors are disproportionate to their obligation to absorb losses of the entity, their rights to receive returns from an entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor with disproportionately few voting rights.

Fees that are customary and commensurate with the level of services provided by the Company, and where the Company does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, would not be considered a variable interest. The Company factors in all economic interests, including proportionate interests through related parties, to determine if fees are considered a variable interest. Where the Company’s interests in funds are primarily management fees ~~incentive fees,~~(including Part I Fees) and ~~insignificant direct or indirect equity interests through related parties, the Company is not considered to have a variable interest in such entities.~~

~~The Company consolidates~~Part II Fees, as applicable, and all VIEs for which it is the primary beneficiary. An entity is determined to be the primary beneficiary if it holds a controlling financial interest, which is defined as having (a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The Company does not consolidate any of the products it manages as it does not hold any direct or indirect interests in such entities that could expose the Company to an obligation to absorb losses of an entity or the right to receive benefits from an entity that could potentially be significant to such entities.other expenses.

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~~Blue Owl Capital Inc.~~

~~(Prior~~(7)Gross IRR is an annualized since inception gross internal rate of return of cash flows to ~~May 19, 2021, Owl Rock)~~

~~Notes to Consolidated~~ and ~~Combined Financial Statements (Unaudited)~~

~~The Company determines whether it is~~from the ~~primary beneficiary of a VIE~~product and the product’s residual value at the time it becomes involved with a VIE and continuously reconsiders that conclusion. In evaluating whether the Company is the primary beneficiary, the Company evaluates its direct and indirect economic interests in the entity. The consolidation analysis is generally performed qualitatively, however, if the primary beneficiary is not readily determinable, a quantitative analysis may also be performed. This analysis requires judgment, including: (1) determining whether the equity investment at risk is sufficient to permit the entity to finance its activities without additional subordinated financial support, (2) evaluating whether the equity holders, as a group, can make decisions that have a significant effect on the successend of the ~~entity, (3) determining whether two or more parties’ equity interests should~~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 ~~aggregated, (4) determining whether~~different to the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive returns from an entity and (5) evaluating the nature of relationships and activities of the parties involved in determining which party within a related-party group is most closely associated with a VIE and therefore would be deemed the primary beneficiary.

Under the voting interest model, the Company consolidates those entities it controls through a majority voting interest. The Company will generally not consolidate those VOEs where a single investor or simple majority of third-party investors with equity have the ability to exercise substantive kick-out or participation rights.

~~Cash and Cash Equivalents~~

The Company considers highly-rated liquid investments that have an original maturity of three months or less from the date of purchase to be cash equivalents. As of September 30, 2021 and December 31, 2020, the Company holds the majority of its cash balances with a single financial institution and such balances are in excess of Federal Deposit Insurance Corporation insured limits, which exposes the Company to a certain degree of credit risk concentration.

~~Investments~~

Investments are primarily comprised of investments for which the Company has elected the fair value option in order to simplify the accounting for these instruments, and therefore changes in unrealized gains or losses are included in current-period earnings. Such elections are irrevocable and are applied on an investment-by-investment basis at initial recognition. Realized and changes in unrealized gains (losses) on these investments are included within net gains (losses) on investments in the consolidated and combined statements of operations. Investments for which the Company has not elected the fair value option are primarily comprised of equity-method in its products. See Note 9 for additional information.

~~Leases~~

Right-of-use assets and liabilities related to operating leases are included within operating lease assets and operating lease liabilities, respectively, in the Company’s consolidated and combined statements of financial condition.

~~The Company adopted Accounting Standards Update (“ASU”) 2016-02,~~ ~~Leases (Topic 842)~~, as amended, on January 1, 2021 (“ASC 842”). The Company did not restate prior periods and there were no adjustments to retained earnings upon adoption of ASC 842. The Company applied the package of practical expedients permitted under the transition guidance within the new standard, including carrying forward the historical lease classification and not reassessing whether certain costs capitalized under the prior guidance are eligible for capitalization under ASC 842. The adoption of ASC 842 resulted in the recognition of $13.8 million of operating lease assets and $14.4 million of operating lease liabilities, with the net of these amounts offsetting the deferred rent credit liability in existence immediately prior to adoption.

~~The Company determines if an arrangement is a lease at inception. Right-of-use lease assets and lease liabilities are recognized at commencement date~~reported IRR based on the ~~present value~~timing of ~~lease payments over~~capital transactions.

(9)For the ~~lease term. Right-of-use lease assets~~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 1.21x and 1.14x, respectively. The gross and net IRR for the Offshore Levered feeder is 9.6% and 6.4%, 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.

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	$	954	$	1,284	$	1,248	$	583	$	721	$	1,304	1.19x	1.04x	3.8	%	0.5	%
Dyal Fund II	2014	$	2,590	$	2,153	$	1,846	$	421	$	2,028	$	2,449	1.48x	1.33x	11.9	%	7.8	%
Dyal Fund III	2015	$	8,174	$	5,318	$	3,241	$	2,591	$	4,272	$	6,863	2.54x	2.12x	31.8	%	23.9	%
Dyal Fund IV	2018	$	14,330	$	9,041	$	4,807	$	2,352	$	6,667	$	9,019	2.25x	1.88x	127.3	%	81.2	%
Dyal Fund V	2020	$	7,798	$	6,787	$	926	$	—	$	1,758	$	1,758	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 ~~Company’s right~~sum of all cash distributions to ~~use~~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 ~~leased asset for~~product’s investments and dividing by the ~~lease term~~total amount of invested capital. Gross MoIC is before giving effect to management fees and ~~lease liabilities~~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	$	1,322	$	1,250	$	1,239	$	923	$	883	$	1,806	1.60x	1.46x	27.2	%	21.4	%
Oak Street Real Estate Capital Net Lease Property Fund	2019	$	5,671	$	3,161	$	2,600	$	164	$	2,951	$	3,115	1.21x	1.20x	22.5	%	21.4	%
Oak Street Real Estate Capital Fund V	2020	$	3,621	$	2,500	$	1,147	$	304	$	1,089	$	1,393	NM	NM	NM		NM
Oak Street Asset-Backed Securitization (9)	2020	$	3,001	$	2,713	$	342	$	48	$	352	$	400	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 ~~Company’s obligation~~sum of all cash distributions to ~~make lease payments arising~~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.

(7)Gross IRR is an annualized since inception gross internal rate of return of cash flows to and from the ~~lease. The Company does not recognize right-of-use lease assets~~product and ~~lease liabilities for leases with an initial term~~the product’s residual value at the end of ~~one year or less.~~the measurement period. Gross IRRs are calculated before giving effect to management fees and carried interest, as applicable.

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~~Blue Owl Capital Inc.~~

~~(Prior~~(8)Net IRR is an annualized since inception net internal rate of return of cash flows to ~~May 19, 2021, Owl Rock)~~

~~Notes~~and from the product and the product's residual value at the end of the measurement period. Net IRRs reflect returns to ~~Consolidated~~all investors. Net IRRs are calculated after giving effect to management fees and ~~Combined Financial Statements (Unaudited)~~

Ascarried interest, as applicable, and all other expenses. An individual investor's IRR may be different to the ~~Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate~~reported IRR based on ~~information available at~~ the ~~lease commencement date in determining~~timing of capital transactions.

(9)Capital raised for this product includes the ~~present~~par value of lease payments. The determination of an appropriate incremental borrowing rate requires judgment. The Company determines its incremental borrowing rate based on data for instruments with similar characteristics, including recentlynotes issued ~~debt, as well as other factors.~~

The operating lease assets include any lease payments made and lease incentives. Lease terms include options to extend or terminate when it is reasonably certain that the Company will exercise that option. In addition, the Company separates lease and non-lease components embedded within lease agreements. Lease expense for operating lease payments is recognized on a straight-line basis, which consists of amortization of right-of-use assets and interest accretion on lease liabilities, over the lease term and included within general, administrative and other expenses in the ~~consolidated~~securitization. Invested capital, realized proceeds, unrealized and ~~combined statements~~total values relate to the subordinated notes/equity of ~~operations. The Company does not have any material finance leases.~~the securitization.

~~Strategic Revenue-Share Purchase Consideration~~

~~On September 20, 2021, the Company entered into 3 Agreements~~GAAP Results of Purchase and Sale (the “Strategic Revenue-Share Purchase”), whereby certain fund investors relinquished their rights to receive management fee shares with respect to certain existing and future GP Capital Solutions products. In exchange for the foregoing and additional commitments to certain products, the Registrant issued 29,701,013 Class A Shares with a fair value of $455.0 million and paid cash of $50.2 million (net of previously accrued management fee shares payable) to such fund investors. On October 18, 2021, the Company filed a resale registration statement on Form S-1 to register the 29,701,013 Class A Shares.Operations Analysis

~~The Company determined that it was not receiving a distinct good or service from the customers as~~As a result of the ~~Strategic Revenue-Share Purchase,~~Dyal Acquisition and ~~as such, determined that~~Oak Street Acquisition, prior year amounts are not comparable to current year amounts or expected future trends. Dyal Capital’s and Oak Street’s results of operations are included from the ~~consideration paid~~Business Combination Date and December 29, 2021, respectively.

Three Months Ended March 31, 2022, Compared to the ~~customers represents a reduction~~Three Months Ended March 31, 2021


	Three Months Ended March 31,
(dollars in thousands)	2022		2021		$ Change
Revenues
Management fees, net (includes Part I Fees of $46,739 and 28,914)	$	247,632	$	94,713	$	152,919
Administrative, transaction and other fees	28,345		13,511		14,834

Total Revenues, Net	275,977		108,224		167,753
Expenses
Compensation and benefits	193,892		47,984		145,908
Amortization of intangible assets	61,526		—		61,526
General, administrative and other expenses	43,294		14,860		28,434
Total Expenses	298,712		62,844		235,868
Other (Loss) Income
Net gains on investments	5		—		5


Interest expense	(12,834)		(5,858)		(6,976)
Change in TRA liability	(9,652)		—		(9,652)
Change in warrant liability	17,758		—		17,758
Change in earnout liability	(496)		—		(496)
Total Other (Loss) Income	(5,219)		(5,858)		639
(Loss) Income Before Income Taxes	(27,954)		39,522		(67,476)
Income tax (benefit) expense	(5,038)		188		(5,226)
Consolidated and Combined Net (Loss) Income	(22,916)		39,334		(62,250)
Net loss attributable to noncontrolling interests	11,101		80		11,021
Net (Loss) Income Attributable to Blue Owl Capital Inc.	$	(11,815)	$	39,414	$	(51,229)

Revenues, Net

Management Fees. Management fees increased primarily due to the $96.8 million accretive impact of the transaction price and, therefore, a reduction to revenue. Accordingly, the total consideration paid was recorded as an asset in the Company’s consolidated statements of financial condition and is amortized as a reduction ofGP Capital Solution’s management fees ~~net~~and $17.2 million of Real Estate’s management fees as well as overall growth in ~~the Company’s consolidated statements~~FPAUM across all of ~~operations.~~our Diversified Lending product strategies. See Note 65 to our consolidated and combined financial statements for additional ~~information.~~details on our GAAP management fees by product and strategy.

~~Intangible Assets, Net~~Administrative, Transaction and ~~Goodwill~~Other Fees. The increase in administrative, transaction and other fees was driven primarily by a $4.8 million increase of dealer manager revenue, a $2.6 million increase of administrative fees related to our Direct Lending products and $3.1 million increase of administrative fees related to our GP Capital Solutions products due to higher compensation and benefits being recovered from our products, which are included from the Business Combination Date. Also contributing to the year-over-year increase was a $4.3 million increase in fee income earned for services provided to portfolio companies.

~~The Company recognized certain finite-lived intangible assets~~

Expenses

Compensation and ~~goodwill~~Benefits. Compensation and benefits expenses increased by $96.2 million related to amortization of equity grants, $16.1 million related to acquisition related cash earnouts for Oak Street and an additional $33.6 million related to growth in our employee headcount as a result of the Dyal ~~Acquisition. The Company’s finite-lived intangible assets consist of contractual rights to earn future management fees from the acquired investment management agreements~~ and ~~value associated with the acquired institutional client relationships and trademarks. Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives.~~

The Company tests finite-lived intangible assets for impairment if certain events occur or circumstances change indicating that the carrying amount of the intangible asset may not be recoverable. The Company evaluates impairment by comparing the estimated fair value attributable to the intangible asset with its carrying amount. If an impairment exists, the Company adjusts the carrying value to equal the fair value by taking a charge through earnings. No impairments have been recognized to-date on the Company’s acquired intangible assets.

Goodwill represents the excess of consideration over identifiable net assets of an acquired business. The Company tests goodwill annually for impairment. If, after assessing qualitative factors, the Company believes that it is more-likely-than-not that the fair value of the reporting unit inclusive of goodwill is less than its carrying amount, the Company will perform a quantitative assessment to determine whether an impairment exists. If an impairment exists, the Company adjusts the carrying value of goodwill so that the carrying value of the reporting unit is equal to its fair value by taking a charge through earnings. The Company also tests goodwill for impairment in other periods if an event occurs or circumstances change such that it is more-likely-than-not to reduce the fair value of the reporting unit below its carrying amount. No impairments have been recognized to-date on the Company’s goodwill.

~~See Note 3 for additional information.~~Oak Street acquisitions as well as organic growth.

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~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~Fixed Assets~~

~~Fixed~~Amortization of Intangible Assets. These expenses relate to the amortization of intangible assets ~~are recorded at cost, less accumulated depreciation and amortization, and are included within other assets, net~~acquired in ~~the Company’s consolidated and combined statements of financial condition. Fixed assets are depreciated or amortized on a straight-line basis,~~connection with the ~~corresponding depreciation~~Dyal Acquisition and ~~amortization expense included within~~the Oak Street Acquisition.

General, Administrative and Other Expenses. The increase in general, administrative and other expenses was due to Transaction Expenses of $9.6 million, a $7.6 million increase in distribution costs due to placement fees associated with Dyal Fund V and certain private fund closes in Direct Lending as well as ongoing trail fees for historical fundraise Dyal products which are included from the Business Combination Date. The remaining net increase was driven primarily by our continued growth as a public company and transitioning back to the office from a remote workforce.

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 ~~Company’s~~second quarter of 2021 using proceeds from the $700.0 million of 2031 Notes, a larger size facility. Further, we issued the $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 warrant liability in 2022 was driven by the decrease in the price of our Public Warrants, as such price directly impacts the valuation of our Private Placement Warrants. The warrants were issued in connection with the Business Combination in May 2021.

Change in earnout liability. There was no material change to the earnout liability.

Income Tax Benefit

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. This resulted in an increase in income tax benefit in the current year period. Please see Note 9 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 first quarter of 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 ~~statements~~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 ~~operations. The estimated useful life for leasehold improvements is~~our business, and we believe that this information enhances the ~~lesser~~ability of ~~the remaining lease term~~shareholders to analyze our performance from period to period. These non-GAAP financial measures supplement and ~~the life~~should be considered in addition to and not in lieu of ~~the asset, while other fixed assets are generally depreciated over a period~~our GAAP results, and such measures should not be considered as indicative of ~~two~~ ~~to seven years. Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset~~our liquidity. Our non-GAAP measures may not be ~~recoverable.~~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.

~~Debt Obligations, Net~~

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~~The Company’s debt obligations,~~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.

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, 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 ~~than revolving credit facilities,~~fees for certain expenses related to reimbursements from our products, which are ~~recorded at amortized cost,~~presented gross for GAAP but net for non-GAAP measures. Transaction Expenses are expenses incurred in connection with the Business Combination 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 ~~any debt issuance costs, discounts~~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 ~~premiums. Debt issuance costs are deferred~~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 ~~along with discounts and premiums are amortized to~~related compensation, interest expense, inas well as amounts payable for taxes and payments made pursuant to the ~~consolidated~~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 ~~combined statements~~payments made pursuant to the TRA reflect the benefit of ~~operations over the life of the related debt instrument using the effective interest method. Unamortized debt issuance costs, discounts and premiums~~tax deductions that are ~~written off to~~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 March 31,
(dollars in thousands)		2022		2021

FRE revenues		$	272,598	$	103,771
FRE expenses		(101,735)		(57,501)
Net loss allocated to noncontrolling interests included in Fee-Related Earnings		520		80
Fee-Related Earnings		$	171,383	$	46,350
Distributable Earnings		$	155,726	$	40,254

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 March 31,
(dollars in thousands)	2022		2021
Direct Lending Products
Diversified lending	$	105,452	$	76,478
Technology lending	23,030		13,857
First lien lending	3,681		3,815
Opportunistic lending	1,541		563
Management Fees, Net	133,704		94,713
Administrative, transaction and other fees	14,473		9,058
FRE Revenues - Direct Lending Products	148,177		103,771

GP Capital Solutions Products
GP minority equity investments	102,100		—
GP debt financing	3,092		—
Professional sports minority investments	500		—

Management Fees, Net	105,692		—
Administrative, transaction and other fees	1,571		—
FRE Revenues - GP Capital Solutions Products	107,263		—

Real Estate Products
Net lease	17,158		—
Management Fees, Net	17,158		—
FRE Revenues - Real Estate Products	17,158		—
Total FRE Revenues	$	272,598	$	103,771

FRE revenues increased due to the accretive impact of the Dyal Capital and Oak Street acquisitions. FRE revenues also increased as a result of overall growth in FPAUM across all of our Diversified Lending product strategies. Also contributing to the increase were higher administrative, transaction and other fees due to higher fee income earned for services provided to portfolio companies.

FRE Expenses


	Three Months Ended March 31,
(dollars in thousands)		2022		2021

FRE compensation and benefits		$	(74,969)	$	(44,530)

FRE general, administrative and other expenses		(26,766)		(12,971)
Total FRE Expenses		$	(101,735)	$	(57,501)

FRE expenses increased primarily due to higher FRE compensation and benefits as a result of increased headcount, both in the legacy Owl Rock business, as well as due to an increase related to the Dyal Acquisition and Oak Street Acquisition. 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 March 31,
(dollars in thousands)		2022		2021
GAAP (Loss) Income Before Income Taxes		$	(27,954)	$	39,522
Net loss allocated to noncontrolling interests included in Fee-Related Earnings		520		80
Strategic Revenue-Share Purchase consideration amortization		8,922		—

Equity-based compensation		96,601		—
Capital-related compensation		830		—
Acquisition-related cash earnout amortization		16,082		—
Amortization of intangible assets		61,526		—
Transaction Expenses		9,637		890
Interest expense		12,834		5,858

Net gains on investments		(5)		—

Change in TRA liability		9,652		—
Change in warrant liability		(17,758)		—
Change in earnout liability		496		—
Fee-Related Earnings		171,383		46,350


Interest expense		(12,834)		(5,858)
Taxes and TRA payments		(2,823)		(238)
Distributable Earnings		155,726		40,254
Interest expense		12,834		5,858
Taxes and TRA payments		2,823		238
Fixed assets depreciation and amortization		218		131
Adjusted EBITDA		$	171,601	$	46,481


	Three Months Ended March 31,
(dollars in thousands)		2022		2021
GAAP Revenues		$	275,977	$	108,224
Strategic Revenue-Share Purchase consideration amortization		8,922		—

Administrative and other fees		(12,301)		(4,453)
FRE Revenues		$	272,598	$	103,771


	Three Months Ended March 31,
(dollars in thousands)		2022		2021
GAAP Compensation and Benefits		$	193,892	$	47,984

Equity-based compensation		(96,188)		—
Capital-related compensation		(830)		—
Acquisition-related cash earnout amortization		(16,082)		—
Administrative and other expenses		(5,823)		(3,454)
FRE Compensation and Benefits		$	74,969	$	44,530


	Three Months Ended March 31,
(dollars in thousands)		2022		2021
GAAP General, Administrative and Other Expenses		$	43,294	$	14,860
Transaction Expenses		(9,637)		(890)
Equity-based compensation		(413)		—
Administrative and other expenses		(6,478)		(999)
FRE General, Administrative and Other Expenses		$	26,766	$	12,971

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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 first quarter of 2022 with $186.0 million of cash and cash equivalents and $714.8 million 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 (as defined 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 March 31, 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 3 to our consolidated and combined 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 ~~operations when~~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 $171.6 million for the ~~Company prepays borrowings prior~~quarter ended March 31, 2022. Please see “—Non-GAAP Reconciliations” for reconciliations of Adjusted EBITDA to ~~maturity. The Company defers debt issuance costs associated~~the most comparable measures prepared in accordance with ~~revolving credit facilities~~GAAP.

Tax Receivable Agreement

As discussed in Note 10 to our consolidated and ~~presents them within other assets, net~~combined financial statements in this report, we may in the future be required to make payments under the TRA. As of March 31, 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 $806.5 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.

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Payments under the tax receivable agreement 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 tax receivable agreement 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.

Warrants

We classify the warrants issued in connection with the Business Combination as liabilities in our consolidated and combined statements of financial condition, ~~and such amounts are amortized to interest expense~~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.

Oak Street Cash Earnout

A portion of the Oak Street Cash Earnout 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 occur. Further, the 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. See Note 2 to our Financial Statements for additional information.

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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.

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, a shifting 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.”

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Cash Flows Analysis


	Three Months Ended March 31,
(dollars in thousands)	2022		2021		$ Change
Net cash provided by (used in):
Operating activities	$	93,204	$	587	$	92,617
Investing activities	(22,607)		(295)		(22,312)
Financing activities	72,788		(3,358)		76,146
Net Change in Cash and Cash Equivalents	$	143,385	$	(3,066)	$	146,451

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 leasehold improvements associated with certain office spaces. In 2021, cash flows related to investing activities were not material.

Our 2021 cash flows related to financing activities included borrowings and repayments under our previously outstanding revolving credit facilities. In addition, distributions related to pre-Business Combination-related earnings was another significant financing cash flow in the prior-year period.

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 ~~statements~~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 ~~operations~~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 ~~straight-line~~consistent basis ~~over~~and assumptions that we believe market participants would use to determine the ~~life~~fair value of the ~~related facility.~~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.

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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~~

The tax receivable agreement (“TRA”) liability represents amounts payable to certain pre-Business Combination equity holders of Owl Rock and Dyal Capital. A portion of the TRA liability related to the Dyal Acquisition is deemed contingent consideration payable to the previous owners of Dyal Capital, and therefore is carried at fair value, with changes in fair value reported within other loss in the consolidated and combined statements of operations. The remaining portion of the TRA is carried at a value equal to the expected future payments due under the TRA. The Company recorded its initial estimate of future payments under the TRA that is not related to the Dyal Acquisition as a decrease to additional paid-in capital and an increase in TRA liability in the consolidated and combined financial statements. Subsequent adjustments to the liability for future payments under the tax receivable agreement related to changes in estimated future tax rates or state income tax apportionment are recognized through current period earnings in the consolidated and combined statements of operations. See Note 11 for additional information.

~~Warrant Liability~~

~~The Company’s warrants are recorded as liabilities carried at fair value, with changes in fair value included within other loss in the Company’s consolidated and combined statements of operations.~~

The Private Placement Warrants contain exercise and settlement features that may change with a change in the holder, which precludes the Private Placement Warrants from being considered indexed to the Company’s own stock, and therefore the Private Placement Warrants are precluded from being classified within equity and are accounted for as derivative liabilities.

The Public Warrants include a provision that, in the event of a tender offer or exchange offer made to and accepted by holders of more than 50% of the outstanding Class A Shares, all holders of the warrants would be entitled to receive cash for their warrants. Such an event would not constitute a change in control because the Class A Shares do not represent a majority of the Registrant’s voting shares. Accordingly, the Public Warrants are also precluded from being classified within equity and are accounted for as derivative liabilities. This provision also applies to the Private Placement Warrants.

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~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~Earnout Securities Liability~~

Earnout Securities issued in connection with the Dyal Acquisition to the former owners of Dyal who are not part of the continuing management team are treated as contingent consideration and are not considered indexed to the Company’s equity. Similarly, Earnout Securities issued to certain former owners of Owl Rock are not considered indexed to the Company’s equity. These Earnout Securities are accounted for as a liability carried at fair value, with changes in fair value included within other loss in the Company’s consolidated and combined statements of operations. Once recognized, the contingent earnout liability is not derecognized until the contingency is resolved and the consideration is paid or becomes payable.

Earnout Securities issued to certain employees in connection with the Business Combination were treated as compensation for post-combination employment services and accounted for as equity-based compensation. See Note 8 for additional information on these Earnout Securities.

~~Noncontrolling Interests~~

Noncontrolling interests are primarily comprised of Common Units and Seller Earnout Units, which are interests in the Blue Owl Operating Group not held by the Company. Allocations to these interests in the consolidated and combined statements of operations are based on the substantive profit-sharing arrangements in the operating agreements of the Blue Owl Operating Partnerships, and to the extent that such allocations are not provisional in nature, as is the case for the Seller Earnout Units, as any allocations to these interests (other than certain minimum tax distributions) would be subject to reversal in the event the Seller Earnout Units do not achieve a Triggering Event and are canceled. Additionally, certain consolidated subsidiaries of the Blue Owl Operating Group are partially owned by third-party investors. Such interests are also presented as noncontrolling interests.

~~Revenue Recognition~~

Revenues consist of management fees and administrative, transaction and other fees. The Company recognizes revenues when such amounts are probable that a significant reversal would not occur. The Company recognizes revenue at the time of transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services (i.e., the transaction price). Under this method, revenue is based on a contract with a determinable transaction price and distinct performance obligations with probable collectability. Revenues cannot be recognized until the performance obligations are satisfied and control is transferred to the customer.

~~Management Fees, Net~~

Management fees are recognized over the period in which the investment management services are performed because customers simultaneously consume and receive benefits continuously over time. Payment terms and fee rates of management fees vary by product but are generally collected on a quarterly basis and are not subject to clawback.

Management fees for the Company’s business development company (“BDC”) products are typically based on a percentage of average fair value of gross assets excluding cash. For certain BDCs, the management fee base may also include uncalled capital commitments. For the Company’s other Direct Lending products, management fees are typically based on gross or net asset value or investment cost, and also may include uncalled capital.

Management fees also include a fee based on the net investment income of the Company’s BDCs and similarly structured products (“Part I Fees”), which are subject to performance hurdles. Such Part I Fees are classified as management fees in the consolidated and combined statements of operations as they are predictable and recurring in nature, not subject to repayment and cash-settled each quarter.

Management fees for the Company’s GP minority equity investments strategy are generally based on a percentage of capital committed during the investment period, and thereafter generally based on the cost of unrealized investments. For the other GP Capital Solutions strategies, management fees are generally determined based on a percentage of investment cost.

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~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

Because management fees, including Part I Fees, are generally cash settled every quarter, the uncertainty underlying these fees are resolved each quarter. As such, on a quarterly basis, a subsequent significant reversal in relation to the cumulative revenue recognized is not probable for the quarter in arrears.

As discussed above, amortization of the Strategic Revenue-Share Purchase consideration is recorded as a reduction of management fees, net in the Company’s consolidated and combined statements of operations.

~~Administrative, Transaction and Other Fees~~

~~Administrative, transaction and other fees primarily include fee income, administrative fees and dealer manager revenue.~~

Fee income is earned for services provided to portfolio companies, which may include arrangement, syndication, origination, structuring analysis, capital structure and business plan advice and other services. The fees are generally recognized as income at the point in time when the services rendered are completed, as there is no ongoing performance requirement.

Administrative fees represent expenses incurred by certain professionals of the Company and reimbursed by products managed by the Company. The Company may incur certain costs in connection with satisfying its performance obligations under administrative agreements – including, but not limited to, employee compensation and travel costs – for which it receives reimbursements from the products it manages. The Company reports these expenses within compensation and benefits and general, administrative and other expenses and reports the related reimbursements as revenues within administrative, transaction and other fees (i.e., on a gross basis) in the consolidated and combined statements of operations.

Dealer manager revenue consists of commissions earned for providing distribution services to certain products. Dealer manager revenue is recorded on an accrual basis at the point in time when the services are completed, as there is no ongoing performance requirement.

The Company is also entitled to receive certain incentive income in the form of incentive fees and carried interest from the products that it manages. Incentive income is based on the investment performance generated over time, subject to the achievement of minimum return levels in certain products. Incentive fees from the Company’s BDCs and certain products within the GP debt financing strategy are realized at the end of a measurement period, typically quarterly or annually. Once realized, such incentive fees are no longer subject to reversal.

For certain non-BDC Direct Lending products and substantially all of the GP Capital Solutions products, incentive income is in the form of carried interest that is allocated to the Company based on cumulative fund performance over time, subject to the achievement of minimum return levels in certain products. The Company recognizes carried interest only to the extent that it is not probable that a significant reversal will occur for amounts recognized. Generally carried interest is earned after a return of all contributions and may be subject to a preferred return to investors; however, the Company is able to catch-up amounts subject to the preferred return in certain cases. Substantially all of the carried interest generated by the Company’s products is allocable to investors, including certain related parties, in vehicles in which the Company does not have a controlling financial interest, and therefore is not included in the Company’s consolidated and combined financial statements. The Company has not recognized any incentive income to-date.

~~Compensation and Benefits~~

~~Cash-Based Compensation~~

~~Compensation and benefits consist of salaries, bonuses, commissions, long-term deferral programs, benefits and payroll taxes. Compensation is accrued over the related service period.~~

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~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~Equity-Based Compensation~~

Equity-based compensation awards are reviewed to determine whether such awards are equity-classified or liability-classified. Compensation expense related to equity-classified awards is equal to their grant-date fair value and recognized on a straight-line basis over the service period. When certain settlement features require an award to be liability-classified, compensation expense is recognized over the service period, and such amount is adjusted at each balance sheet date through the settlement date to the then current fair value of such award.

~~See Note 8 for additional information on the Company’s equity-based compensation plans.~~

~~Foreign Currency~~

The functional currency of the Company’s foreign consolidated subsidiaries is the U.S. dollar, as their operations are considered extensions of U.S. parent operations. Monetary assets and liabilities denominated in foreign currencies are remeasured into U.S. dollars at the closing rates of exchange on the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are remeasured into U.S. dollars using the historical exchange rate. The profit or loss arising from foreign currency transactions are remeasured using the rate in effect on the date of any relevant transaction. Gains and losses on transactions denominated in foreign currencies due to changes in exchange rates are recorded within general, administrative and other expenses.

~~Income Taxes~~

Prior to the Business Combination, the Company’s earnings were subject to New York City unincorporated business tax (“UBT”), as well as certain U.S. Federal and foreign taxes. Subsequent to the Business Combination, substantially all of the earnings of the Blue Owl Operating Group remain subject to New York City UBT and additionally, the portion of earnings allocable to the Registrant is subject to corporate tax rates at the Federal and state and local levels. Therefore, the amount of income taxes recorded prior to the Business Combination is not representative of the expenses expected in the future.

The computation of the effective tax rate and provision at each interim period requires the use of certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income that is subject to tax, permanent differences between the Company’s GAAP earnings and taxable income, and the likelihood of recovering deferred tax assets existing as of the balance sheet date. The estimates used to compute the provision for income taxes may change throughout the year as new events occur, additional information is obtained or as tax laws and regulations change. Accordingly, the effective tax rate for future interim periods may vary materially.

Deferred income tax assets and liabilities resulting from temporary differences between the GAAP and tax bases of assets and liabilities are measured at the balance sheet date using enacted income tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. The Company offsets deferred income tax assets and liabilities for presentation in its consolidated and combined statements of financial condition when such assets and liabilities are within the same taxpayer and related to the same taxing jurisdiction.

The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryback or carryforward periods under the enacted tax law in the applicable tax jurisdiction. A valuation allowance is established when management determines, based on available information, that it is more-likely-than-not that deferred income tax assets will not be realized. Significant judgment is required in determining whether a valuation allowance should be established, as well as the amount of such valuation allowance.

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~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

The Company recognizes uncertain income tax positions when it is not more-likely-than-not a tax position will be sustained upon examination. If the Company were to recognize an uncertain tax position, the Company would accrue interest and penalties related to uncertain tax positions as a component of the income tax provision in the consolidated and combined statements of operations.

~~New Accounting Pronouncements~~

The Company considers the applicability and impact of all ASUs issued by the FASB. None of the ASUs that have been issued but not yet adopted are expected to have a material impact on the Company’s consolidated and combined financial statements.

~~3. DYAL ACQUISITION~~

~~The following table provides the consideration calculation in connection with the Dyal Acquisition (dollars in thousands):~~


~~Consideration~~
~~Equity consideration(1)~~	$	~~4,285,359~~
~~Cash consideration(2)~~	~~973,457~~
~~Tax receivable agreement(3)~~	~~101,645~~
~~Earnout Securities(3)~~	~~246,788~~
~~Total Consideration~~	$	~~5,607,249~~

~~Net Identifiable Assets Acquired and Goodwill~~
~~Assets acquired:~~
~~Due from related parties~~	$	~~13,442~~
~~Intangible assets~~	~~2,218,000~~
~~Deferred tax asset~~	~~29,770~~
~~Other assets, net~~	~~2,096~~
~~Total assets acquired~~	~~2,263,308~~
~~Liabilities assumed:~~
~~Accrued compensation~~	~~7,376~~
~~Deferred tax liability~~	~~170,753~~
~~Accounts payable, accrued expenses and other liabilities~~	~~41,352~~
~~Total liabilities assumed~~	~~219,481~~
~~Net Identifiable Assets Acquired~~	$	~~2,043,827~~
~~Goodwill(4)~~	$	~~3,563,422~~

~~(1)Represents share consideration issued to the Dyal Capital selling shareholders based on the fair value of the acquired business, reflecting a discount for lack of control.~~

~~(2)Includes cash consideration paid to reimburse seller for certain pre-acquisition expenses, net of cash received in the Business Combination.~~

~~(3)The TRA and Earnout Securities represent contingent consideration. See Note 9 for additional information on the valuation of these instruments.~~

~~(4)~~Goodwill represents the amount of total consideration in excess of net identifiable assets acquired. None of the goodwill balance is expected to be deductible by the Blue Owl Operating Partnerships for tax purposes.

During the third quarter of 2021, goodwill was adjusted due to a corresponding change in the institutional investor relationship intangible assets. The acquired investment management agreements, institutional investor relationships and

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~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~trademarks had a weighted-average amortization period from the date of acquisition of 14.3 years, 10.0 years and 7.0 years, respectively.~~

~~Finite Lived Intangible Assets, Net~~

~~The following table summarizes the Company’s intangible assets, net (dollars in thousands):~~

September 30, 2021 Useful Life
(in years) Remaining Weighted-Average Amortization Period as of September 30, 2021
Investment management agreements $ 1,859,900 1.4 - 20.0 14.0 years
Institutional investor relationships 291,400 10.0 9.6 years
Trademarks 66,700 7.0 6.6 years
Total Intangible Assets 2,218,000
Less: accumulated amortization (67,527)
Total Intangible Assets, Net $ 2,150,473

~~As of September 30, 2021, future amortization of finite-lived intangible assets is estimated to be (dollars in thousands):~~

Period Amortization
October 1, 2021 to December 31, 2021 $ 46,362
2022 183,180
2023 180,937
2024 181,433
2025 178,587
Thereafter 1,379,974
Total $ 2,150,473

Dyal Capital’s results are included in the Company’s consolidated results starting from the Closing Date. For the three and nine months ended September 30, 2021, the Company’s consolidated results included $97.5 million and $137.3 million of GAAP revenues related to the acquired business, respectively. Given the Company operates through 1 operating and reportable segment, the impact of the Dyal Acquisition to GAAP consolidated net income is not tracked on a standalone basis.

~~Pro Forma Financial Information~~

Unaudited pro forma revenues were $659.0 million and $374.6 million for the nine months ended September 30, 2021 and 2020, respectively. Unaudited pro forma net income (loss) allocated to Class A Shareholders was $(657.6) million and $(14.3) million for the nine months ended September 30, 2021 and 2020, respectively. This pro forma financial information was computed by combining the historical financial information of the predecessor Owl Rock and acquired Dyal Capital businesses as though the Business Combination was consummated on January 1, 2020, assuming a consistent ownership structure, effective tax rate and amortization of the fair value of acquired assets as of the Business Combination Date. The pro forma information does not reflect the potential benefits of cost and funding synergies, opportunities to earn additional revenues, or other factors, and therefore does not represent what the actual revenues and net income would have been had the businesses actually been combined as of this date.

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~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~4. DEBT OBLIGATIONS, NET~~

~~The table below summarizes outstanding debt obligations of the Company (dollars in thousands):~~

September 30, 2021
Current
Maturity
Date
Aggregate
Facility
Size
Outstanding
Debt
Amount Available(1)
Net Carrying Value
Average Interest
Rate(2)
2031 Notes 6/10/2031 $ 700,000 $ 700,000 $ — $ 683,557 3.13 %
Revolving Credit Facility 4/15/2024 150,000 — 149,842 — N/A
Total $ 850,000 $ 700,000 $ 149,842 $ 683,557

~~(1)Amount available is reduced by outstanding letters of credit related to certain leases.~~

~~(2)Average interest rates exclude the impact of deferred financing costs and discounts.~~

December 31, 2020
Current
Maturity
Date
Aggregate
Facility
Size
Outstanding
Debt
Amount Available(1)
Net Carrying Value
Average Interest
Rate(2)
Revolving Credit Facility #1 2/28/2022 $ 105,000 $ 92,895 $ 10,377 $ 92,522 4.75 %
Revolving Credit Facility #2 8/20/2021 22,000 17,365 4,635 17,303 4.49 %
Term Loan 10/25/2029 250,000 250,000 — 246,561 7.86 %
Total $ 377,000 $ 360,260 $ 15,012 $ 356,386

~~(1)Amount available is reduced by outstanding letters of credit related to certain leases.~~

~~(2)Average interest rates exclude the impact of deferred financing costs.~~

~~2031 Notes~~

On June 10, 2021, the Company, through its indirect subsidiary, Blue Owl Finance LLC, issued $700.0 million aggregate principal amount of 3.125% Senior Notes due 2031 (the “2031 Notes”). The 2031 Notes bear interest at a rate of 3.125% per annum and mature on June 10, 2031. Interest on the 2031 Notes will be payable semi-annually in arrears on June 10 and December 10 of each year, commencing December 10, 2021.

The 2031 Notes are fully and unconditionally guaranteed, jointly and severally, by the Blue Owl Operating Partnerships and certain of their respective subsidiaries. The guarantees are unsecured and unsubordinated obligations of the guarantors. All or a portion of the 2031 Notes may be redeemed at the Company’s option in whole, at any time, or in part, from time to time, prior to their stated maturity, subject to a make-whole redemption price; provided, however, that if the Company redeems any amounts on or after March 10, 2031, the redemption price for the 2031 Notes will be equal to 100% of the principal amount of the amounts redeemed, in each case, plus any accrued and unpaid interest. If a change of control repurchase event occurs, the 2031 Notes are subject to repurchase by the Company at a repurchase price in cash equal to 101% of the aggregate principal amount repurchased plus any accrued and unpaid interest. The 2031 Notes also provide for customary events of default and acceleration.

~~Revolving Credit Facility~~

On April 15, 2021, the Company entered into a $150.0 million credit facility (“Revolving Credit Facility”). The maximum capacity under the Revolving Credit Facility may be increased to $200 million through our exercise of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Revolving Credit Facility matures on April 15, 2024.

~~Table of Contents~~

~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

Borrowings under the credit facility bear interest at a rate per annum equal to: (i) LIBOR + 2.50% or (ii) an alternate base rate (“ABR”) + 1.50% (subject to an ABR floor of 1.00%). The ABR is the greater of: (a) Prime Rate, (b) NY Fed Bank Rate + 0.50%, and (c) LIBOR + 1.00%. The Company also pays a fee on the unused portion of the credit facility in the amount of (i) 0.25% per annum to the extent utilization is greater than 50% and (ii) 0.375% per annum to the extent utilization is less than 50%. Borrowings under the credit facility are secured by a continuing interest in certain management fees, incentive fees and other fees or distributions.

~~Revolving Credit Facility #1 and #2~~

~~In April 2021, the Company repaid all amounts outstanding under and terminated Revolving Credit Facility #1 and #2 in connection with closing the Revolving Credit Facility.~~

~~Term Loan~~

In June 2021, the Company prepaid the $250.0 million term loan agreement (the “Term Loan”) owed to a product managed by the Company with proceeds from the 2031 Notes. This prepayment resulted in a net loss on the retirement of debt of $15.8 million, which is inclusive of call protection premium and write-off of deferred financing costs.

~~5. LEASES~~

The Company primarily has non-cancelable operating leases for its headquarters in New York and various other offices. The operating lease for the Company’s headquarters does not include any renewal options (dollars in thousands).

Lease Cost Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
Operating lease cost $ 2,181 $ 4,809
Short term lease cost 117 166
Net Lease Cost $ 2,298 $ 4,975

Supplement Lease Cash Flow Information Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $ 1,390 $ 4,184
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 10,841 $ 56,909

~~Lease Term and Discount Rate~~

~~September 30, 2021~~

~~Weighted-average remaining lease term:~~

~~Operating leases~~

~~10.2 years~~

~~Weighted-average discount rate:~~

~~Operating leases~~

~~3.08~~

~~Table of Contents~~

~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

Future Maturity of Operating Lease Payments Operating Leases
October 1, 2021 to December 31, 2021 $ 1,198
2022 4,151
2023 9,688
2024 7,074
2025 7,010
Thereafter 51,630
Total Lease Payments 80,751
Imputed interest (12,905)
Total Lease Liabilities $ 67,846

The Company has future operating lease payments of $24.7 million related to a lease that has not commenced that was entered into as of September 30, 2021. Such lease payments are not included in the table above or the Company’s consolidated statements of financial condition as operating lease assets and operating lease liabilities. These operating lease payments are anticipated to commence in the second half of 2022 and continue for 10.0 years.

~~Table of Contents~~

~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~6. REVENUES~~

~~The following table presents a disaggregated view of the Company’s revenues:~~

Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2021 2020 2021 2020
Direct Lending Products
Diversified lending $ 90,885 $ 25,108 $ 251,136 $ 73,583
Technology lending 16,820 10,848 47,404 30,228
First lien lending 4,098 3,177 11,730 9,006
Opportunistic lending 1,166 13 2,470 13
Management Fees, Net 112,969 39,146 312,740 112,830
Administrative, transaction and other fees 37,434 14,897 85,280 30,979
Total GAAP Revenues - Direct Lending Products 150,403 54,043 398,020 143,809
GP Capital Solutions Products
GP minority equity investments 85,426 — 121,767 —
GP debt financing 6,165 — 6,901 —
Professional sports minority investments 160 — 160 —
Strategic Revenue-Share Purchase consideration amortization (970) — (970) —
Management Fees, Net 90,781 — 127,858 —
Administrative, transaction and other fees 6,691 — 9,481 —
Total GAAP Revenues - GP Capital Solutions Products 97,472 — 137,339 —
Total GAAP Revenues $ 247,875 $ 54,043 $ 535,359 $ 143,809

The table below presents the beginning and ending balances of the Company’s management fees and administrative, transaction and other fees receivable and unearned management fees. Substantially all of these amounts receivable are generally collected during the following quarter. A liability for unearned management fees is generally recognized when management fees are paid to the Company in advance. The entire change in unearned management fees shown below relates to amounts recognized as revenues in the current year period. Management fees receivable and administrative, transaction and other fees receivable are included within due from related parties and unearned management fees are included within accounts payable, accrued expenses and other liabilities in the Company’s consolidated and combined statements of financial condition.

Nine Months Ended September 30,
(dollars in thousands) 2021 2020
Management Fees Receivable
Beginning balance $ 78,586 $ 32,473
Ending balance $ 132,867 $ 36,075
Administrative, Transaction and Other Fees Receivable
Beginning balance $ 9,876 $ 8,667
Ending balance $ 16,376 $ 7,400
Unearned Management Fees
Beginning balance $ 11,846 $ —
Ending balance $ 10,702 $ —

~~Table of Contents~~

~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

The table below presents the changes in the Company’s Strategic Revenue-Share Purchase consideration. This asset is amortized as a reduction of management fees, net in the Company’s consolidated statements of operations over a weighted-average period of 12 years, which represents the average period over which the related customer revenues are expected to be recognized.

Strategic Revenue-Share Purchase Consideration
(dollars in thousands) Cash Class A Shares Total
December 31, 2020 $ — $ — $ —
Consideration paid 50,194 455,020 505,214
Amortization (96) (874) (970)
September 30, 2021 $ 50,098 $ 454,146 $ 504,244

~~7. OTHER ASSETS, NET~~

(dollars in thousands) September 30, 2021 December 31, 2020
Fixed assets, net:
Leasehold improvements $ 2,133 $ 2,133
Furniture and fixtures 1,603 1,612
Computer hardware and software 1,686 1,286
Accumulated depreciation and amortization (2,131) (1,675)
Fixed assets, net 3,291 3,356
Prepaid expenses 8,946 874
Deferred transaction costs 418 8,255
Other assets 14,779 1,306
Total $ 27,434 $ 13,791

~~8. EQUITY-BASED COMPENSATION~~

The Company may from time-to-time grant equity-based compensation awards in the form of RSUs and Blue Owl Operating Group Units, to its management, employees and the independent members of the Board under the terms of the 2021 Omnibus Equity Incentive Plan (“2021 Equity Incentive Plan”). The total number of Class A Shares and Blue Owl Operating Group Units, collectively, that may be issued under the 2021 Equity Incentive Plan is 101,230,522, of which 92,180,522 remain available as of September 30, 2021. To the extent that an award expires or is canceled, forfeited, terminated, surrendered or exchanged, the unissued awards will again be available for grant under the 2021 Equity Incentive Plan.

In addition, the Company granted Common Units and Seller Earnout Units in connection with the Business Combination, which grants were not made under the 2021 Equity Incentive Plan. A portion of these Common Units and Seller Earnout Units were considered equity-based compensation grants and a portion were considered consideration related to the Dyal Acquisition. The portion considered equity-based compensation is included in the disclosures below. On July 21, 2021, a Triggering Event occurred with respect to one-half of the Earnout Securities, as the volume weighted average Class A Share price equaled or exceeded $12.50 per share for 20 consecutive trading days ending July 21, 2021. In connection with the Triggering Event, the Company recognized $15.0 million of non-cash equity-based compensation expense in the third quarter of 2021.

~~Table of Contents~~

~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

The table below presents information regarding equity-based compensation expense included within compensation and benefits in the Company’s consolidated and combined statements of operations. As of September 30, 2021, no RSUs have been settled in cash or Class A Shares.

Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2021 2020 2021 2020
Common Units $ — $ — $ 1,121,139 $ —
Seller Earnout Units 15,722 — 53,180 —
Equity-classified RSUs — $ 12,300 $ — $ 12,300
Equity-Based Compensation Expense $ 15,722 $ 12,300 $ 1,174,319 $ 12,300
Corresponding tax benefit $ — $ — $ — $ —

The table below presents activity related to the Company’s unvested equity-based compensation awards for the nine months ended September 30, 2021. Common Units and Seller Earnout Units recorded as consideration related to the Dyal Acquisition are not included in these tables, as such units are not accounted for as equity-based compensation expense.

Common Units Seller Earnout Units Equity-Classified RSUs
Unvested Weighted-Average Grant Date Fair Value Per Unit Unvested Weighted-Average Grant Date Fair Value Per Unit Unvested Weighted-Average Grant Date Fair Value Per Unit
December 31, 2020 — $ — — $ — — $ —
Granted 132,808,673 9.00 11,608,004 5.43 9,050,000 10.00
Vested (132,808,673) 9.00 (5,804,002) 6.39 (9,050,000) 10.00
September 30, 2021 — $ — 5,804,002 $ 4.47 — $ —

~~Common Units~~

Prior to the Business Combination, certain members of Dyal Capital were entitled to receive rights to distributions of certain future profits (the “Profit Interest Units”) that were subject to certain forfeiture conditions that would have lapsed in 4 equal annual installments beginning on November 3, 2027. In connection with the Business Combination, the forfeiture conditions of the Profit Interest Units were modified to eliminate any future service requirements. The Profit Interest Units were replaced with Common Units on the Business Combination Date. The Company recognized a one-time non-cash equity-based compensation expense of $1.1 billion related to the replacement award, which represents the fair value under GAAP of the replacement awards (excluding the portion attributable to the Profit Interest Units prior to the Business Combination, which was included as equity consideration in Note 3). The fair value of the Common Units replacement award for GAAP purposes was determined based on the share price of the Company on the transaction date with the application of a 10% discount for lack of marketability calculated using an option pricing model with the following assumptions: volatility of 20% and a risk-free rate of 0.9%.

~~Table of Contents~~

~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~Seller Earnout Units~~

In connection with the Business Combination, the Company granted Seller Earnout Units to certain pre-Business Combination owners that are also ongoing members of management, which grants were accounted for as equity-based compensation. A portion of the Seller Earnout Units were immediately vested upon grant on the Business Combination Date because they were not subject to a service condition. As of September 30, 2021, there was $9.9 million remaining of unrecognized compensation expense related to the Seller Earnout Units, with a remaining weighted average amortization period of 3.4 years. As of September 30, 2021, the Triggering Events had not yet been met with respect to the Series E-2 Earnout Securities, and therefore all of such units are presented as unvested in the table above. In July 2021, a Triggering Event occurred with respect to the Series E-1 Seller Earnout Units, and such units were settled as Common Units. In connection with the Triggering Event, the Company recognized $15.0 million of non-cash equity-based compensation expense in the third quarter of 2021. See Note 1 for additional information. The fair value of the Seller Earnout Units was determined using the Monte Carlo simulation valuation model, with the following assumptions: volatility of 24%, risk-free rate of 0.9%, discount for lack of marketability of 12% and expected holding period of approximately 3 years.

~~RSUs~~

On September 15, 2020, the Company issued an award that was based on the fair value of Owl Rock and that was fully vested upon issuance. The original terms of the award required cash settlement at a future date and was, therefore, classified as a liability that was remeasured to its settlement value at each reporting period. The Company recorded compensation expense of $90.5 million in 2020 related to the award. Prior to and contingent on the close of the Business Combination, the Company modified this award to be settled in 9,050,000 RSUs that were immediately vested but would be settled in Class A Shares in future years. The modification did not result in any incremental compensation expense, as the value immediately prior to modification was greater than the value immediately following the modification. Accordingly, the Company reclassified the existing liability of $90.5 million to equity on the Business Combination Date.

~~9. FAIR VALUE DISCLOSURES~~

Fair value represents the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date (i.e., an exit price). The Company and the products it manages hold a variety of assets and liabilities, certain of which are not publicly traded or that are otherwise illiquid. Significant judgement and estimation go into the assumptions that drive the fair value of these assets and liabilities. The fair value of these assets and liabilities may be estimated using a combination of observed transaction prices, prices from third parties (including independent pricing services and relevant broker quotes), models or other valuation methodologies based on pricing inputs that are neither directly nor indirectly market observable. Due to the inherent uncertainty of valuations of assets and liabilities that are determined to be illiquid or do not have readily ascertainable fair values, the estimates of fair value may differ from the values ultimately realized, and those differences can be material.

GAAP prioritizes the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is impacted by a number of factors, including the type of assets and liabilities and the specific characteristics of the financial assets and liabilities. Financial assets and liabilities with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and lesser degree of judgment used in measuring fair value.

~~Financial assets and liabilities measured at fair value are classified and disclosed into one of the following categories based on the observability of inputs used in the determination of fair values:~~

•~~Level I – Quoted prices that are available in active markets for identical financial assets or liabilities as of the reporting date.~~

•Level II – Valuations obtained from independent third-party pricing services, the use of models or other valuation methodologies based on pricing inputs that are either directly or indirectly market observable as of the measurement date. These financial assets and liabilities exhibit higher levels of liquid market observability as compared to Level III financial assets and liabilities.

~~Table of Contents~~

~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

•Level III – Pricing inputs that are unobservable in the market and includes situations where there is little, if any, market activity for the financial asset or liability. The inputs into the determination of fair value of financial assets and liabilities in this category may require significant management judgment or estimation. The fair value of these financial assets and liabilities may be estimated using a combination of observed transaction prices, independent pricing services, models or other valuation methodologies based on pricing inputs that are neither directly nor indirectly market observable (e.g., cash flows, implied yields).

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial asset or liability when the fair value is based on unobservable inputs.

~~Fair Value Measurements Categorized within the Fair Value Hierarchy~~

~~The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis:~~

September 30, 2021
(dollars in thousands) Level I Level II Level III Total
Investments, at Fair Value
Corporate bonds $ — $ 239,463 $ — $ 239,463
Agency securities — 53,139 — 53,139
$ — $ 292,602 $ — $ 292,602
Liabilities, at Fair Value
TRA liability $ — $ — $ 123,122 $ 123,122
Warrant liability 43,141 — 24,750 67,891
Earnout Securities liability — — 661,707 661,707
Total Liabilities, at Fair Value $ 43,141 $ — $ 809,579 $ 852,720

~~Reconciliation of Fair Value Measurements Categorized within Level III~~

Unrealized gains and losses on the Company’s liabilities carried at fair value on a recurring basis are included within other loss in the consolidated and combined statements of operations. There were no transfers in or out of Level III during the periods presented. The following table sets for a summary of changes in the fair value of the Level III measurements for the three months ended September 30, 2021:

Level III Liabilities
(dollars in thousands) TRA Liability Warrant Liability Earnout Securities Liability Total
Beginning balance $ 102,791 $ 14,600 $ 954,247 $ 1,071,638
Additional TRA resulting from settlement of Earnout Securities liability 15,598 — — 15,598
Settlement of Earnout Securities liability — — (585,662) (585,662)
Net (gains) losses 4,733 10,150 293,122 308,005
Ending Balance $ 123,122 $ 24,750 $ 661,707 $ 809,579
Change in net unrealized (gains) on liabilities still recognized at the reporting date $ 4,733 $ 10,150 $ 242,132 $ 257,015

~~Table of Contents~~

~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~The following table sets forth a summary of changes in the fair value of the Level III measurements for the nine months ended September 30, 2021:~~

Level III Liabilities
(dollars in thousands) TRA Liability Warrant Liability Earnout Securities Liability Total
Beginning balance $ — $ — $ — $ —
Impact of the Business Combination 101,645 9,131 491,277 602,053
Additional TRA resulting from settlement of Earnout Securities liability 15,598 — — 15,598
Settlement of Earnout Securities liability — — (585,662) (585,662)
Net (gains) losses 5,879 15,619 756,092 777,590
Ending Balance $ 123,122 $ 24,750 $ 661,707 $ 809,579
Change in net unrealized (gains) on liabilities still recognized at the reporting date $ 5,879 $ 15,619 $ 461,490 $ 482,988

The settlement of Earnout Securities liability and related additional TRA resulting from the settlement of such liability are non-cash transactions, and as such have not been reflected in the consolidated and combined statements of cash flows.

~~Valuation Methodologies for Fair Value Measurements Categorized within Levels II and III~~

~~Corporate Bonds and Agency Securities~~

The fair value of corporate bonds and agency securities are estimated based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs. These investments are generally classified as Level II. The Company obtains prices from independent pricing services that generally utilize broker quotes and may use various other pricing techniques, which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data.

~~TRA Liability~~Tax Receivable Agreement

~~The TRA related~~As discussed in Note 10 to our consolidated and combined financial statements in this report, we may in the ~~Dyal Acquisition is considered contingent consideration~~future be required to make payments under the TRA. As of March 31, 2022, assuming no material changes in the relevant tax law and ~~is measured at fair value based on discounted future cash flows. The remaining TRA liability is not measured at fair value, as it was not part~~that we generate sufficient taxable income to realize the full tax benefit of the ~~Dyal Acquisition,~~increased amortization resulting from the increase in tax basis of certain Blue Owl Operating Group assets, we expect to pay approximately $806.5 million under the TRA. Future cash savings and ~~therefore was not contingent consideration.~~

~~Warrant Liability~~

~~The Public Warrants are traded on~~related payments under the ~~NYSE and are stated at the last reported sales price as~~TRA in respect of ~~each balance sheet date. These warrants are actively traded, and valuation adjustments are not applied, and therefore are classified as Level I.~~

~~The Company uses a Monte Carlo simulation model to value the Private Placement Warrants. The Company estimates the volatility~~subsequent exchanges of ~~its~~Blue Owl Operating Group Units for Class A or B Shares ~~based on the volatility implied by the Public Warrants. The risk-free interest rate is based on U.S. Treasuries for a maturity similar~~would be in addition to ~~the expected remaining life of the warrants. The expected term of the warrants is assumed to be equivalent to their remaining contractual term.~~these amounts.

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The obligation to make payments under the tax receivable agreement is an obligation of Blue Owl ~~Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated~~GP, and ~~Combined Financial Statements (Unaudited)~~

~~Earnout Securities Liability~~

~~In connection with~~any other corporate taxpaying entities that in the ~~Business Combination, the Company recognized a liability for a certain portion~~future may hold GP Units, and not of the ~~Earnout Securities issued (the remaining Earnout Securities were accounted for as equity-classified equity-based compensation). The fair value of~~Blue Owl Operating Group. We may need to incur debt to finance payments under the Earnout Securities liability is determined by using a Monte Carlo simulation model to forecast the future price of Class A Shares. The Company estimates the volatility of its Class A Shares based on the volatility implied by the Public Warrants and a review of historical volatility for similar publicly traded companies over a horizon that matches the expected remaining life of the Earnout Securities. The risk-free interest rate is based on U.S. Treasuries for a maturity similarTRA to the ~~expected remaining life of~~extent the ~~Earnout Securities. The expected remaining life of~~Blue Owl Operating Group does not distribute cash to Registrant or Blue Owl GP in an amount sufficient to meet our obligations under the ~~Earnout Securities is assumed to be the equivalent to their remaining contractual term.~~

~~Quantitative Inputs and Assumptions for Fair Value Measurements Categorized within Level III~~TRA.

The ~~following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of September 30, 2021:~~

Fair Value Valuation Technique Significant Unobservable Inputs Input Impact to Valuation from an Increase in Input
(dollars in thousands)
TRA liability $ 123,122 Discounted cash flow Discount rate 10 % Decrease
Warrant liability 24,750 Monte Carlo simulation Volatility 17 % Increase
Risk-free rate 1 % Increase
Earnout Securities liability 661,707 Monte Carlo simulation Volatility 24 % Increase
Risk-free rate 1 % Increase
Discount for lack of marketability 12 % Decrease
Total Liabilities, at Fair Value $ 809,579

~~Fair Value of Other Financial Instruments~~

Management estimates that the carrying value of the Company’s other investments and debt obligations, which are not carried at fair value, approximated their fair values as of September 30, 2021. The fair value measurements for the Company’s other investments are categorized as Level III and its debt obligations are categorized as Level I within the fair value hierarchy.

~~10. INCOME TAXES~~

~~The Company’s income~~actual increase in tax ~~provision and related income tax assets and liabilities are based on, among other things, an estimate of the impact of the Business Combination, inclusive of an analysis of tax~~ basis ~~and state tax implications~~ of the Blue Owl Operating Group assets resulting from an exchange or from payments under the TRA, as well as the amortization thereof and ~~their underlying assets~~the timing and ~~liabilities.~~ amount of payments under the TRA, will vary based upon a number of factors, including the following:

•The ~~Company’s estimate is based on~~amount and timing of our taxable income will impact the ~~most recent information available; however,~~payments to be made under the ~~impact~~TRA. To the extent that we do not have sufficient taxable income to utilize the amortization deductions available as a result of the ~~Business Combination cannot be finally determined until the Company’s 2021 tax returns have been filed. The~~increased tax basis ~~and state impact~~in the Blue Owl Operating Partnerships’ assets, payments required under the TRA would be reduced.

•The composition of the Blue Owl Operating Group ~~and their underlying~~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 ~~liabilities~~thus will impact the amount of future payments under the TRA resulting from any future exchanges.

•The extent to which future exchanges are ~~based on estimates subject~~taxable will impact the extent to ~~finalization~~which we will receive an increase in tax basis of the ~~Company’s tax returns,~~Blue Owl Operating Group assets as a result of such exchanges, and thus will impact the benefit derived by us and the ~~impact~~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.

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 ~~differ, possibly materially, from~~rely on debt or equity financing to facilitate these transactions in the ~~current estimates described herein.~~future if needed.

The Blue Owl Operating Partnerships, and prior to the Business Combination, Owl Rock, are partnerships for U.S. Federal income tax purposes subject to the New York City UBT. Effective upon the consummationOak Street Cash Earnout

A portion of the ~~Business Combination, generally all~~Oak Street Cash Earnout is classified as a liability and represents the fair value of the ~~income~~obligation to make future cash payments that would need to be made if all the ~~Registrant earns~~respective Oak Street Triggering Events occur. Further, the portion classified as compensation expense will be ~~subject~~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, ~~corporate-level income taxes~~we may rely on debt or equity financing to facilitate these transactions in the ~~United States. Further, the amount of income taxes recorded prior~~future. See Note 2 to ~~the Business Combination are not representative of the expenses expected in the future.~~our Financial Statements for additional information.

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Dividends and Distributions

~~(Prior~~’s share of Distributable Earnings, subject to ~~May 19, 2021, Owl Rock)~~

~~Notes~~adjustment as determined by our Board to ~~Consolidated~~be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and ~~Combined Financial Statements (Unaudited)~~

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 ~~Company had~~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 ~~effective~~assumed tax rate ~~of 5.6%~~equal to the highest effective marginal combined U.S. federal, New York State and 0.3% for the three months ended September 30, 2021 and 2020, respectively, and 2.4% and 0.4% for the nine months ended September 30, 2021 and 2020, respectively. The three and nine months ended September 30, 2021 effectiveNew York City income tax rates ~~differed from~~prescribed for an individual or corporate resident in New York City (taking into account certain assumptions set forth in the ~~statutory rate primarily due~~relevant partnership agreements). Tax Distributions will be made only to the portion of income allocated to noncontrolling interests, nondeductible compensation and state and local taxes. Prior to the Business Combination, the Company was not subject to corporate-level income taxes.

The Company evaluates the realizability of its deferred tax asset on a quarterly basis and may recognize or adjust any valuation allowance when it is more-likely-than-not that all or a portion of the deferred tax asset may not be realized. As of September 30, 2021, the Company has not recorded any valuation allowances. As of and prior to September 30, 2021, the Company has not recognized any liability for uncertain tax positions.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the tax years that remain open under the statute of limitations will be subject to examinations by the appropriate tax authorities. The Company is generally no longer subject to state or local examinations by tax authorities for tax years prior to 2017.

As a result of the Business Combination, the Registrant recognized a deferred tax asset in the amount of $363.6 million to account primarily for the difference between the Company’s book and tax basis in its investment inextent distributions from the Blue Owl Operating Partnerships for the relevant year were otherwise insufficient to cover the estimated assumed tax liabilities.

Risks to our Liquidity

LIBOR Transition

On March 5, 2021, the UK Financial Conduct Authority announced that it would phase out LIBOR as a ~~portion~~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 ~~the TRA liability that will eventually lead~~those exposures. Our senior management has oversight of these transition efforts. See “Risk Factors—Risks Related to ~~additional tax basis in the Blue Owl Operating Partnerships upon future TRA payments. Net deferred tax assets of $504.6 million related~~Legal and Regulatory Environment—Changes to the ~~purchase~~method of ~~partnership interests~~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.”

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Cash Flows Analysis


	Three Months Ended March 31,
(dollars in thousands)	2022		2021		$ Change
Net cash provided by (used in):
Operating activities	$	93,204	$	587	$	92,617
Investing activities	(22,607)		(295)		(22,312)
Financing activities	72,788		(3,358)		76,146
Net Change in Cash and Cash Equivalents	$	143,385	$	(3,066)	$	146,451

Operating Activities. Our net cash flows from ~~and future TRA payments~~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 pre-Business Combination owners of Owl Rock and was recorded through additional paid-in capital. Net deferred tax liabilities of $141.0 million related to the purchase of partnership interests from and future TRA payments to the pre-Business Combination owners of Dyal Capital, and therefore were recorded as partinclusion of the ~~net identifiable assets recognized as part of the Dyal Acquisition. The deferred tax assets will be recovered as the basis is amortized. Concurrent with the Business Combination~~GP Capital Solutions and ~~recording of these deferred tax assets, the Company recorded a TRA liability, net of fair value adjustments, of $461.0 million, of which $359.4 million and $101.6 million~~Real Estate related ~~to pre-Business Combination owners of Owl Rock (additional paid-in capital) and Dyal Capital (contingent consideration related to the Dyal Acquisition), respectively.~~

As a result of the Triggering Event for the Series E-1 Class E Shares, the Company recorded a deferred tax asset of $18.5 million to account primarily for the difference between the Company’s book and tax basis in its investment in the Blue Owl Operating Partnerships,cash flows, as well as ~~a portion~~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 ~~the TRA liability that will eventually lead~~leasehold improvements associated with certain office spaces. In 2021, cash flows related to additional tax basis in the Blue Owl Operating Partnerships upon future TRA payments. The $18.5 million deferred tax asset was recorded through additional paid-in capital. Concurrent with recording these deferred tax assets, the Company recordedinvesting activities were not material.

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 ~~TRA liability of $15.6 million. Additionally,~~net increase to our debt as a result of the ~~Strategic Revenue-Share Purchase, the Company recorded a deferred tax asset of $77.6 million~~proceeds from our 2032 Notes, which were used to ~~account for the book~~finance working capital needs and ~~tax basis difference in its investment~~general capital purposes, partially offset by repayments under our Revolving Credit Facility.

Critical Accounting Estimates

We prepare our Financial Statements in ~~connection~~accordance with ~~the transaction. The $77.6 million deferred tax asset was recorded through additional paid-in capital.~~

~~All~~U.S. GAAP. In applying many of these ~~adjustments to~~accounting principles, we make estimates that affect the ~~TRA liability~~reported amounts of assets, liabilities, revenues and ~~deferred tax assets and liabilities recorded through additional paid-in capital are non-cash transactions, and as such have not been reflected~~expenses in ~~the~~our consolidated and combined ~~statements~~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.

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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.~~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.

~~11. COMMITMENTS AND CONTINGENCIES~~

~~Tax Receivable Agreement~~

Pursuant to the TRA, the Company will pay 85% of certain tax benefits, if any, that it realizes (or in certain cases is deemed to realize) as a result of any increases in tax basis of the assets of the Blue Owl Operating Group related to the Business Combination and any subsequent exchanges of Blue Owl Operating Group Units for shares of the Registrant or cash.

~~Table of Contents~~

~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

Payments under the TRA will continue until all such tax benefits have been utilized or expired unless (i) the Company exercises its right to terminate the TRA and paying recipients an amount representing the present value of the remaining payments, (ii) there is a change of control or (iii) the Company breaches any of the material obligations of the TRA, in which case all obligations will generally be accelerated and due as if the Company had exercised its right to terminate the TRA. In each case, if payments are accelerated, such payments will be based on certain assumptions, including that the Company will have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions.

The estimate of the timing and the amount of future payments under the TRA involves several assumptions that do not account for the significant uncertainties associated with these potential payments, including an assumption that the Company will have sufficient taxable income in the relevant tax years to utilize the tax benefits that would give rise to an obligation to make payments.

The table below presents management’s estimate as of September 30, 2021, of the maximum amounts that would be payable under the TRA assuming that the Company will have sufficient taxable income each year to fully realize the expected tax savings. In light of the numerous factors affecting the Company’s obligation to make such payments, the timing and amounts of any such actual payments may differ materially from those presented in the table.

(dollars in thousands) Potential Payments Under the Tax Receivable Agreement
October 1, 2021 to December 31, 2021 $ —
2022 —
2023 41,371
2024 39,183
2025 39,816
Thereafter 483,146
Total Payments 603,516
Less adjustment to fair value for contingent consideration (121,006)
Total TRA Liability $ 482,510

~~Unfunded Product Commitments~~

As of September 30, 2021, the Company had unfunded investment commitments to its products of $4.6 million, which is exclusive of commitments that employees and other related parties have to the products.

~~Indemnification Arrangements~~

In the normal course of business, the Company enters into contracts that contain indemnities for related parties of the Company, persons acting on behalf of the Company or such related parties and third parties. The terms of the indemnities vary from contract to contract and the Company’s maximum exposure under these arrangements cannot be determined and has not been recorded in the consolidated statements of financial condition. As of September 30, 2021, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of material loss to be remote.

~~Litigation~~

From time to time, the Company is involved in legal actions in the ordinary course of business. Although there can be no assurance of the outcome of such legal actions, in the opinion of management, the Company does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial condition or cash flows.

~~Table of Contents~~

~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~12. RELATED PARTY TRANSACTIONS~~

~~The majority of the Company’s revenues, including all management fees and administrative fees, are earned from the products it manages, which are considered related parties.~~

~~Reimbursements from the Company’s Products~~

Administrative fees represent allocable compensation and other expenses incurred by the Company, pursuant to administrative and other agreements, that are reimbursed by products it manages. These administrative fees are included within administrative, transaction and other fees on the consolidated and combined statements of operations and totaled $11.4 million and $21.7 million during the three and nine months ended September 30, 2021, respectively, and $3.4 million and $9.2 million during the three and nine months ended September 30, 2020, respectively.

The Company also has arrangements in place with products that it manages, whereby certain costs are initially paid by the Company and subsequently are reimbursed by the products. These amounts are included within due from related parties in the Company’s consolidated and combined statements of financial condition.

(dollars in thousands) September 30, 2021 December 31, 2020
Management fees $ 132,867 $ 78,586
Administrative fees and other expenses paid on behalf of the Company’s products and other related parties 51,482 14,112
Due from Related Parties $ 184,349 $ 92,698

~~Employee Capital Invested in the Company’s Products~~

The Company’s assets under management include amounts from executives and other employees of approximately $2.5 billion and $480.0 million as of September 30, 2021 and December 31, 2020, respectively, and a portion of these investments are not charged fees. The increase from the prior year is a result of the Business Combination due to the addition of related party investments and commitments in the GP Capital Solutions products.

~~Expense Support and Caps Arrangements~~

The Company is party to expense support and cap arrangements with certain of the products it manages. Pursuant to these arrangements, the Company may absorb certain expenses of these products when in excess of stated expense caps or until such products reach certain profitability and cash flow thresholds. In certain cases, the Company is able to recover these expenses once certain profitability and cash flow thresholds are met. The Company recorded expenses (recoveries) related to these arrangements of $(4.1) million and $3.1 million for the three months ended September 30, 2021 and 2020, respectively, and $(1.1) million and $15.5 million for the nine months ended September 30, 2021 and 2020, respectively. These expenses, net of recoveries, are included in general, administrative and other expenses within the consolidated and combined statements of operations.

~~Aircraft and Other Services~~

In the normal course of business, the Company reimburses certain related parties for business use of their aircraft based on current market rates. Personal use of the aircraft is not charged to the Company. The Company recorded an expense for aircraft reimbursements of $121 thousand and $290 thousand for the three and nine months ended September 30, 2021, respectively and $82 thousand and $901 thousand for the three and nine months ended September 30, 2020, respectively.

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~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~13. EARNINGS (LOSS) PER SHARE~~

Basic earnings (loss) per share attributable to Class A Shareholders is computed by dividing the earnings or loss attributable to Class A Shares by the weighted-average number of shares of Class A Shares outstanding during the period. Class E Shares do not participate in the earnings or losses of the Company until a Triggering Event has occurred, and therefore no earnings per share has been presented for these shares. The Company’s Class C and D Shares represent voting interests and do not participate in the earnings of the Company. Accordingly, earnings per share is not presented for Class C and D Shares.

As of September 30, 2021, the Company had 9,050,000 RSUs that have vested but have not been settled in Class A Shares. These contingently issuable shares have been included in the calculation of basic earnings (loss) per Class A Share, but do not participate in earnings until they are settled in Class A Shares.

Diluted earnings (loss) per Class A Share attributable to common shareholders adjusts basic earnings (loss) per Class A Share for the potentially dilutive impact of RSUs, Seller Earnout Units, Common Units, and warrants. Unvested RSUs and all outstanding warrants are included in dilutive earnings per Class A Share using the treasury stock method. Common Units are included using the if-converted method, which takes into account any incremental income tax expense that would have arisen had the Common Units converted into Class A Shares as of the beginning of the period. Seller Earnout Units are included in the denominator in computing dilutive earnings (loss) per Class A Share only when a Triggering Event has occurred, and therefore the contingency has been met. As of September 30, 2021, the Triggering Events on the E-2 Seller Earnout Units had not yet occurred.

Three Months Ended September 30, 2021 Net Income Attributable to Class A Shareholders Weighted-Average Class A Shares Outstanding Loss Per Class A Share Number Units Excluded from Diluted Calculation
(dollars in thousands, except per share amounts)
Basic $ (53,323) 338,472,456 $ (0.16)
Effect of dilutive securities:
Common Units — — 956,301,495
Warrants — — 14,159,381
Earnout Securities — — 49,999,962
Diluted $ (53,323) 338,472,456 $ (0.16)

For the Period from May 19, 2021 to September 30, 2021 Net Loss Attributable to Class A Shareholders Weighted-Average Class A Shares Outstanding Loss Per Class A Share Number Units Excluded from Diluted Calculation
(dollars in thousands, except per share amounts)
Basic $ (450,512) 335,472,904 $ (1.34)
Effect of dilutive securities:
Common Units (1,292,764) 945,706,163 —
Warrants — — 14,159,381
Earnout Securities — — 49,999,962
Diluted $ (1,743,276) 1,281,179,067 $ (1.36)

The Company analyzed the calculation of earnings (loss) per share for periods prior to the Business Combination, and determined that it resulted in values that would not be meaningful to the users of the consolidated and combined financial statements, as the Company’s capital structure completely changed as a result of the Business Combination. Therefore, earnings (loss) per share information has not been presented for periods prior to the Business Combination.

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~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~14. SUBSEQUENT EVENTS~~

~~Dividend~~

On November 9, 2021, the Company announced a cash dividend of $0.09 per Class A Share. The dividend is payable on November 30, 2021, to holders of record as of the close of business on November 22, 2021.

~~2051 Notes~~

On October 7, 2021, the Company, through its indirect subsidiary, Blue Owl Finance LLC, issued $350.0 million aggregate principal amount of 4.125% Senior Notes due 2051 (the “2051 Notes”). The 2051 Notes bear interest at a rate of 4.125% per annum and mature on October 7, 2051. Interest on the 2051 Notes will be payable semi-annually in arrears on April 7 and October 7 of each year, commencing April 7, 2022.

The 2051 Notes are fully and unconditionally guaranteed, jointly and severally, by the Blue Owl Operating Partnerships and certain of their subsidiaries. The guarantees are unsecured and unsubordinated obligations of the guarantors. All or a portion of the 2051 Notes may be redeemed at the Company’s option in whole, at any time, or in part, from time to time, prior to their stated maturity, subject to a make-whole redemption price; provided, however, that if the Company redeems any amounts on or after April 7, 2051, the redemption price for the 2051 Notes will be equal to 100% of the principal amount of the amounts redeemed, in each case, plus any accrued and unpaid interest. If a change of control repurchase event occurs, the 2051 Notes are subject to repurchase by the Company at a repurchase price in cash equal to 101% of the aggregate principal amount repurchased plus any accrued and unpaid interest. The 2051 Notes also provide for customary events of default and acceleration.

~~Dividend Reinvestment Plan~~

On October 4, 2021, the Registrant adopted a Dividend Reinvestment Plan (the “DRIP”). Under the DRIP, eligible stockholders have the opportunity to reinvest the cash dividends paid on some or all of their Class A Shares in additional Class A Shares. Class A Shares will be purchased under the DRIP from newly issued shares, shares held in the treasury of the Registrant or shares purchased in the open market or by negotiated transactions. To the extent that Class A Shares issued under the DRIP are authorized but previously unissued shares or treasury shares rather than shares acquired in the open market, the DRIP will raise additional capital for the Company. The registration statement for the DRIP was declared effective on October 18, 2021.

~~Oak Street Acquisition~~

On October 18, 2021, the Company announced its entry into an agreement to acquire Oak Street Real Estate Capital, LLC and its investment advisory business (“Oak Street”). The Company will acquire 100% of Oak Street’s management company earnings and 100% of the right to allocate Oak Street’s carried interest earnings on future funds for an aggregate closing purchase price of $950 million. Oak Street’s equity holders will be entitled to receive their respective portions of the consideration in cash and may elect to receive up to approximately 75% of their respective portions of the consideration in the form of Common Units. Up to an aggregate of approximately 39 million Common Units are issuable in satisfaction of the closing purchase price. In addition, upon the achievement of certain performance thresholds, at future dates Oak Street equity holders will be entitled to earnout payments in cash or, at their election, up to an aggregate of approximately 39 million Common Units. The transaction is expected to close in the fourth quarter of 2021, subject to customary closing conditions.

~~Equity-Based Compensation Grants~~

Subsequent to September 30, 2021, the Company granted approximately 24.7 million RSUs and Blue Owl Operating Group Units to certain officers, employees and independent members of its Board in connection with the closing of the Business Combination. These grants made to certain officers and employees generally vest in ~~three~~ ~~equal installments on August 15, 2024, 2025 and 2026, and grants made to the independent members of the Company’s Board vest in full on May 19, 2022.~~

~~Table of Contents~~

~~Blue Owl Capital Inc.~~

~~(Prior to May 19, 2021, Owl Rock)~~

~~Notes to Consolidated and Combined Financial Statements (Unaudited)~~

~~Earnout Securities Triggering Event~~

On November 3, 2021, a Triggering Event occurred with respect to the remaining one-half of the Earnout Securities, as the volume weighted average Class A Share price exceeded $15.00 per share for 20 consecutive trading days ending November 3, 2021. As a result, (i) 7,495,432 Class E Shares were converted into an equal number of Class A Shares, (ii) 7,495,432 Seller Earnout Units were converted into an equal number of GP Units, (iii) 42,504,530 Seller Earnout Units were converted into an equal number of Common Units, and (iv) 42,504,530 non-economic, voting shares of the Registrant were issued to the holders of the converted Common Units (30,266,653 Class C Shares and 12,237,877 Class D Shares). In connection with the Triggering Event, the Company will recognize $9.9 million of unrecognized non-cash equity-based compensation expense in the fourth quarter of 2021.

~~Repurchase of Noncontrolling Interests~~

In November 2021, the Company repurchased the noncontrolling interests outstanding for a consolidated holding company of one of its BDC advisors. Total cash consideration of $297.1 million was paid using cash on hand.

~~Table of Contents~~

~~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 Quarterly Report. For a description of our business, please see “Business of Blue Owl” in the Current Report on Form 8-K filed on May 21, 2021.

~~2021 Third Quarter Overview~~

Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2021 2020 2021 2020
Net Loss Attributable to Blue Owl Capital Inc. (After May 19, 2021) / Owl Rock (Prior to May 19, 2021) $ (53,323) $ (8,622) $ (376,253) $ (28,125)
Fee-Related Earnings(1)
$ 141,858 $ 9,779 $ 286,339 $ 2,063
Distributable Earnings(1)
$ 142,750 $ 3,595 $ 268,140 $ (16,008)

(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.”

Net Loss Attributable to Blue Owl Capital Inc. (“Net Loss”) during the nine months ended September 30, 2021 was impacted by significant non-cash equity-based compensation expenses recognized in connection with the Business Combination. This unfavorable change year-over-year was partially offset by higher management fees from our Direct Lending products due to management fee waivers that were in place in the prior-year period, which impact was also favorable to our Fee-Related Earnings and Distributable Earnings results. Our Net Loss, Fee-Related Earnings and Distributable Earnings were all favorably impacted by the accretive impact from the GP Capital Solutions products that were acquired in connection with the Business Combination. Please see “—GAAP Results of Operations Analysis” and “—Non-GAAP Analysis” for a detailed discussion of the underlying drivers of our results.

~~Assets Under Management~~

During the third quarter of 2021, we continued to raise additional capital across both our Direct Lending and GP Capital Solutions products. We finished the quarter with $70.5 billion of AUM, which included $47.0 billion of FPAUM and $9.0 billion of AUM not yet paying fees. During the third quarter of 2021, approximately 97% of our management fees were earned on AUM that we refer to as permanent capital. See “—Assets Under Management” for additional information, including important information on how we define these metrics.

~~2051 Notes~~

On October 7, 2021, we completed the offering of $350.0 million of 2051 Notes. We intend to use the net proceeds of the notes for general corporate purposes. Please see Note 14 to our unaudited consolidated and combined financial statements included in this report for additional information.

~~Oak Street Acquisition~~

On October 18, 2021, we announced an entry into an agreement to acquire Oak Street using a combination of cash and Common Units. Please see Note 14 to our unaudited consolidated and combined financial statements included in this report for additional information.

~~Equity-Based Compensation Grants~~

Subsequent to September 30, 2021, we granted approximately 24.7 million RSUs and Blue Owl Operating Group Units to employees and independent members of our Board of Directors in connection with the closing of the Business Combination. These grants generally vest in three equal installments on August 15, 2024, 2025 and 2026.

~~Table of Contents~~

~~Repurchase of Noncontrolling Interests~~

In November 2021, we repurchased the noncontrolling interests outstanding for a consolidated holding company of one of our BDC advisors. Total cash consideration of $297.1 million was paid using cash on hand.

~~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.~~

Capital markets largely maintained a “pro-risk” stance in the third quarter of 2021, but the overall tone was decidedly more mixed compared to the second quarter of 2021 given both rising volatility and higher rates. In the U.S., credit performance remained resilient, outperforming both traditional fixed income and equities. Despite the market’s moderation in momentum, the prevailing backdrop of stable economic conditions, supportive policy and improved operating performance for business remained constructive for credit investing and capital deployment.

We believe the sustained low interest rate environment has resulted in increasing demand for yield, and significant tailwinds for direct lending. The search for yield has resulted in growing allocations to alternative assets, as investors seek to meet their return objectives. This rotation into alternatives has helped give rise to and sustain continued growth of the direct lending market. Our Direct Lending products continue to attract investor capital given its position as a higher-yielding product with defensive characteristics that provides an attractive income alternative to traditional liquid fixed income and a lower-risk alternative to private equity.

Similarly, in our GP Capital Solutions products, the rising needs of alternative asset managers, which we refer to as “GPs,” for liquidity and stable capital resulted in the strong growth of GP minority stake investing market. While previously GP minority stake investing was relatively infrequent and driven by opportunistic acquisitions by financial institutions and institutional investors, the years after the global financial crisis of 2007 and 2008 were marked by strong growth in the sector. Over the last several years, GP minority stake investing has rapidly evolved. We believe this growth in activity increased awareness of the strategic benefits that alternative asset managers can derive from partnering with long-term, stable capital providers and highlighted to the investor community the merits of investing in portfolios of GP minority investments. Notably, as of the date of this filing, Dyal Fund V has already committed approximately 65% of the capital we expect to raise for this product through four investments, and we just held our first close last November.

We believe that our disciplined investment philosophy across our distinct but complementary products contributes to the stability of our performance throughout market cycles. Our products have a stable base of permanent or long-term capital enabling us to invest in assets with a long-term focus over different points in a market cycle.

~~Table of Contents~~

~~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 not subject to fees, as further discussed below. AUM amounts presented below are as of September 30, 2021.


~~Blue Owl~~ ~~AUM: $70.5 billion~~

~~Direct Lending Products~~ ~~AUM: $34.6 billion~~						~~GP Capital Solutions Products~~ ~~AUM: $35.9 billion~~

~~Diversified Lending~~ ~~Commenced 2016~~ ~~AUM: $22.2 billion~~						~~GP Minority Equity~~ ~~Commenced 2010~~ ~~AUM: $34.7 billion~~
~~Technology Lending~~ ~~Commenced 2018~~ ~~AUM: $6.7 billion~~						~~GP Debt Financing~~ ~~Commenced 2019~~ ~~AUM: $1.0 billion~~
~~First Lien Lending~~ ~~Commenced 2018~~ ~~AUM: $3.7 billion~~						~~Professional Sports Minority Investments~~ ~~Commenced 2021~~ ~~AUM: $0.2 billion~~
~~Opportunistic Lending~~ ~~Commenced 2020~~ ~~AUM: $2.0 billion~~						~~Co-Investments and Structured Equity~~ ~~Not Yet Launched~~

~~Composition of Assets Under Management~~

Our AUM consists of FPAUM, AUM not yet paying fees, fee exempt AUM and net appreciation 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) and undeployed debt (to the extent we earn fees based on total asset values, inclusive of assets purchased using debt) that will generally begin earning fees once these amounts are invested in the underlying products. 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.

~~Table of Contents~~

~~Permanency and Duration of Assets Under Management~~

Our capital base is heavily weighted toward permanent capital. We use the term “permanent capital” to refer to AUM in our 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 elect, to return all or a portion of capital gains and investment income. Permanent capital includes certain products that are subject to management fee step downs and/or roll-offs over time. Substantially all of our remaining AUM is in what we refer to as “long-dated funds.” These are funds in which the contractual remaining life is five years or more.

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:

~~Direct Lending Products - AUM~~

~~The tables below present roll forwards of the AUM in our Direct Lending products:~~

Three Months Ended September 30, 2021 Three Months Ended September 30, 2020
(dollars in millions) Diversified
Lending
Technology
Lending
First Lien
Lending
Opportunistic
Lending
Direct Lending AUM Diversified
Lending Technology
Lending First Lien
Lending Opportunistic
Lending Direct Lending AUM
Beginning Balance $ 19,792 $ 6,233 $ 3,217 $ 1,914 $ 31,156 $ 13,892 $ 3,929 $ 2,688 $ — $ 20,509
New capital raised 501 — 150 73 724 734 127 — 1,039 1,900
Change in debt 1,907 199 316 — 2,422 445 449 193 1 1,088
Distributions (158) (26) (55) — (239) (139) (14) (11) — (164)
Change in value 197 247 32 38 514 259 50 30 (2) 337
Ending Balance $ 22,239 $ 6,653 $ 3,660 $ 2,025 $ 34,577 $ 15,191 $ 4,541 $ 2,900 $ 1,038 $ 23,670

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
(dollars in millions) Diversified
Lending Technology
Lending First Lien
Lending Opportunistic
Lending Direct Lending AUM Diversified
Lending Technology
Lending First Lien
Lending Opportunistic
Lending Direct Lending AUM
Beginning Balance $ 17,234 $ 5,387 $ 3,014 $ 1,466 $ 27,101 $ 12,490 $ 3,491 $ 2,655 $ — $ 18,636
New capital raised 945 8 150 605 1,708 1,486 444 — 1,039 2,969
Change in debt 3,915 861 510 (133) 5,153 1,524 563 246 1 2,334
Distributions (451) (62) (103) — (616) (547) (33) (27) — (607)
Change in value 596 459 89 87 1,231 238 76 26 (2) 338
Ending Balance $ 22,239 $ 6,653 $ 3,660 $ 2,025 $ 34,577 $ 15,191 $ 4,541 $ 2,900 $ 1,038 $ 23,670

~~Table of Contents~~

For the three and nine months ended September 30, 2021, our Direct Lending products experienced AUM growth of $3.4 billion and $7.5 billion, or 11% and 28%, respectively, as we continued to grow assets through a combination of fundraising and new debt facilities, as well as portfolio appreciation.

~~Direct Lending Products - FPAUM~~

Three Months Ended September 30, 2021 Three Months Ended September 30, 2020
(dollars in millions) Diversified
Lending Technology
Lending First Lien
Lending Opportunistic
Lending Direct Lending FPAUM Diversified
Lending Technology
Lending First Lien
Lending Opportunistic
Lending Direct Lending FPAUM
Beginning Balance $ 15,714 $ 5,366 $ 2,528 $ 554 $ 24,162 $ 11,001 $ 3,596 $ 1,963 $ — $ 16,560
New capital raised / deployed 2,527 363 (305) 223 2,808 882 395 71 47 1,395
Distributions (153) (22) (37) — (212) (132) (16) — — (148)
Change in value 198 245 9 30 482 259 52 18 (2) 327
Ending Balance $ 18,286 $ 5,952 $ 2,195 $ 807 $ 27,240 $ 12,010 $ 4,027 $ 2,052 $ 45 $ 18,134

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
(dollars in millions) Diversified
Lending Technology
Lending First Lien
Lending Opportunistic
Lending Direct Lending FPAUM Diversified
Lending Technology
Lending First Lien
Lending Opportunistic
Lending Direct Lending FPAUM
Beginning Balance $ 13,536 $ 4,772 $ 2,392 $ 162 $ 20,862 $ 10,337 $ 3,228 $ 1,713 $ — $ 15,278
New capital raised / deployed 4,600 792 (172) 576 5,796 1,990 763 344 47 3,144
Distributions (443) (71) (57) — (571) (556) (43) — — (599)
Change in value 593 459 32 69 1,153 239 79 (5) (2) 311
Ending Balance $ 18,286 $ 5,952 $ 2,195 $ 807 $ 27,240 $ 12,010 $ 4,027 $ 2,052 $ 45 $ 18,134

For the three and nine months ended September 30, 2021, we experienced FPAUM growth of $3.1 billion and $6.4 billion, or 13% and 31%, respectively, as we continued to deploy capital, both from equity raises and from debt facilities. Each of these drivers contributed to our overall growth in management fees, as we earn management fees on the total amount of gross assets for the majority of the FPAUM in our Direct Lending products.

~~Direct Lending Products - Additional Details~~

The charts below present as of September 30, 2021 our available capital, which we may also refer to as “dry powder,” and AUM not yet paying fees for our Direct Lending products (dollars in billions).

~~Table of Contents~~

~~GP Capital Solutions Products - AUM~~

Three Months Ended September 30, 2021 Three Months Ended September 30, 2020
(dollars in millions) GP Minority Equity GP Debt Financing Professional Sports Minority Investments Co-Investments and Structured Equity GP Capital Solutions AUM GP Minority Equity GP Debt Financing Professional Sports Minority Investments Co-Investments and Structured Equity GP Capital Solutions AUM
Beginning Balance $ 30,035 $ 1,021 $ 155 $ — $ 31,211 $ 22,050 $ 1,010 $ — $ — $ 23,060
New capital raised 1,556 — 42 — 1,598 (1) — — — (1)
Distributions (249) — — — (249) (91) — — — (91)
Change in value 3,392 (12) — — 3,380 522 (1) — — 521
Ending Balance $ 34,734 $ 1,009 $ 197 $ — $ 35,940 $ 22,480 $ 1,009 $ — $ — $ 23,489

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
(dollars in millions) GP Minority Equity GP Debt Financing Professional Sports Minority Investments Co-Investments and Structured Equity GP Capital Solutions AUM GP Minority Equity GP Debt Financing Professional Sports Minority Investments Co-Investments and Structured Equity GP Capital Solutions AUM
Beginning Balance $ 25,211 $ 1,009 $ — $ — $ 26,220 $ 21,990 $ 1,011 $ — $ — $ 23,001
New capital raised 2,793 — 197 — 2,990 218 — — — 218
Distributions (453) — — — (453) (698) — — — (698)
Change in value 7,183 — — — 7,183 970 (2) — — 968
Ending Balance $ 34,734 $ 1,009 $ 197 $ — $ 35,940 $ 22,480 $ 1,009 $ — $ — $ 23,489

For the three and nine months ended September 30, 2021, AUM in our GP Capital Solutions products increased by $4.7 billion and $9.7 billion, or 15% and 37%, respectively, which was primarily driven by portfolio appreciation, as well as new capital raises in Dyal Fund V.

~~GP Capital Solutions Products - FPAUM~~

Three Months Ended September 30, 2021 Three Months Ended September 30, 2020
(dollars in millions) GP Minority Equity GP Debt Financing Professional Sports Minority Investments Co-Investments and Structured Equity GP Capital Solutions FPAUM GP Minority Equity GP Debt Financing Professional Sports Minority Investments Co-Investments and Structured Equity GP Capital Solutions FPAUM
Beginning Balance $ 18,134 $ 523 $ — $ — $ 18,657 $ 17,096 $ 345 $ — $ — $ 17,441
New capital raised / deployed 1,084 1 92 — 1,177 — — — — —
Distributions (114) (1) — — (115) (11) — — — (11)
Ending Balance $ 19,104 $ 523 $ 92 $ — $ 19,719 $ 17,085 $ 345 $ — $ — $ 17,430

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
(dollars in millions) GP Minority Equity GP Debt Financing Professional Sports Minority Investments Co-Investments and Structured Equity GP Capital Solutions FPAUM GP Minority Equity GP Debt Financing Professional Sports Minority Investments Co-Investments and Structured Equity GP Capital Solutions FPAUM
Beginning Balance $ 17,050 $ 558 $ — $ — $ 17,608 $ 17,251 $ 295 $ — $ — $ 17,546
New capital raised / deployed 2,158 210 92 — 2,460 18 50 — — 68
Distributions (104) (245) — — (349) (184) — — — (184)
Ending Balance $ 19,104 $ 523 $ 92 $ — $ 19,719 $ 17,085 $ 345 $ — $ — $ 17,430

For the three and nine months ended September 30, 2021, FPAUM in our GP Capital Solutions products increased by $1,062.0 million and $2.1 billion, or 6% and 12%, respectively. The growth in the year-to-date period was primarily driven by additional commitments in Dyal Fund V.

~~Table of Contents~~

~~GP Capital Solutions Products - Additional Details~~

~~The charts below present as of September 30, 2021 our available capital and AUM not yet paying fees for our GP Capital Solutions products (dollars in billions):~~

~~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.

~~Direct Lending Products~~

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
Owl Rock Capital Corp. (ORCC) 2016 $ 14,637 $ 5,997 $ 6,009 $ 1,779 $ 5,877 $ 7,656 1.35x 1.27x 11.7 % 9.1 %
Owl Rock Capital Corp. II (ORCC II) (9) 2017 $ 2,633 $ 1,389 $ 1,362 $ 223 $ 1,359 $ 1,582 N/A 1.16x N/A 7.3 %
Technology Lending
Owl Rock Technology Finance Corp. (ORTF) 2018 $ 6,652 $ 3,180 $ 2,651 $ 198 $ 3,059 $ 3,257 1.29x 1.23x 23.2 % 18.1 %
First Lien Lending (10)
Owl Rock First Lien Fund Levered 2018 $ 3,112 $ 986 $ 813 $ 75 $ 864 $ 939 1.20x 1.16x 11.9 % 9.5 %
Owl Rock First Lien Fund Unlevered 2019 $ 175 $ 137 $ 5 $ 141 $ 146 1.10x 1.07x 5.9 % 3.9 %

~~(1)Includes reinvested dividends, 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.~~

~~Table of Contents~~

~~(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.

~~(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 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 applicable to 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 1.18x and 1.13x, respectively. The gross and net IRR for the Offshore Levered feeder is 11.0% and 7.4%, 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.

~~GP Capital Solutions Products~~

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 I 2011 $ 916 $ 1,284 $ 1,248 $ 583 $ 683 $ 1,266 1.16x 1.01x 3.4 % 0.3 %
Dyal II 2014 $ 2,373 $ 2,153 $ 1,846 $ 396 $ 1,807 $ 2,203 1.31x 1.19x 9.3 % 5.5 %
Dyal III 2015 $ 8,300 $ 5,318 $ 3,241 $ 2,424 $ 4,193 $ 6,617 2.43x 2.04x 33.1 % 24.8 %
Dyal IV 2018 $ 12,480 $ 9,041 $ 3,765 $ 1,825 $ 4,780 $ 6,605 2.08x 1.75x 139.5 % 86.1 %
Dyal V 2020 $ 4,966 $ 4,368 $ 144 $ — $ 631 $ 631 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 and are exclusive of investments made by 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.~~

~~(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 are calculated after giving effect to 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.

~~Table of Contents~~

~~GAAP Results of Operations Analysis~~

As a result of the Dyal Acquisition, prior year amounts are not comparable to current year amounts or expected future trends. Dyal Capital’s results of operations are included from the Business Combination Date.

~~Three Months Ended September 30, 2021, Compared to the Three Months Ended September 30, 2020~~

Three Months Ended September 30,
(dollars in thousands) 2021 2020 $ Change
Revenues
Management fees, net (includes Part I Fees of $43,659 and $2,701) $ 203,750 $ 39,146 $ 164,604
Administrative, transaction and other fees 44,125 14,897 29,228
Total Revenues, Net 247,875 54,043 193,832
Expenses
Compensation and benefits 96,910 44,214 52,696
Amortization of intangible assets 46,191 — 46,191
General, administrative and other expenses 28,438 13,642 14,796
Total Expenses 171,539 57,856 113,683
Other Loss
Net losses on investments (145) — (145)
Interest expense (6,112) (6,127) 15
Change in TRA liability (4,733) — (4,733)
Change in warrant liability (27,462) — (27,462)
Change in Earnout Securities liability (293,122) — (293,122)
Total Other Loss (331,574) (6,127) (325,447)
Loss Before Income Taxes (255,238) (9,940) (245,298)
Income tax benefit (14,391) (26) (14,365)
Consolidated and Combined Net Loss (240,847) (9,914) (230,933)
Net loss attributable to noncontrolling interests 187,524 1,292 186,232
Net Loss Attributable to Blue Owl Capital Inc. (After May 19, 2021) / Owl Rock (Prior to May 19, 2021) $ (53,323) $ (8,622) $ (44,701)

~~Revenues, Net~~

~~Management Fees~~. The increase in our management fees compared to the same period for the prior year was primarily driven by the $90.8 million accretive impact of our GP Capital Solutions’ management fees as a result of the Business Combination and the fee waivers in ORCC that expired in October 2020. These waivers totaled $40.5 million (inclusive of $22.3 million of Part I Fees) for the three months ended September 30, 2020. The remaining increase was driven primarily by the overall growth in FPAUM across all of our Diversified Lending product strategies. See Note 6 to our consolidated and combined 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 a $16.7 million increase in fee income earned for services provided to portfolio companies.~~

~~Expenses~~

~~Compensation and Benefits.~~ ~~Compensation and benefits increased due to a 72% increase in headcount from September 30, 2020 to September 30, 2021, which is inclusive of the increase in headcount related to the Dyal Acquisition.~~

~~Table of Contents~~

~~Amortization of Intangible Assets.~~ These expenses relate to the amortization of intangible assets acquired in connection with the Dyal Acquisition. See Note 3 to our unaudited consolidated and combined financial statements included in this report for additional information.

~~General, Administrative and Other Expenses~~. General, administrative and other expenses increased primarily driven by Transaction expenses of $4.1 million that were not eligible to be netted against proceeds for GAAP, a $4.0 million increase in placement fees primarily due to closes in Dyal Fund V, and a $2.7 million increase in other professional services driven by higher legal and accounting expenses associated with being a public company. The remaining net increase was primarily due to increased travel and office-related expenses as we transition from working remotely back to the office. Partially offsetting these increases in expense was a $7.1 million decrease in expense support to certain products.

~~Other Loss~~

~~Interest Expense~~. Interest expense remained relatively flat as higher interest rate borrowings previously outstanding under the $250.0 million Term Loan and our current and former revolving credit facilities were replaced by the lower interest rate borrowing under the $700.0 million 2031 Notes during the second quarter of 2021.

~~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 warrant liability was driven by the increase in the price of our publicly traded warrants, as such price directly impacts the Public Warrants and is also a significant input to the valuation of our Private Placement Warrants.

~~Change in Earnout Securities liability.~~ The change in Earnout Securities liability 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 Benefit~~

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. In connection with the Business Combination, the portion of income allocable to the Registrant is also generally subject to corporate tax rates at the Federal and state and local levels. This resulted in an increase in income tax benefit in the current year period. Please see Note 10 to our unaudited consolidated and combined financial statements included in this report 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 73% interest in the Blue Owl Operating Group. Prior to the Business Combination, amounts attributable to noncontrolling interests were not significant.

~~Table of Contents~~

~~Nine Months Ended September 30, 2021, Compared to the Nine Months Ended September 30, 2020~~

Nine Months Ended September 30,
(dollars in thousands) 2021 2020 $ Change
Revenues
Management fees, net (includes Part I Fees of $108,646 and $9,052) $ 440,598 $ 112,830 $ 327,768
Administrative, transaction and other fees 94,761 30,979 63,782
Total Revenues, Net 535,359 143,809 391,550
Expenses
Compensation and benefits 1,366,459 108,658 1,257,801
Amortization of intangible assets 67,527 — 67,527
General, administrative and other expenses 94,818 48,457 46,361
Total Expenses 1,528,804 157,115 1,371,689
Other Loss
Net losses on investments (145) — (145)
Net losses on retirement of debt (16,145) — (16,145)
Interest expense (17,787) (18,007) 220
Change in TRA liability (5,879) — (5,879)
Change in warrant liability (42,762) — (42,762)
Change in Earnout Securities liability (756,092) — (756,092)
Total Other Loss (838,810) (18,007) (820,803)
Loss Before Income Taxes (1,832,255) (31,313) (1,800,942)
Income tax benefit (43,402) (119) (43,283)
Consolidated and Combined Net Loss (1,788,853) (31,194) (1,757,659)
Net loss attributable to noncontrolling interests 1,412,600 3,069 1,409,531
Net Loss Attributable to Blue Owl Capital Inc. $ (376,253) $ (28,125) $ (348,128)

~~Revenues, Net~~

~~Management Fees~~. In addition to the increase in management fees resulting from the $127.9 million accretive impact of GP Capital Solution’s management fees from the Business Combination Date, management fees increased primarily due to the fee waivers in ORCC that expired in October 2020. These waivers totaled $123.5 million (inclusive of $70.5 million of Part I Fees) for the nine months ended September 30, 2020. The remaining increase was driven primarily by the overall growth in FPAUM across all of our Diversified Lending product strategies. See Note 6 to our consolidated and combined 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 a $41.7 million increase in fee income earned for services provided to portfolio companies. Also contributing to the year-over-year increase was $9.5 million of fees related to our GP Capital Solutions products, which are included from the Business Combination Date.

~~Expenses~~

~~Compensation and Benefits.~~ Compensation and benefits expenses increased due to non-cash equity-based compensation charges totaling $1.2 billion in connection with Blue Owl Operating Group Units issued in connection with the Business Combination, as discussed further in Note 8 to our unaudited consolidated and combined financial statements included in this report. Excluding these Business Combination-related charges, compensation and benefits increased $99.2 million, driven primarily by a 72% growth in headcount from September 30, 2020 to September 30, 2021, which is inclusive of the increase in headcount related to the Dyal Acquisition.

~~Table of Contents~~

~~General, Administrative and Other Expenses~~. The increase in general, administrative and other expenses was primarily due to Business Combination-related expenses of $40.2 million that were not eligible to be netted against proceeds for GAAP, a $4.8 million increase in other professional services driven by higher legal and accounting expenses associated with being a public company and a $4.7 million increase in placement fees primarily due to closes in Dyal Fund V. The remaining net increase was primarily due to increased travel and office-related expenses as we transition from working remotely back to the office. Partially offsetting these increases in expense was a $16.4 million decrease in expense support to certain products.

~~Other Loss~~

~~Net losses on retirement of debt~~. The net loss on retirement of debt in the current year period was primarily due to a $12.5 million call protection premium paid in connection with the early repayment of our Term Loan. The remaining amount relates to the write-off of unamortized deferred financing costs related to the Term Loan and former revolving credit facilities. See Note 4 to our unaudited consolidated and combined financial statements included in this report for additional information.

~~Interest Expense~~. Interest expense remained relatively flat as higher interest rate borrowings previously outstanding under the $250.0 million Term Loan and our current and former revolving credit facilities, were replaced by the lower interest rate borrowing under the $700.0 million 2031 Notes during the second quarter of 2021.

~~Income Tax Benefit~~

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. In connection with the Business Combination, the portion of income allocable to the Registrant is also generally subject to corporate tax rates at the Federal and state and local levels. This resulted in an increase in income tax benefit in the current year period. Please see Note 10 to our unaudited consolidated and combined financial statements included in this report 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 represent an approximately 73% interest in the Blue Owl Operating Group. Prior to the Business Combination, amounts attributable to noncontrolling interests were not significant.

~~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.

~~Table of Contents~~

~~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., Adjusted Revenues and Adjusted Expenses) on the same basis used to calculate Fee-Related Earnings, and such components are also non-GAAP measures and have been identified as “Adjusted” 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.

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; amortization of intangible assets; Business Combination and other strategic transaction-related expenses (“Transaction Expenses”); net gains (losses) on investments, changes in TRA, Earnout Securities and warrant liabilities; net losses on retirement of debt; interest and taxes. In addition, management reviews Adjusted Revenues by reducing GAAP revenues for certain general, administrative and other expenses that primarily relate to expense reimbursements from our products, which are presented gross for GAAP but net for Adjusted non-GAAP measures.

~~Distributable Earnings~~

Distributable Earnings is a supplemental non-GAAP measure of operating performance that equals Fee-Related Earnings less interest and amounts payable for taxes and TRA payments related to the respective period’s earnings. Amounts payable for taxes and the TRA presents the total estimated GAAP provision for current income taxes payable and the current payable under the TRA, 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. The GAAP provision for current income taxes payable and the current payable under 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.). Management believes that Distributable Earnings can be useful as a supplemental measure to our GAAP results in assessing the amount of earnings available for distribution.

~~Fee-Related Earnings and Distributable Earnings Summary~~

Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2021 2020 2021 2020
Adjusted Revenues $ 235,732 $ 50,140 $ 511,042 $ 131,741
Adjusted Expenses (92,405) (41,653) (221,460) (132,747)
Less: Noncontrolling interests included in Fee-Related Earnings (1,469) 1,292 (3,243) 3,069
Fee-Related Earnings $ 141,858 $ 9,779 $ 286,339 $ 2,063
Distributable Earnings $ 142,750 $ 3,595 $ 268,140 $ (16,008)

Fee-Related Earnings and Distributable Earnings for both the three and nine months ended September 30, 2021 increased year-over-year as a result of the accretive impact of the Dyal Acquisition, as well as higher revenues from our Direct Lending products as certain fee waivers in ORCC, our largest BDC, expired in the fourth quarter of 2020. There was also an increase in expenses primarily due to increased professional fees, placement fees and travel and office-related expenses as we transition from working remotely back to the office.

~~Table of Contents~~

~~Adjusted Revenues~~

Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2021 2020 2021 2020
Direct Lending Products
Diversified lending $ 90,885 $ 25,107 $ 251,136 $ 73,583
Technology lending 16,820 10,849 47,404 30,228
First lien lending 4,098 3,177 11,730 9,006
Opportunistic lending 1,166 13 2,470 13
Management Fees, Net 112,969 39,146 312,740 112,830
Administrative, transaction and other fees 31,012 10,994 69,474 18,911
Adjusted Revenues - Direct Lending Products 143,981 50,140 382,214 131,741
GP Capital Solutions Products
GP minority equity investments 85,426 — 121,767 —
GP debt financing 6,165 — 6,901 —
Professional sports minority investments 160 — 160 —
Co-investments and structured equity — — — —
Management Fees, Net 91,751 — 128,828 —
Administrative, transaction and other fees — — — —
Adjusted Revenues - GP Capital Solutions Products 91,751 — 128,828 —
Total Adjusted Revenues $ 235,732 $ 50,140 $ 511,042 $ 131,741

Adjusted Revenues increased primarily due to higher management fees due to the fee waivers in ORCC, our largest BDC, that expired in October 2020. These waivers totaled $40.5 million (inclusive of $22.3 million of Part I Fees) for the three months ended September 30, 2020, and $123.5 million (inclusive of $70.5 million of Part I Fees) for the nine months ended September 30, 2020. Also contributing to the increase were higher administrative, transaction and other fees due to higher fee income earned for services provided to portfolio companies. Adjusted Revenues also increased due to $91.8 million and $128.8 million accretive impact of Dyal Capital’s management fees from the Business Combination Date for the three and nine months ended September 30, 2021, respectively. The remaining increase was driven primarily by the overall growth in FPAUM across all of our Diversified Lending product strategies.

~~Adjusted Expenses~~

Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2021 2020 2021 2020
Adjusted Compensation and Benefits $ (70,664) $ (28,491) $ (171,345) $ (87,136)
Adjusted General, Administrative and Other Expenses (21,741) (13,162) (50,115) (45,611)
Total Adjusted Expenses $ (92,405) $ (41,653) $ (221,460) $ (132,747)

Adjusted Expenses increased primarily due to higher Adjusted Compensation and Benefits as a result of increased headcount, both in the legacy Owl Rock business, as well as due to an increase related to the Dyal Acquisition. Adjusted General, Administrative and Other Expenses were up primarily due to placement fees related to Dyal Fund V, expenses related to being a public company and increased travel and office-related expenses as we transition from working remotely back to the office. These increases were partially offset by lower expense support to certain products. 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 September 30, Nine Months Ended September 30,
(dollars in thousands) 2021 2020 2021 2020
GAAP Loss Before Income Taxes $ (255,238) $ (9,940) $ (1,832,255) $ (31,313)
Less: Net (income) loss allocated to noncontrolling interests included in Fee-Related Earnings (1,469) 1,292 (3,243) 3,069
Plus: Strategic Revenue-Share Purchase consideration amortization 970 — 970 —
Plus: Equity-based compensation 15,722 12,300 1,174,319 12,300
Plus: Amortization of intangible assets 46,191 — 67,527 —
Plus: Transaction Expenses 4,108 — 40,211 —
Plus: Interest expense 6,112 6,127 17,787 18,007
Less: Net losses on investments 145 — 145 —
Less: Net losses on early retirement of debt — — 16,145 —
Less: Change in TRA liability 4,733 — 5,879 —
Less: Change in warrant liability 27,462 — 42,762 —
Less: Change in Earnout Securities liability 293,122 — 756,092 —
Fee-Related Earnings 141,858 9,779 286,339 2,063
Less: Interest expense (6,112) (6,127) (17,787) (18,007)
Less: Taxes and TRA payable 7,004 (57) (412) (64)
Distributable Earnings 142,750 3,595 268,140 (16,008)
Plus: Interest expense 6,112 6,127 17,787 18,007
Plus: Taxes and TRA payable (7,004) 57 412 64
Plus: Fixed assets depreciation and amortization 191 230 456 689
Adjusted EBITDA $ 142,049 $ 10,009 $ 286,795 $ 2,752

Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2021 2020 2021 2020
GAAP Revenues $ 247,875 $ 54,043 $ 535,359 $ 143,809
Plus: Strategic Revenue-Share Purchase consideration amortization 970 — 970 —
Less: Administrative and other expenses (13,113) (3,903) (25,287) (12,068)
Adjusted Revenues $ 235,732 $ 50,140 $ 511,042 $ 131,741

Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2021 2020 2021 2020
GAAP Expenses $ 171,539 $ 57,856 $ 1,528,804 $ 157,115
Less: Administrative and other expenses (13,113) (3,903) (25,287) (12,068)
Less: Equity-based compensation (15,722) (12,300) (1,174,319) (12,300)
Less: Amortization of intangible assets (46,191) — (67,527) —
Less: Transaction Expenses (4,108) — (40,211) —
Adjusted Expenses $ 92,405 $ 41,653 $ 221,460 $ 132,747

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~~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 invest excess liquidity from time-to-time in corporate bonds, agency securities and other investments. We ended the third quarter with $138.9 million of cash and cash equivalents, excess liquidity investments of $292.6 million and $149.8 million available under our Revolving Credit Facility (amount available is reduced by outstanding letters of credit related to certain leases). 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 (as defined 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 discussed above, our current debt obligations consist of $700.0 million of our 2031 Notes and $350.0 million of our 2051 Notes, which were issued in October 2021. We also have $149.8 million available under our Revolving Credit Facility, which is available for general corporate purposes. 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 consolidated and combined financial statements in this report for additional information regarding our debt obligations.

Adjusted EBITDA was $142.0 million and $10.0 million for the three months ended September 30, 2021 and 2020, respectively, and $286.8 million and $2.8 million for the nine months ended September 30, 2021 and 2020, respectively. Please see “—Non-GAAP Reconciliations” for reconciliations of Adjusted EBITDA to the most comparable measures prepared in accordance with GAAP.

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Tax Receivable Agreement

As discussed in Note 1110 to our consolidated and combined financial statements in this report, we may in the future be required to make payments under the TRA. As of ~~September 30, 2021,~~March 31, 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 ~~$482.5~~$806.5 million under the ~~TRA, net of fair value adjustments.~~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.

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•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.

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 ~~unaudited consolidated and combined financial statements included in this report.~~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.

Oak Street Cash Earnout

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~~Earnout Securities~~

We classify certain Earnout Securities as liabilities in our consolidated and combined statements of financial condition, as described in Note 2 to our unaudited consolidated and combined financial statements included in this report. The settlement of these liabilities will be in the form of Class A Shares or Common Units upon a Triggering Event and will not require cash settlement.

Dividends and Distributions

The Blue Owl Operating Partnerships will make cash distributions (“Tax Distributions”) to the partners of such partnerships, including ~~our wholly owned subsidiary,~~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,~~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 ~~partnerships~~Blue Owl Operating Partnerships for the relevant year were otherwise insufficient to cover the estimated assumed tax liabilities.

Holders of Earnout Securities are not entitled to receive dividends or distributions (except Tax Distributions on Seller Earnout Units) until such Earnout Securities have had a Triggering Event. Upon a Triggering Event occurring, Earnout Securities will be entitled to receive dividends equal to the cumulative dividends or distributions as if the Earnout Securities were participating from the Business Combination date.

Risks to our Liquidity

Adverse market conditions, including from ~~the~~unexpectedly high and persistent inflation, a shifting interest rate environment, geopolitical events, and ongoing impact from COVID-19 ~~pandemic or any other market dislocation event,~~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.

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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 ~~2031~~ 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 ~~LIBOR~~SOFR rates at our option, or alternative rates that are not tied to LIBOR. Certain of our products ~~also~~ 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 ~~funds~~products and could affect our results of operations and financial ~~results”~~results.”

Table of ~~our Current Report on Form 8-K filed on May 21, 2021 for additional information.~~Contents

Cash Flows Analysis


		Nine Months Ended September 30,						Three Months Ended March 31,
(dollars in thousands)	(dollars in thousands)	2021		2020		$ Change			(dollars in thousands)	2022		2021		$ Change
Net cash provided by (used in):	Net cash provided by (used in):								Net cash provided by (used in):
Operating activities	Operating activities	$	127,370	$	(17,553)	$	144,923		Operating activities	$	93,204	$	587	$	92,617
Investing activities	Investing activities	(1,274,108)		(328)		(1,273,780)			Investing activities	(22,607)		(295)		(22,312)
Financing activities	Financing activities	1,273,983		17,814		1,256,169			Financing activities	72,788		(3,358)		76,146
Net Change in Cash and Cash Equivalents	Net Change in Cash and Cash Equivalents	$	127,245	$	(67)	$	127,312		Net Change in Cash and Cash Equivalents	$	143,385	$	(3,066)	$	146,451

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. ~~The cash flows related to Dyal Capital are included starting on the Business Combination Date, and therefore our historical operating cash flows are not representative of our future cash flows.~~

Net cash flows from operating activities increased from the prior year period due to the inclusion of the ~~Dyal~~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 ~~2020~~2021 discretionary bonuses, which were paid in the first quarter of ~~2021,~~2022, as compared to discretionary bonuses in ~~2019,~~2020, which were paid in the first quarter of ~~2020.~~2021.

Investing Activities. Cash flows ~~related to~~from investing activities for ~~2021~~2022 were primarily related to ~~the cash consideration paid in connection~~leasehold improvements associated with ~~the Dyal Acquisition.~~certain office spaces. In ~~2020,~~2021, cash flows related to investing activities were not material.

Financing Activities. Cash flows ~~related to~~from financing activities for ~~2021~~2022 were primarily driven by dividends on our Class A Shares and related distributions on our Common Units (noncontrolling interests). Our cash ~~proceeds~~flows 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 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. Cash flows related to financing activities ~~in 2021~~ also ~~included~~benefited from a net increase to our debt as a result of the proceeds from our ~~2031~~2032 Notes, which ~~proceeds~~ were used ~~in part~~ to ~~repay our previously outstanding Term Loan. We also made various borrowings~~finance working capital needs and general capital purposes, partially offset by repayments under our ~~previously outstanding revolving credit facilities.~~Revolving Credit Facility.

Our ~~2020~~2021 cash flows related to financing activities included borrowings and repayments under our previously outstanding revolving credit facilities. In addition, distributions related to pre-Business Combination-related earnings was another significant financing cash flow in the prior-year period.

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Critical Accounting Estimates

We prepare our ~~consolidated and combined financial statements~~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 ~~the~~unexpectedly high and persistent inflation, a shifting interest rate environment, geopolitical events, and ongoing impact from COVID-19 ~~pandemic and other factors.~~globally. For a summary of our significant accounting policies, see Note 2 to our ~~unaudited consolidated and combined financial statements included in this report.~~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.

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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 ~~flow,~~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 8 to our Financial Statements for additional details.

Earnout ~~Securities~~ Liability and Private Placement Warrants Liability

The fair values of our Earnout Securities liability and Private Placement Warrants liability were determined using ~~Monte Carlo simulations that have~~ 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, ~~appropriate risk-free rates,~~ 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. ~~We expect~~See Note 8 to our Financial Statements for additional details.

Equity-based Compensation

The fair values of our equity-based compensation RSU and Incentive Unit grants are generally determined using our Class A Share price on the ~~Earnout Securities to be settled, if at all, in shares~~grant date, adjusted for the lack of dividend participation during the ~~Registrant or Blue Owl Operating Group Units. The Private Placement Warrants would be settled in cash only at our option, except in~~vesting period, and the ~~case~~application of a ~~change in control~~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 ~~Registrant, which~~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 ~~view as not~~used Monte Carlo simulations that had various significant unobservable inputs. The assumptions used have a material ~~risk with~~impact on the valuation of these ~~instruments. Accordingly, while increases in~~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 ~~liabilities would negatively impact~~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 7 to our ~~GAAP results of operations, we would not expect them to negatively impact our liquidity.~~

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Financial Statements for additional details.

Deferred Tax Assets

~~As a result of the Business Combination, deferred tax assets comprise one of our largest assets in our consolidated and combined statements of financial condition.~~ Substantially all of our deferred tax assets relate to the goodwill and other intangible assets deductible for tax purposes, ~~that arose in connection with the purchase of Blue Owl Operating Group Units with proceeds from the Business Combination,~~ as well as subsequent payments expected to be made under the ~~TRA and other capital transactions that have occurred since the Business Combination.~~TRA. In accordance with relevant tax rules, we expect to take substantially all of these goodwill and other intangible deductions over ~~the~~a 15-year period following the ~~Business Combination Date.~~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.

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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.

~~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 ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, or that have been issued but that we have not yet adopted, are expected to substantively impact our future trends.

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Item 3. Quantitative and Qualitative Disclosures About Market ~~Risk~~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 ~~2031~~ Notes bear interest at fixed rates. Our Revolving Credit Facility bears interest at a variable rate based on ~~LIBOR~~SOFR (or an alternative base rate at our option). ~~Currently,~~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 ~~our~~ 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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~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.

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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 ~~Chief Executive Officer~~principal executive officer and ~~Chief Financial Officer,~~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.

Our management, ~~under the supervision and~~ with the participation of our ~~Chief Executive Officer~~principal executive officer and ~~Chief Financial Officer,~~principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures ~~pursuant to Rule 13a-15 under the Exchange Act~~ as of ~~September 30, 2021.~~March 31, 2022. Based onupon that evaluation and subject to the foregoing, our ~~Chief Executive Officer~~principal executive officer and ~~Chief Financial Officer have~~principal financial officer concluded that, as of March 31, 2022, the ~~end~~design and operation of ~~the period covered by this report,~~ our disclosure controls and procedures were effective to accomplish their objectives at athe reasonable assurance level.

We have not engaged an independent registered accounting firm to perform an audit of our internal control over financial reporting as of any balance sheet date or for any period reported in our financial statements. Presently, we are not an accelerated filer, as such term is defined by Rule 12b-2 of the Exchange Act, and therefore our management is not presently required to perform an annual assessment of the effectiveness of our internal control over financial reporting. Our independent public registered accounting firm will first be required to attest to the effectiveness of our internal control over financial reporting for our Annual Report on Form 10-K for the year ended December 31, 2022.

Changes in Internal ~~Controls~~Control over Financial Reporting

~~During the quarter ended June 30, 2021, we completed the Business Combination and the internal controls of Owl Rock became our internal controls. We are engaged~~There has been no change in ~~the process of the design and implementation of~~ our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) ~~in a manner commensurate with the scale of our operations subsequent to the Business Combination.~~

~~There have been no other changes in our internal control over financial reporting~~ during the quarter ended ~~September 30, 2021,~~March 31, 2022, that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, our internal control over financial reporting.

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PART ~~II–~~II - OTHER INFORMATION

Item 1. Legal Proceedings.

~~The section entitled “Litigation”~~We may from time to time be involved in ~~Note 11~~litigation and claims incidental to the conduct of our ~~unaudited~~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 included~~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 ~~this report are incorporated herein by reference.~~certain matters could have a material effect on Blue Owl’s financial results in any particular period. See Note 10 to our Financial Statements for additional information.

Item 1A. Risk Factors.

~~Factors~~Some factors that could cause our actual results to differ materially from those results in this report are ~~any of the~~described as risks ~~described below,~~ in our ~~definitive Proxy Statement/Prospectus (the “Proxy”) on Form S-4 filed with the SEC on April 22, 2021, and our Current Report on Form 8-K (the “Super 8-K”) filed with the SEC on May 21, 2021.~~Annual Report. Any of these factors could ~~result in a significant or material adverse effect on~~materially and adversely affect our business, financial condition, results of operations ~~or financial condition. Additional~~and cash flows. As of the date of this report, there have been no material changes to the risk factors ~~not presently known to us or that we currently deem immaterial~~previously disclosed in the Annual Report. We may, ~~also impair our business or results of operations. We may~~however, disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

We recently ceased to be an emerging growth company, and now are being required to comply with certain heightened reporting requirements. Fulfilling our obligations incident to being a public company, including compliance with the Exchange Act and the requirements of the Sarbanes-Oxley Act and the Dodd-Frank Act, are expensive and time-consuming, and any delays or difficulties in satisfying these obligations could have a material adverse effect on our future results of operations and our stock price.

In connection with the completion of the Business Combination on May 19, 2021, we became a public company. As a public company, we are subject to the reporting, accounting and corporate governance requirements of the NYSE, the Exchange Act, the Sarbanes-Oxley Act and Section 619 of the Dodd-Frank Act that apply to issuers of listed equity, which impose certain significant compliance requirements, costs and obligations upon us. On October 7, 2021, we ceased to be an “emerging growth company” as defined in the JOBS Act. The changes necessitated by being a publicly listed company and ongoing compliance with these rules and regulations require a significant commitment of additional resources and management oversight, which increases our operating costs and could divert our management and personnel from other business concerns. Further, to continue to comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff.Item 1B. Unresolved Staff Comments.

The Sarbanes-Oxley Act requires us, among other things, to maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight.None.

In addition, our internal resources and personnel may in the future be insufficient to avoid accounting errors, and our auditors may identify deficiencies, significant deficiencies or material weaknesses in our internal control environment in the future. Any failure to develop or maintain effective controls or any difficulties encountered implementing required new or improved controls could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE.

The expenses associated with being a public company include increases in auditing, accounting and legal fees and expenses, investor relations expenses, increased directors’ fees and director and officer liability insurance costs, registrar and transfer agent fees and listing fees, as well as other expenses. As a public company, we are required, among other things institute comprehensive compliance and investor relations functions. These obligations and constituents require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, cash flows and results of operation. Failure to comply with the requirements of being a public company could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities.

~~Table of Contents~~

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and there could be a material adverse effect on our business, financial condition, cash flows and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~Agreements~~Share Repurchases

The table below presents purchases made by or on behalf of ~~Purchase and Sale~~

~~On September 20, 2021,~~ Blue Owl Capital Inc. ~~(the “Company”) entered into three Agreements~~or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of ~~Purchase and Sale, dated as~~shares of September 20, 2021, by and among the Company and Blue Owl Capital Holdings LP on the one hand, and each of Koch Companies Defined Benefit Master Trust (“Koch Pension”), Koch Financial Assets III, LLC (“KFA”) and Illiquid Markets 1888 Fund, LLC (“Illiquid Markets” and, together with Koch Pension and KFA, each a “Dyal Fund Investor”), on the other hand (each, a “Purchase and Sale Agreement”). Pursuant to the terms of each Purchase and Sale Agreement, Dyal Fund Investors relinquished their respective rights to receive management fee shares with respect to Dyal Capital Partners III (A) LP, Dyal Capital Partners III (B) LP, Dyal Capital Partners IV (A) LP, Dyal Capital Partners IV (B) LP, Dyal Capital Partners IV (C) LP, Dyal Capital Partners V (A) LP, Dyal Capital Partners V (B) LP and/or Dyal Finance Investors (US) LP, as well as feeder funds, alternative vehicles, parallel funds and future investment funds, accounts, vehicles and/or other similar arrangements investing alongside therewith, or formed in succession thereof. Applicable Dyal Fund Investors also waived the respective competing fund covenants in respect of each of Dyal Capital Partners V (A) LP, Dyal Capital Partners V (B) LP and/or Dyal Finance Investors (US) LP, as applicable, and agreed to subscribe for incremental commitments to Dyal Capital Partners V (A) LP and/or Dyal Capital Partners V (B) LP. In exchange for the foregoing, on September 20, 2021, (a) the Company issued itsour Class A Shares during each of the indicated periods:


(dollars in thousands, except per share data)
Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs(1)
January 1, 2022 - January 31, 2022	—	$	—	—	$	100,000
February 1, 2022 - February 28, 2022	—	—		—	100,000
March 1, 2022 - March 31, 2022	2,000	12.09		2,000	75,825
Total	2,000			2,000

(1)On May 19, 2021, Blue Owl’s Board authorized the repurchase of up to $100.0 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 repurchase program was set to expire on May 19, 2022. On May 4, 2022, Blue Owl’s Board authorized renewing the repurchase program, and increased the amount to up to $150.0 million of Class A Shares. The repurchase program may be changed, suspended or discontinued at any time and will terminate upon the earlier of (i) ~~18,799,854~~the purchase of all shares to Koch Pension, (ii) 7,167,817 shares to KFA and (iii) 3,733,342 shares to Illiquid Markets, and (b) Blue Owl Capital Holdings paid a cash purchase price in the amount of (i) $36.2 million to Koch Pension, (ii) $13.8 million to KFA and (iii) $7.5 million to Illiquid Markets. This transaction is exempted from registrationavailable under the ~~Securities Act of 1933 Sec. 4(a)(2), as it is not a public offer. The securities in this transaction were registered under the Form S-1 declared effective on October 29, 2021.~~repurchase program or (ii) December 31, 2024.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

~~None.~~Not applicable.

Item 5. Other Information.

Effective November 4, 2021, Alan Kirshenbaum, the Company’s Chief Financial Officer and principal financial officer, has been designated by the Board of Directors of the Company as the Company’s principal accounting officer, replacing Junot Foradada, whom the Company expects will remain at the Company in his current position. Mr. Foradada’s replacement is not the result of any disagreement with management or with respect to the Company’s operations, policies or practices.None.

~~Table of Contents~~

Item 6. Exhibits


Exhibit Number						Description




2 .1						Agreement and Plan of Merger, dated October 17, 2021, by and among Blue Owl Capital Inc., Blue Owl Capital GP LLC, Blue Owl Capital Holdings LP, Blue Owl Capital Carry LP, Flyer Merger Sub I, LLC, Flyer Merger Sub II, LP, OSREC GP Holdings, LP, Oak Street Real Estate Capital, LLC, SASC Feeder, LP and Augustus, LLC (incorporated by reference to Exhibit 2.1 of Blue Owl Capital Inc. Current Report on Form 8-K filed on October 18, 2021)

3 .1						~~Certificate of Incorporation of Blue Owl Capital Inc. (incorporated by reference to Exhibit 3.2 of Blue Owl Capital Inc. Current Report on Form 8-K filed on May 21, 2021)~~
~~3.2~~*						~~Amended and Restated Bylaws of Blue Owl Capital Inc.~~




4 .1						Second Supplemental Indenture dated as of October 7, 2021 among Blue Owl Finance LLC, as issuer, Blue Owl Capital Holdings LP, Blue Owl Capital Carry LP, Owl Rock Capital Group LLC, Dyal Capital Holdings LLC, Owl Rock Capital GP Holdings LP and Dyal GP Holdings LLC, as guarantors, Blue Owl Capital Inc. solely for purposes of Section 6.3 and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.2 of Blue Owl Capital Inc. Current Report on Form 8-K filed on October 7, 2021)
4.2						~~Form of 4.125% Senior Note due 2051 (included in Exhibit 4.~~1 ~~hereto)~~































3.1*						Certificate of Incorporation of Blue Owl Capital Inc., as amended
4.1*						Description of Securities
4.2						Third Supplemental Indenture dated as of February 15, 2022 among Blue Owl Finance LLC, as issuer, Blue Owl Capital Holdings LP, Blue Owl Capital Carry LP, Owl Rock Capital Group LLC, Dyal Capital Holdings (incorporated by reference to Exhibit 4.2 of Blue Owl Capital Inc. Current Report on Form 8-K filed on February 15, 2022)
4.3						Form of 4.375% Senior Note due 2032 (included in Exhibit 4.2 hereto) (incorporated by reference to Exhibit 4.3 of Blue Owl Capital Inc. Current Report on Form 8-K filed on February 15, 2022)
10.1						Second Amended and Restated Limited Partnership Agreement of ~~Purchase and Sale, dated as of September 20, 2021, by and among~~ Blue Owl Capital Carry LP (incorporated by reference to Exhibit 10.2 of Blue Owl Capital Inc., Current Report on Form 8-K filed on October 25, 2021)
10.2						Second Amended and Restated Limited Partnership Agreement of Blue Owl Capital Holdings LP ~~and Illiquid Markets 1888 Fund, LLC~~(incorporated by reference to Exhibit 10.3 of Blue Owl Capital Inc. Current Report on Form 8-K filed on October 25, 2021)
10.3						Amendment No. 1 to Blue Owl Capital Inc. 2021 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.1 of Blue Owl Capital Inc. Current Report on Form 8-K filed on ~~September 20,~~October 25, 2021)
~~10.~~210.4						~~Agreement~~Form of Purchase and Sale, dated as of September 20, 2021, by and among Blue Owl Capital Inc., Blue Owl Capital Holdings LP and Koch Financial Assets III, LLC (incorporated by reference to Exhibit 10.2 of Blue Owl Capital Inc. Current Report on Form 8-K filed on September 20, 2021)
~~10.~~3						Incentive Unit Grant Agreement of Purchase and Sale, dated as of September 20, 2021, by and among Blue Owl Capital Inc., Blue Owl Capital Holdings LP and Koch Companies Defined Benefit Master Trust (incorporated by reference to Exhibit 10.3 of Blue Owl Capital Inc. Current Report on Form 8-K filed on September 20, 2021)
~~10.~~4						~~Registration Rights Agreement, dated as of September 20, 2021, by and between Blue Owl Capital Inc. and Koch Financial Assets III, LLC~~ (incorporated by reference to Exhibit 10.4 of Blue Owl Capital Inc. Current Report on Form 8-K filed on ~~September 20,~~October 25, 2021)
~~10.~~510.5						~~Registration Rights~~Form of RSU Award Agreement ~~dated as of September 20, 2021, by and between Blue Owl Capital Inc. and Koch Companies Defined Benefit Master Trust~~for Directors (incorporated by reference to Exhibit 10.5 of Blue Owl Capital Inc. Current Report on Form 8-K filed on ~~September 20,~~October 25, 2021)
~~10.~~610.6						~~Registration Rights~~Form of RSU Award Agreement ~~dated as of September 20, 2021, by and between Blue Owl Capital Inc. and Illiquid Markets 1888 Fund, LLC~~for Employees (incorporated by reference to Exhibit 10.6 of Blue Owl Capital Inc. Current Report on Form 8-K filed on ~~September 20,~~October 25, 2021)
31.1*						Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002
31.2*						Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002
32.1*						Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002
32.2*						Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002
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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, (ii) the Consolidated and Combined Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (iii) the Consolidated and Combined Statements of Changes in Shareholders’ Equity (Deficit) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (iv) the Consolidated and Combined Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and (v) the Notes to the Consolidated and Combined Financial ~~Statements.~~ Statements
104*						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).




*						Filed herewith

~~Table of Contents~~

SIGNATURES

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


Date: ~~November 9, 2021~~May 5, 2022	Blue Owl Capital Inc.

	By:	/s/ Alan Kirshenbaum
		Alan Kirshenbaum
		Chief Financial Officer

6127

INDEX TO FINANCIAL STATEMENTS (UNAUDITED)


			Page

Consolidated and Combined Statements of Financial Condition as of March 31, 2022 and December 31, 2021			F-2
Consolidated and Combined Statements of Operations for the three months ended March 31, 2022 and 2021			F-3
Consolidated and Combined Statements of Changes in Shareholder’s Equity (Deficit) for the three months ended March 31, 2022 and 2021			F-4
Consolidated and Combined Statements of Cash Flows for the three months ended March 31, 2022 and 2021			F-6
Notes to Consolidated and Combined Financial Statements			F-7

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)


	March 31, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	185,952	$	42,567
Due from related parties	211,582		224,576
Operating lease assets	86,241		86,033
Strategic Revenue-Share Purchase consideration, net	486,400		495,322
Deferred tax assets	648,536		635,624
Intangible assets, net	2,549,885		2,611,411
Goodwill	4,132,245		4,132,245
Other assets, net (includes investments of $— and $1,311 at fair value, respectively)	60,090		38,620
Total Assets	$	8,360,931	$	8,266,398
Liabilities
Debt obligations, net	$	1,412,539	$	1,174,167
Accrued compensation	92,565		155,606
Operating lease liabilities	90,133		88,480
Deferred tax liabilities	44,376		48,962
TRA liability (includes $120,978 and $111,325 at fair value, respectively)	695,195		670,676
Warrant liability, at fair value	51,040		68,798
Earnout liability, at fair value	144,296		143,800
Accounts payable, accrued expenses and other liabilities	85,943		68,339
Total Liabilities	2,616,087		2,418,828
Commitments and Contingencies (Note 10)	0		0
Shareholders’ Equity


Class A Shares, par value $0.0001 per share, 2,500,000,000 authorized, 407,639,908 and 404,919,411 issued and outstanding, respectively	41		40

Class C Shares, par value $0.0001 per share, 1,500,000,000 authorized, 670,147,025 and 674,766,200 issued and outstanding, respectively	67		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	2,166,232		2,160,934
Accumulated deficit	(549,826)		(497,506)
Total Shareholders’ Equity Attributable to Blue Owl Capital Inc.	1,616,546		1,663,567
Shareholders’ equity attributable to noncontrolling interests	4,128,298		4,184,003
Total Shareholders’ Equity	5,744,844		5,847,570
Total Liabilities and Shareholders’ Equity	$	8,360,931	$	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 March 31,
		2022		2021
Revenues
Management fees, net (includes Part I Fees of $46,739 and 28,914, respectively)		$	247,632	$	94,713
Administrative, transaction and other fees		28,345		13,511

Total Revenues, Net		275,977		108,224
Expenses
Compensation and benefits		193,892		47,984
Amortization of intangible assets		61,526		—
General, administrative and other expenses		43,294		14,860
Total Expenses		298,712		62,844
Other (Loss) Income
Net gains on investments		5		—


Interest expense		(12,834)		(5,858)
Change in TRA liability		(9,652)		—
Change in warrant liability		17,758		—
Change in earnout liability		(496)		—
Total Other (Loss) Income		(5,219)		(5,858)
(Loss) Income Before Income Taxes		(27,954)		39,522
Income tax (benefit) expense		(5,038)		188
Consolidated and Combined Net (Loss) Income		(22,916)		39,334
Net loss attributable to noncontrolling interests		11,101		80
Net (Loss) Income Attributable to Blue Owl Capital Inc. (After May 19, 2021) / Owl Rock (Prior to May 19, 2021)		$	(11,815)	$	39,414



Net Loss Attributable to Class A Shares		$	(11,815)
Net Loss per Class A Share
Basic		$	(0.03)
Diluted		$	(0.03)
Weighted-Average Class A Shares
Basic(1)		417,108,929
Diluted		417,108,929

(1)Included in the weighted-average Class A Shares outstanding were 10,928,095 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 12.

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 March 31,
		2022		2021
Members’ Deficit Prior to the Business Combination
Beginning balance		$	—	$	(507,687)

Distributions		—		(9,125)
Comprehensive income prior to the Business Combination Date		—		39,414

Ending Balance		$	—	$	(477,398)






Class A Shares Par Value
Beginning balance		$	40	$	—




Class C Shares and Common Units exchanged for Class A Shares		1		—

Ending Balance		$	41	$	—







Class C Shares Par Value
Beginning balance		$	67	$	—





Ending Balance		$	67	$	—

Class D Shares Par Value
Beginning balance		$	32	$	—




Ending Balance		$	32	$	—

F-4


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 March 31,
		2022		2021

Additional Paid-in Capital
Beginning balance		$	2,160,934	$	—
Deferred taxes on capital transactions		9,639		—
TRA liability on capital transactions		(14,868)		—
Exercise of warrants		2		—
Equity-based compensation		2,781		—


Withholding taxes on vested RSUs		(214)		—
Class A Share repurchases		(24,238)		—
Reallocation between additional paid-in capital and noncontrolling interests due to changes in Blue Owl Operating Group ownership		32,196		—
Ending Balance		$	2,166,232	$	—

Accumulated Deficit
Beginning balance		$	(497,506)	$	—
Cash dividends declared on Class A Shares		(40,505)		—
Comprehensive loss		(11,815)		—
Ending Balance		$	(549,826)	$	—
Total Shareholders' Equity Attributable to Blue Owl Capital Inc.		$	1,616,546	$	—

Shareholders’ Equity Attributable to Noncontrolling Interests
Beginning balance		$	4,184,003	$	6,526







Equity-based compensation		84,018		—


Contributions		5,131		2,654

Distributions		(101,038)		—
Withholding taxes on vested RSUs		(519)		—
Reallocation between additional paid-in capital and noncontrolling interests due to changes in Blue Owl Operating Group ownership		(32,196)		—
Comprehensive loss		(11,101)		(80)

Ending Balance		$	4,128,298	$	9,100
Total Shareholders' Equity		$	5,744,844	$	(468,298)

Cash Dividends Paid per Class A Share		$	0.10	$	—

Number of Class A Shares
Beginning balance		404,919,411		—

Class A Share repurchases		(2,000,000)		—
Shares delivered on vested RSUs		101,122		—

Class C Shares and Common Units exchanged for Class A Shares		4,619,175		—
Exercise of warrants		200		—
Ending Balance		407,639,908		—







Number of Class C Shares
Beginning balance		674,766,200		—




Class C Shares and Common Units exchanged for Class A Shares		(4,619,175)		—

Ending Balance		670,147,025		—

Number of Class D Shares
Beginning balance		319,132,127		—



Ending Balance		319,132,127		—

The accompanying notes are an integral part of these consolidated and combined financial statements.

F-5

Blue Owl Capital Inc.

Consolidated and Combined Statements of Cash Flows (Unaudited)

(Prior to May 19, 2021, Owl Rock)

(Dollars in Thousands)


	Three Months Ended March 31,
	2022		2021
Cash Flows from Operating Activities
Consolidated and combined net (loss) income	$	(22,916)	$	39,334
Adjustments to reconcile consolidated and combined net (loss) income to net cash from operating activities:
Amortization of intangible assets	61,526		—
Equity-based compensation	96,601		—
Depreciation and amortization of fixed assets	218		131
Amortization of debt discounts and deferred financing costs	1,022		218
Amortization of investment discounts and premiums	6		—
Non-cash lease expense	1,444		1,148

Net gains on investments, net of dividends	(5)		—
Change in TRA liability	9,652		—
Change in warrant liability	(17,758)		—
Change in earnout liability	496		—
Deferred income taxes	(7,860)		—
Changes in operating assets and liabilities:
Due from related parties	12,994		(7,555)
Strategic Revenue-Share Purchase consideration	8,922		—
Other assets, net	4,099		(11,252)
Accrued compensation	(72,843)		(26,045)
Accounts payable, accrued expenses and other liabilities	17,606		4,608
Net Cash Provided by Operating Activities	93,204		587
Cash Flows from Investing Activities
Purchase of fixed assets	(18,379)		(295)
Purchase of investments	(5,750)		—
Proceeds from investment sales and maturities	1,522		—
Net Cash Used in Investing Activities	(22,607)		(295)
Cash Flows from Financing Activities




Proceeds from debt obligations	395,060		97,898
Debt issuance costs	(4,854)		—
Repayments of debt obligations, including retirement costs	(153,000)		(94,745)
Withholding taxes on vested RSUs	(733)		—
Dividends paid on Class A Shares	(40,505)		—
Proceeds from exercise of warrants	2		—
Class A Share repurchases	(24,238)		—

Contributions from noncontrolling interests	2,094		2,614
Distributions to noncontrolling interests	(101,038)		(9,125)
Net Cash Provided by (Used in) Financing Activities	72,788		(3,358)
Net Increase (Decrease) in Cash and Cash Equivalents	143,385		(3,066)
Cash and cash equivalents, beginning of period	42,567		11,630
Cash and Cash Equivalents, End of Period	$	185,952	$	8,564
Supplemental Information
Cash paid for interest	$	215	$	5,675
Cash paid for income taxes	$	113	$	230

The accompanying notes are an integral part of these consolidated and combined financial statements.

F-6

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

1. ORGANIZATION

Blue Owl Capital Inc. (the “Registrant”), a Delaware corporation, together with its consolidated subsidiaries (collectively, the “Company” or “Blue Owl”), is a global alternative asset manager. Anchored by a strong permanent capital base, the Company deploys private capital across Direct Lending, GP Capital Solutions and Real Estate strategies on behalf of institutional and private wealth clients.

The Company conducts its operations through Blue Owl Capital Holdings LP (“Blue Owl Holdings”) and Blue Owl Capital Carry LP (“Blue Owl Carry”). Blue Owl Holdings and Blue Owl Carry are referred to, collectively, as the “Blue Owl Operating Partnerships,” and collectively with their consolidated subsidiaries, as the “Blue Owl Operating Group.” The Registrant holds its controlling financial interests in the Blue Owl Operating Group indirectly through Blue Owl Capital Holdings GP LLC and Blue Owl Capital GP LLC (collectively, “Blue Owl GP”), which are directly or indirectly wholly owned subsidiaries of the Registrant.

Business Combination, Including Dyal Acquisition

The Registrant was initially incorporated in the Cayman Islands as Altimar Acquisition Corporation (“Altimar”), a special purpose acquisition company. Pursuant to the Business Combination Agreement dated December 23, 2020, as amended, modified, supplemented or waived from time to time (the “Business Combination Agreement”), on May 19, 2021 (“Business Combination Date”), (i) Altimar was redomiciled as a Delaware corporation and changed its name to Blue Owl Capital Inc., (ii) Altimar merged with Owl Rock (as defined below) (the “Altimar Merger”) and (iii) the Company acquired Dyal Capital Partners (“Dyal Capital”), a former division of Neuberger Berman Group LLC (the “Dyal Acquisition”) (collectively with the Altimar Merger, the “Business Combination”). As further discussed in Note 2, for both the Altimar Merger and the Dyal Acquisition, Owl Rock was deemed to be the acquirer for accounting purposes. Therefore, the predecessor to Blue Owl is “Owl Rock,” a combined carve-out of Owl Rock Capital Group LLC and Blue Owl Securities LLC (formerly, Owl Rock Capital Securities LLC) (“Securities”).

Oak Street Acquisition

On December 29, 2021, the Company completed its acquisition of Oak Street Real Estate Capital, LLC (“Oak Street”) and its advisory business (the “Oak Street Acquisition,” and together with the Dyal Acquisition, the “Acquisitions”).

Registrant’s Capital Structure

As of March 31, 2022, the Registrant had the following instruments outstanding:

•Class A Shares—Shares of Class A common stock that are publicly traded. Class A Shareholders are entitled to dividends declared on the Class A Shares by the Registrant’s board of directors (the “Board”). As of March 31, 2022, the Class A Shares and Class C Shares (collectively, the “Low-Vote Shares”) represented a combined 10% of the total voting power of all shares. Subsequent to March 31, 2022, the Company’s organization documents were amended to increase from 10% to 20% the total voting power of the Low-Vote Shares.

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Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

•Class B Shares—Shares of Class B common stock that are not publicly traded. Class B Shareholders are entitled to dividends in the same amount per share as declared on Class A Shares. As of March 31, 2022, the Class B Shares and Class D Shares (collectively, the “High-Vote Shares”) represented a combined 90% of the total voting power of all shares. Subsequent to March 31, 2022, the Company’s organization documents were amended to lower from 90% to 80% the total voting power of the High-Vote Shares. No Class B Shares have been issued from inception through March 31, 2022. Common Units (as defined below) held by certain senior members of management (“Principals”) are exchangeable on a 1-for-one basis for Class B Shares.

•Class C Shares—Shares of Class C common stock that are not publicly traded. Class C Shareholders do not participate in the earnings of the Registrant, as the holders of such shares participate in the economics of the Blue Owl Operating Group through their direct and indirect holdings of Common Units and Incentive Units (as defined below and subject to limitations on unvested units). For every Common Unit held directly or indirectly by non-Principals, 1 Class C Share is issued to grant a corresponding voting interest in the Registrant. The Class C Shares are Low-Vote Shares as described above.

•Class D Shares—Shares of Class D common stock that are not publicly traded. Class D Shareholders do not participate in the earnings of the Registrant, as the holders of such shares participate in the economics of the Blue Owl Operating Group through their direct or indirect holdings of Common Units and Incentive Units (subject to limitations on unvested units). For every Common Unit held directly and indirectly by Principals, 1 Class D Share is issued to grant a corresponding voting interest in the Registrant. The Class D Shares are High-Vote Shares as described above.

•RSUs—The Company grants Class A restricted share units (“RSUs”) to its employees and independent Board members. An RSU entitles the holder to receive a Class A Share, or cash equal to the fair value of a Class A Share at the election of the Board, upon completion of a requisite service period. RSUs granted to-date do not accrue dividend equivalents. No RSUs were issued prior to the Business Combination. RSU grants are accounted for as equity-based compensation. See Note 7 for additional information.

•Warrants—In connection with the Business Combination, the Company issued warrants to purchase Class A Shares at a price of $11.50 per share. The warrants expire five years from the Business Combination Date. A portion of the outstanding warrants are held by the sponsor of Altimar (“Private Placement Warrants”) and the remaining warrants are held by other third-party investors (“Public Warrants”). The Company generally may redeem all Public Warrants for $0.01 per warrant if the Company’s Class A Share price equals or exceeds $18.00 per share. If the Company’s Class A Share price is greater than $10.00 per share but less than $18.00 per share, the Company generally may redeem all Public Warrants for $0.10 per warrant. In each case, any redemptions require a 30-day notice to the warrant holders, during which time the holders may elect to exercise their warrants, and such redemptions must be done for not less than all of the outstanding Public Warrants. Holders may elect to exercise their warrants on a cashless basis.

The following table presents the number of shares of the Registrant, RSUs and warrants that were outstanding as of March 31, 2022:


						March 31, 2022
Class A Shares						407,639,908

Class C Shares						670,147,025
Class D Shares						319,132,127
RSUs						21,645,224
Warrants						14,159,048

F-8

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

Blue Owl Operating Partnerships’ Capital Structure

As of March 31, 2022, the Blue Owl Operating Partnerships had outstanding the following instruments, which are collectively referred to as “Blue Owl Operating Group Units”:

•GP Units—The Registrant indirectly holds a general partner interest and all of the GP Units in each of the Blue Owl Operating Partnerships. The GP Units are general partner interests in the Blue Owl Operating Partnerships that represent the Registrant’s economic ownership in the Blue Owl Operating Group. For each Class A Share and Class B Share outstanding, the Registrant indirectly holds an equal number of GP Units. References to GP Units refer collectively to a GP Unit in each of the Blue Owl Operating Partnerships. References to GP Units also include Common Units (as defined below) acquired and held directly or indirectly by the Registrant as a result of Common Units exchanged for Class A Shares.

•Common Units—Common Units are limited partner interests held by certain members of management, employees and other third parties in the Blue Owl Operating Partnerships. Subject to certain restrictions, Common Units are exchangeable on a 1-for-one basis for either Class A Shares (if held by a non-Principal) or Class B Shares (if held by a Principal). Common Unit exchanges may be settled in cash, only at the election of the Company’s Exchange Committee (currently composed of independent members of the Board), and only if funded from proceeds of a new permanent equity offering. Common Units held by Principals are exchangeable after the two-year anniversary of the Business Combination Date. References to Common Units refer collectively to a Common Unit in each of the Blue Owl Operating Partnerships, but excludes any Common Units held directly or indirectly by the Registrant. Upon an exchange of Common Units for an equal number of Class A Shares or Class B Shares, a corresponding number of Class C Shares or Class D Shares, respectively, will be cancelled. Common Unitholders are entitled to distributions in the same amount per unit as declared on GP Units.

•Incentive Units—Incentive Units are Class P limited partner interests in the Blue Owl Operating Partnerships granted to certain members of management, employees and consultants (collectively, “Incentive Unit Grantees”) and are generally subject to vesting conditions, as further discussed in Note 7. Incentive Units are held indirectly through Blue Owl Management Vehicle LP on behalf of Incentive Unit Grantees. A vested Incentive Unit may convert into a Common Unit upon becoming economically equivalent on a tax basis to a Common Unit. Once vested, Incentive Unitholders are entitled to distributions in the same amount per unit as declared on GP Units and Common Units. Unvested Incentive Unitholders generally are not entitled to distributions; however, consistent with other Blue Owl Operating Group Units (other than Oak Street Earnout Units), unvested Incentive Units receive taxable income allocations that may subject holders to tax liabilities. As a result, Incentive Unitholders (consistent with other Blue Owl Operating Group Units other than Oak Street Earnout Units) may receive tax distributions on unvested units to cover a portion or all of such tax liabilities.

•Oak Street Earnout Units—In connection with the Oak Street Acquisition, the Company agreed to make additional payments of cash (“Oak Street Cash Earnout”) and Common Units (“Oak Street Earnout Units” and collectively with the Oak Street Cash Earnout, the “Oak Street Earnouts”) in two tranches upon the occurrence of certain “Oak Street Triggering Events.” The Oak Street Triggering Events are based on achieving a certain level of quarterly management fee revenues from existing and future Oak Street products. See Note 3 to the consolidated and combined audited financial statements included in the Company’s Annual Report for the year ended December 31, 2021 (the “2021 Audited Financial Statements”), for additional information.

F-9

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

The following table presents the number of Blue Owl Operating Group Units that were outstanding as of March 31, 2022:


Units						March 31, 2022
GP Units						407,639,908
Common Units						989,279,152
Incentive Units						24,999,499
Oak Street Earnout Units						26,074,330

Share Repurchase Program

On May 19, 2021, Blue Owl’s Board authorized the repurchase of up to $100.0 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 repurchase program was set to expire on May 19, 2022. On May 4, 2022, Blue Owl’s Board authorized renewing the repurchase program, and increased the amount to up to $150.0 million of Class A Shares. The 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.

Common Unit Exchanges

During the first quarter of 2022, the Company exchanged 4,619,175 Common Units and Class C Shares for an equal number of Class A Shares. As a result of the exchange, the Company reallocated equity from noncontrolling interests to the Company’s additional paid-in capital and recorded additional deferred tax assets and TRA liability in connection with the exchanges. See the consolidated and combined statement of shareholders’ equity for these amounts.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These unaudited, interim, consolidated and combined financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”). All intercompany transactions and balances have been eliminated in consolidation and combination. The notes are an integral part of the Company’s consolidated and combined financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the Company’s consolidated and combined financial statements have been included and are of a normal and recurring nature. The Company’s comprehensive income (loss) is comprised solely of consolidated and combined net income (i.e., the Company has no other comprehensive income). These interim consolidated and combined financial statements should be read in conjunction with the 2021 Audited Financial Statements.

The merger between Owl Rock and Altimar was accounted for as a reverse asset acquisition, with no step-up to fair value on any assets or liabilities, and therefore no goodwill or other intangible assets were recorded. The Acquisitions were accounted for using the acquisition method of accounting. As a result, the Company recorded the fair value of the net assets acquired as of the closing date of each respective acquisition, and operating results for each acquired business are included starting as of such each respective date.

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Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make assumptions and estimates that affect the amounts reported in the consolidated and combined financial statements. The most critical of these estimates are related to (i) the fair value of the investments held by the products the Company manages, as for many products, this impacts the amount of revenues the Company recognizes each period; (ii) the fair value of equity-based compensation grants; (iii) the fair values of liabilities with respect to the TRA (the portion considered contingent consideration), warrants and earnout liability; (iv) the estimate of future taxable income, which impacts the realizability and carrying amount of the Company’s deferred income tax assets; and (v) the qualitative and quantitative assessments of whether impairments of acquired intangible assets and goodwill exist. Inherent in such estimates and judgements relating to future cash flows, which include the Company’s interpretation of current economic indicators and market valuations, and assumptions about the Company’s strategic plans with regard to its operations. While management believes that the estimates utilized in preparing the consolidated and combined financial statements are reasonable and prudent, actual results could differ materially from those estimates.

Principles of Consolidation

The Company consolidates entities in which it has a controlling financial interest based on the application of either the variable interest model or the voting interest model.

An entity is considered to be a variable interest entity (“VIE”) if any of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) the holders of equity investment at risk, as a group, lack either the direct or indirect ability through voting rights or similar rights to make decisions that have a significant effect on the success of the entity or the obligation to absorb the expected losses or right to receive the expected residual returns, or (c) the voting rights of some equity investors are disproportionate to their obligation to absorb losses of the entity, their rights to receive returns from an entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor with disproportionately few voting rights.

The Company is required to consolidate any VIEs for which it is the primary beneficiary. The Company is the primary beneficiary if it holds a controlling financial interest, which is defined as having (a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The Company does not consolidate any of the products it manages, as it does not hold any direct or indirect interests in such entities that could expose the Company to an obligation to absorb losses or right to receive benefits that are more than insignificant to such entities.

Fees that are customary and commensurate with the level of services provided by the Company, and where the Company does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, are not be considered to be variable interests. The Company factors in all economic interests, including proportionate interests held through related parties, to determine if fees are variable interests. The Company’s interests in the products it manages are primarily in the form of management fees, realized performance income, and insignificant direct or indirect equity interests, and therefore does not have variable interests in such entities.

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Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and continuously reconsiders that conclusion. In evaluating whether the Company is the primary beneficiary, the Company evaluates its direct and indirect economic interests in the entity. The consolidation analysis is generally performed qualitatively; however, if the primary beneficiary is not readily determinable, a quantitative analysis may also be performed. This analysis requires judgment, including: (1) determining whether the equity investment at risk is sufficient to permit the entity to finance its activities without additional subordinated financial support, (2) evaluating whether the equity holders, as a group, can make decisions that have a significant effect on the success of the entity, (3) determining whether two or more parties’ equity interests should be aggregated, (4) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive returns from an entity and (5) evaluating the nature of relationships and activities of the parties involved in determining which party within a related-party group is most closely associated with a VIE and therefore would be deemed the primary beneficiary.

For entities that are not VIEs, the Company evaluates such entities (“VOEs”) under the voting interest model. The Company consolidates VOEs where the Company controls a majority voting interest. The Company will generally not consolidate VOEs where a single investor or simple majority of third-party investors with equity have the ability to exercise substantive kick-out or participation rights.

Acquisitions

For business combinations accounted for under the acquisition method, management recognizes the fair value of assets acquired and liabilities assumed on the acquisition date. The excess of purchase price consideration over the fair value of net assets acquired is recorded as goodwill. Management’s determination of fair value of assets acquired and liabilities assumed at the acquisition date is based on the best information available in the circumstances and incorporates management’s own assumptions and involve a significant degree of judgment.

Cash and Cash Equivalents

The Company considers highly-rated liquid investments that have an original maturity of three months or less from the date of purchase to be cash equivalents. As of March 31, 2022 and December 31, 2021, the Company holds the majority of its cash balances with a single financial institution and such balances are in excess of Federal Deposit Insurance Corporation insured limits, which exposes the Company to a certain degree of credit risk concentration.

Investments

Investments are primarily comprised of investments for which the Company has elected the fair value option in order to simplify the accounting for these instruments, and therefore changes in unrealized gains or losses are included in current-period earnings. Such elections are irrevocable and are applied on an investment-by-investment basis at initial recognition. Investments are included within other assets in the consolidated and combined statements of financial condition. Realized and changes in unrealized gains (losses) on these investments are included within net gains (losses) on investments in the consolidated and combined statements of operations. Investments for which the Company has not elected the fair value option are primarily comprised of equity-method investments in its products. See Note 8 for additional information.

Leases

The Company determines if an arrangement is a lease at inception. Right-of-use lease assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Right-of-use lease assets represent the Company’s right to use a leased asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company does not recognize right-of-use lease assets and lease liabilities for leases with an initial term of one year or less.

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Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

As the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on information available at the lease commencement date in determining the present value of lease payments. The determination of an appropriate incremental borrowing rate requires judgment. The Company determines its incremental borrowing rate based on data for instruments with similar characteristics, including recently issued debt, as well as other factors.

The operating lease assets include any lease payments made and lease incentives. Lease terms include options to extend or terminate when it is reasonably certain that the Company will exercise that option. In addition, the Company separates lease and non-lease components embedded within lease agreements. Lease expense for operating lease payments is recognized on a straight-line basis, which consists of amortization of right-of-use assets and interest accretion on lease liabilities, over the lease term and included within general, administrative and other expenses in the consolidated and combined statements of operations. The Company does not have any material finance leases.

Strategic Revenue-Share Purchase Consideration

On September 20, 2021, the Company entered into certain Agreements of Purchase and Sale (the “Strategic Revenue-Share Purchase”), whereby certain fund investors relinquished their rights to receive management fee shares with respect to certain existing and future GP Capital Solutions products. In exchange for the foregoing, the Company issued 29,701,013 Class A Shares with a fair value of $455.0 million and paid cash of $50.2 million (net of previously accrued management fee shares payable and other receivable) to such fund investors.

The Company determined that it was not receiving a distinct good or service from the customers as a result of the Strategic Revenue-Share Purchase, and therefore determined that the consideration paid to the customers represents a reduction of the transaction price (i.e., a reduction to revenue). Accordingly, the total consideration paid was recorded within Strategic Revenue-Share Purchase consideration in the Company’s consolidated statements of financial condition and is being amortized as a reduction of management fees, net in the Company’s consolidated statements of operations. See Note 5 for additional information.

Intangible Assets, Net and Goodwill

The Company recognized certain finite-lived intangible assets and goodwill as a result of the Acquisitions. The Company’s finite-lived intangible assets consist of contractual rights to earn future management fees from the acquired investment management agreements and value associated with the acquired client relationships and trademarks. Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives.

The Company uses its best estimates and assumptions to accurately assign fair value to identifiable intangible assets acquired at the acquisition date as well as the useful lives of those acquired intangible assets. Examples of critical estimates in valuing certain of the intangible assets acquired include, but are not limited to, future expected cash inflows and outflows, expected useful life and discount rates. The Company’s estimates for future cash flows are based on historical data, various internal estimates and certain external sources, and are based on assumptions that are consistent with the plans and estimates the Company uses to manage the underlying assets acquired. The Company estimates the useful lives of the intangible assets based on the expected period over which the Company anticipates generating economic benefit from the asset. The Company bases its estimates on assumptions it believes to be reasonable but that are unpredictable and inherently uncertain. Unanticipated events and circumstances may occur that could affect the accuracy or validity of such assumptions, estimates or actual results.

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Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

Fixed Assets

Fixed assets are recorded at cost, less accumulated depreciation and amortization, and are included within other assets, net in the Company’s consolidated and combined statements of financial condition. Fixed assets are depreciated or amortized on a straight-line basis, with the corresponding depreciation and amortization expense included within general, administrative and other expenses in the Company’s consolidated and combined statements of operations. The estimated useful life for leasehold improvements is the lesser of the remaining lease term and the life of the asset, while other fixed assets are generally depreciated over a period of three to seven years. Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Debt Obligations, Net

The Company’s debt obligations, other than revolving credit facilities, are recorded at amortized cost, net of any debt issuance costs, discounts and premiums. Debt issuance costs are deferred and along with discounts and premiums are amortized to interest expense in the consolidated and combined statements of operations over the life of the related debt instrument using the effective interest method. Unamortized debt issuance costs, discounts and premiums are written off to net losses on retirement of debt in the consolidated and combined statements of operations when the Company prepays borrowings prior to maturity. The Company defers debt issuance costs associated with revolving credit facilities and presents them within other assets, net in the consolidated and combined statements of financial condition, and such amounts are amortized to interest expense in the consolidated and combined statements of operations on a straight-line basis over the life of the related facility.

TRA Liability

The tax receivable agreement (“TRA”) liability represents amounts payable to certain pre-Business Combination equity holders of Owl Rock and Dyal Capital. The portion of the TRA liability related to the Dyal Acquisition is deemed contingent consideration payable to the previous owners of Dyal Capital, and therefore is carried at fair value, with changes in fair value reported within other loss in the consolidated and combined statements of operations. The remaining portion of the TRA is carried at a value equal to the expected future payments due under the TRA. The Company recorded its initial estimate of future payments under the TRA portion that is not related to the Dyal Acquisition, including as a result of exchanges of Common Units for Class A or B Shares, as a decrease to additional paid-in capital in the consolidated and combined statements of financial condition. Subsequent adjustments to the liability for future payments under the tax receivable agreement related to changes in estimated future tax rates or state income tax apportionment are recognized through current period earnings in the consolidated and combined statements of operations. See Note 10 for additional information.

Warrant Liability, at Fair Value

The Company’s warrants are recorded as liabilities carried at fair value, with changes in fair value included within other loss in the Company’s consolidated and combined statements of operations.

F-14

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

Earnout Liability, at Fair Value

Earnout liability is comprised of the Oak Street Cash Earnout. The Oak Street Cash Earnout represents contingent consideration on the Oak Street Acquisition and is recorded at fair value until the contingency has been resolved, with changes in fair value included within change in earnout liability in the Company’s consolidated and combined statements of operations. Once recognized, earnout liabilities are not derecognized until the contingencies are resolved and the consideration is paid or becomes payable. Earnout liabilities may expire and upon expiration, the consideration would not be paid or payable.

Noncontrolling Interests

Noncontrolling interests are primarily comprised of Common Units, which are interests in the Blue Owl Operating Group not held by the Company.

Allocations to noncontrolling interests in the consolidated and combined statements of operations are based on the substantive profit-sharing arrangements in the operating agreements of the Blue Owl Operating Partnerships. The Company does not record income or loss allocations to noncontrolling interests to the extent that such allocations would be provisional in nature, such as for unvested Incentive Units (other than certain minimum tax distributions). Provisional allocations to these interests would be subject to reversal in the event the unvested Incentive Units are forfeited or if the Seller Earnout Units would not have achieved their Class E Triggering Events.

Certain consolidated holding companies for investment advisor subsidiaries of the Blue Owl Operating Group are partially owned by third-party investors. Such interests are also presented as noncontrolling interests.

Revenue Recognition

Revenues consist of management fees; administrative, transaction and other fees; and realized performance income. The Company recognizes revenues when such amounts are probable that a significant reversal would not occur. The Company recognizes revenue at the time of transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services (i.e., the transaction price). Under this method, revenue is based on a contract with a determinable transaction price and distinct performance obligations with probable collectability. Revenues cannot be recognized until the performance obligations are satisfied and control is transferred to the customer.

Management Fees, Net

F-15

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

Management fees for the Company’s net lease strategy are generally based on either a percentage of capital committed and/or called during the investment period, and thereafter generally based on the total cost of unrealized investments, or net asset value.

Administrative, Transaction and Other Fees

Administrative, transaction and other fees primarily include fee income, administrative fees and dealer manager revenue.

Realized Performance Income

The Company is entitled to receive certain realized performance income in the form of realized performance income and carried interest from the products that it manages. Realized performance income is based on the investment performance generated over time, subject to the achievement of minimum return levels in certain products. Realized performance income from the Company’s BDCs and certain products within the GP debt financing strategy (“Part II Fees”) are realized at the end of a measurement period, typically quarterly or annually. Once realized, such realized performance income is no longer subject to reversal.

F-16

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

For certain non-BDC Direct Lending products and substantially all of the GP Capital Solutions products, realized performance income is in the form of carried interest that is allocated to the Company based on cumulative fund performance over time, subject to the achievement of minimum return levels in certain products. The Company recognizes carried interest only to the extent that it is not probable that a significant reversal will occur for amounts recognized. Generally carried interest is earned after a return of all contributions and may be subject to a preferred return to investors; however, the Company is able to catch-up amounts subject to the preferred return in certain cases. Substantially all of the carried interest generated by the Company’s products is allocable to investors, including certain related parties, in vehicles in which the Company does not have a controlling financial interest, and therefore is not included in the Company’s consolidated and combined financial statements.

Compensation and Benefits

Cash-Based Compensation

Compensation and benefits consist of salaries, bonuses, commissions, long-term deferral programs, benefits and payroll taxes. Compensation is accrued over the related service period.

Equity-Based Compensation

Equity-based compensation awards are reviewed to determine whether such awards are equity-classified or liability-classified. Compensation expense related to equity-classified awards is equal to their grant-date fair value and generally recognized on a straight-line basis over the awards’ requisite service period. When certain settlement features require an award to be liability-classified, compensation expense is recognized over the service period, and such amount is adjusted at each balance sheet date through the settlement date to the then current fair value of such award.

The Company accounts for forfeitures on equity-based compensation arrangements as they occur. The Company recognizes deferred income tax benefits throughout the service period, based on the grant date fair value. Any tax deduction shortfall or windfall due to the difference between grant date fair value and the ultimate deduction taken for tax purposes is recognized at the time of vesting. Expenses related to equity-based grants to employees are included within compensation and benefits, while amounts related to grants to non-employees are within general, administrative and other expenses in the consolidated and combined statements of operations.

See Note 7 for additional information on the Company’s equity-based compensation plans.

Foreign Currency

Income Taxes

Substantially all of the earnings of the Blue Owl Operating Group are subject to New York City and Connecticut unincorporated business tax (“UBT”) and additionally, the portion of earnings allocable to the Registrant is subject to corporate tax rates at the U.S. federal and state and local levels.

F-17

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

New Accounting Pronouncements

3. DEBT OBLIGATIONS, NET

The table below summarizes outstanding debt obligations of the Company:


	March 31, 2022
(dollars in thousands)	Maturity Date	Aggregate Facility Size		Outstanding Debt		Amount Available		Net Carrying Value		Average Interest Rate
2031 Notes	6/10/2031	$	700,000	$	700,000	$	—	$	684,195	3.13	%
2032 Notes	2/15/2032	400,000		400,000		—		391,338		4.38	%
2051 Notes	10/7/2051	350,000		350,000		—		337,006		4.13	%
Revolving Credit Facility	12/7/2024	715,000		—		714,842		—		1.77	%
Total		$	2,165,000	$	1,450,000	$	714,842	$	1,412,539

F-18

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)


	December 31, 2021
(dollars in thousands)	Maturity Date	Aggregate Facility Size		Outstanding Debt		Amount Available		Net Carrying Value		Average Interest Rate
2031 Notes	6/10/2031	$	700,000	$	700,000	$	—	$	684,154	3.13	%
2051 Notes	10/7/2051	350,000		350,000		—		337,013		4.13	%
Revolving Credit Facility	12/7/2024	640,000		153,000		487,000		153,000		1.86	%
Total		$	1,690,000	$	1,203,000	$	487,000	$	1,174,167

Amounts available for the Company’s Revolving Credit Facility as presented in the tables above are reduced by outstanding letters of credit related to certain leases. Average interest rates exclude the impact of deferred financing costs and undrawn commitment fees.

2031 Notes

On June 10, 2021, the Company, through its indirect subsidiary, Blue Owl Finance LLC, issued $700.0 million aggregate principal amount of 3.125% Senior Notes due 2031 (the “2031 Notes”). The 2031 Notes bear interest at a fixed rate of 3.125% per annum and mature on June 10, 2031. Interest on the 2031 Notes is payable semi-annually in arrears on June 10 and December 10 of each year.

2032 Notes

On February 15, 2022, the Company, through its indirect subsidiary, Blue Owl Finance LLC, issued $400.0 million aggregate principal amount of 4.375% Senior Notes due 2032 (the “2032 Notes”). The 2032 Notes bear interest at a fixed rate of 4.375% per annum and mature on February 15, 2032. Interest on the 2032 Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing August 15, 2022.

The 2032 Notes are fully and unconditionally guaranteed, jointly and severally, by the Blue Owl Operating Partnerships and certain of their subsidiaries. The guarantees are unsecured and unsubordinated obligations of the guarantors. All or a portion of the 2032 Notes may be redeemed at the Company’s option in whole, at any time, or in part, from time to time, prior to their stated maturity, subject to a make-whole redemption price; provided, however, that if the Company redeems any amounts on or after November 15, 2031, the redemption price for the 2032 Notes will be equal to 100% of the principal amount of the amounts redeemed, in each case, plus any accrued and unpaid interest. If a change of control repurchase event occurs, the 2032 Notes are subject to repurchase by the Company at a repurchase price in cash equal to 101% of the aggregate principal amount repurchased plus any accrued and unpaid interest. The 2032 Notes also provide for customary events of default and acceleration.

2051 Notes

On October 7, 2021, the Company, through its indirect subsidiary, Blue Owl Finance LLC, issued $350.0 million aggregate principal amount of 4.125% Senior Notes due 2051 (the “2051 Notes”). The 2051 Notes bear interest at a fixed rate of 4.125% per annum and mature on October 7, 2051. Interest on the 2051 Notes is payable semi-annually in arrears on April 7 and October 7 of each year, commencing April 7, 2022.

F-19

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

Revolving Credit Facility

On December 7, 2021, the Company entered into a credit facility (the “Revolving Credit Facility”), which was subsequently supplemented in December 2021 and February 2022 to increase the capacity of the facility to $715.0 million. Borrowings under the Revolving Credit Facility may be used to finance working capital needs and general corporate purposes.

Borrowings under the Revolving Credit Facility bear interest at a rate per annum of (a) adjusted-term secured overnight financing rate (“SOFR”) plus a margin of 1.25% to 1.875%, or (b) the greater of (i) prime rate, (ii) New York Fed Bank Rate plus 0.50% and (iii) adjusted-term SOFR plus 1%, plus a margin of 0.25% to 0.875%. The Company is subject to an undrawn commitment fee rate of 0.15% to 0.40% of the daily amount of available revolving commitment. The Revolving Credit Facility contains customary events of defaults, as well as a financial covenant generally providing for a maximum net leverage ratio of 3.5 to 1. The net leverage ratio is generally calculated as the ratio of total consolidated debt less unrestricted cash and cash equivalents (up to $300.0 million) to the trailing 12-month consolidated EBITDA (each as defined in the agreement).

4. LEASES


(dollars in thousands)	Three Months Ended March 31,
Lease Cost	2022		2021

Operating lease cost	$	3,451	$	1,316
Short term lease cost	315		—


Net Lease Cost	$	3,766	$	1,316


(dollars in thousands)		Three Months Ended March 31,
Supplement Lease Cash Flow Information	2022	2021

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases		$	2,007	$	1,373



Right-of-use assets obtained in exchange for lease obligations:
Operating leases		$	2,983	$	—

Lease Term and Discount Rate

March 31, 2022

December 31, 2021

Weighted-average remaining lease term:

Operating leases

9.8 years

10.2 years

Weighted-average discount rate:

Operating leases

3.1

F-20

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)


(dollars in thousands)
Future Maturity of Operating Lease Payments	Operating Leases
April 1, 2022 to December 31, 2022	$	609
2023	13,977
2024	10,357
2025	9,964
2026	9,799
Thereafter	61,957
Total Lease Payments	106,663
Imputed interest	(16,530)
Total Lease Liabilities	$	90,133

Amounts presented in the table above for the period from April 1, 2022 to December 31, 2022, are presented net of $8.0 million of tenant improvement allowance and reflects the impact of a $3.1 million rent holiday period.

5. REVENUES

The following table presents a disaggregated view of the Company’s revenues:


	Three Months Ended March 31,
(dollars in thousands)		2022		2021
Direct Lending Products
Diversified lending		$	105,452	$	76,478
Technology lending		23,030		13,857
First lien lending		3,681		3,815
Opportunistic lending		1,541		563
Management Fees, Net		133,704		94,713
Administrative, transaction and other fees		25,222		13,511

Total GAAP Revenues - Direct Lending Products		158,926		108,224

GP Capital Solutions Products
GP minority equity investments		102,100		—
GP debt financing		3,092		—
Professional sports minority investments		500		—

Strategic Revenue-Share Purchase consideration amortization		(8,922)		—
Management Fees, Net		96,770		—
Administrative, transaction and other fees		3,123		—
Total GAAP Revenues - GP Capital Solutions Products		99,893		—

Real Estate Products
Net lease		17,158		—
Management Fees, Net		17,158		—
Total GAAP Revenues - Real Estate Products		17,158		—
Total GAAP Revenues		$	275,977	$	108,224

F-21

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

The table below presents the beginning and ending balances of the Company’s management fees, realized performance income and administrative, transaction and other fees receivable and unearned management fees. Substantially all of the amounts receivable are collected during the following quarter. A liability for unearned management fees is generally recognized when management fees are paid to the Company in advance. The entire change in unearned management fees shown below relates to amounts recognized as revenues in the current year period. Management fees, realized performance income and administrative, transaction and other fees receivable are included within due from related parties and unearned management fees are included within accounts payable, accrued expenses and other liabilities in the Company’s consolidated and combined statements of financial condition.


	Three Months Ended March 31,
(dollars in thousands)	2022		2021
Management Fees Receivable
Beginning balance	$	168,057	$	78,586
Ending balance	$	174,397	$	90,648

Administrative, Transaction and Other Fees Receivable
Beginning balance	$	19,535	$	9,876
Ending balance	$	13,183	$	4,387

Realized Performance Income Receivable
Beginning balance	$	10,496	$	—
Ending balance	$	—	$	—

Unearned Management Fees
Beginning balance	$	10,299	$	11,846
Ending balance	$	9,804	$	11,469

The table below presents the changes in the Company’s Strategic Revenue-Share Purchase consideration. The consideration paid, which includes $455.0 million paid in Class A Shares and $50.2 million in cash, is being amortized as a reduction of management fees, net in the Company’s consolidated statements of operations over a weighted-average period of 12 years, which represents the average period over which the related customer revenues are expected to be recognized.


	Three Months Ended March 31,
(dollars in thousands)	2022		2021
Beginning Balance	$	495,322	$	—
Consideration paid	—		—
Amortization	(8,922)		—
Ending Balance	$	486,400	$	—

F-22

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

6. OTHER ASSETS, NET


(dollars in thousands)	March 31, 2022		December 31, 2021
Fixed assets, net:
Leasehold improvements	$	24,834	$	6,692
Furniture and fixtures	1,631		1,631
Computer hardware and software	2,204		1,968
Accumulated depreciation and amortization	(2,558)		(2,340)
Fixed assets, net	26,111		7,951
Investments (includes $— and $1,311 at fair value and $14,016 and $8,522 of investments in the Company’s products, respectively)	16,371		12,143
Prepaid expenses	4,313		8,496
Deferred transaction costs	347		347
Other assets	12,948		9,683
Total	$	60,090	$	38,620

7. EQUITY-BASED COMPENSATION

The Company grants equity-based compensation awards in the form of RSUs and Incentive Units to its management, employees, consultants and independent members of the Board under the 2021 Omnibus Equity Incentive Plan (“2021 Equity Incentive Plan”). The total number of Class A Shares and Blue Owl Operating Group Units, collectively, that may be issued under the 2021 Equity Incentive Plan is 101,230,522, of which 48,177,821 remain available as of March 31, 2022. To the extent that an award expires or is canceled, forfeited, terminated, surrendered, exchanged or withheld to cover tax withholding obligations, the unissued awards will again be available for grant under the 2021 Equity Incentive Plan.

F-23

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

The table below presents information regarding equity-based compensation expense included within compensation and benefits in the Company’s consolidated and combined statements of operations.


	Three Months Ended March 31,
(dollars in thousands)		2022		2021
Included within compensation and benefits:


Oak Street Earnout Units		$	60,654	$	—
Incentive Units		26,983		—
RSUs		8,551		—
Included within general, administrative and other expenses
Incentive Units		179		—
RSUs		234		—
Equity-Based Compensation Expense		$	96,601	$	—
Corresponding tax benefit		$	152	$	—

Fair value of RSUs settled in Class A Shares		$	1,300	$	—
Fair value of RSUs withheld to satisfy tax withholding obligations		$	733	$	—
Number of RSUs withheld to satisfy tax withholding obligations		56,981		—

The table below presents activity related to the Company’s unvested equity-based compensation awards for the three months ended March 31, 2022.


	Incentive Units			RSUs			Oak Street Earnout Units
	Number of Units	Weighted-Average Grant Date Fair Value Per Unit		Number of Units	Weighted-Average Grant Date Fair Value Per Unit		Number of Units	Weighted-Average Grant Date Fair Value Per Unit
December 31, 2021	23,080,845	$	13.87	10,118,104	$	13.84	26,074,330	$	12.53
Granted	1,755,126	14.26		848,714	13.34		—	—

Vested	(175,309)	14.56		(104,872)	13.36		—	—
Forfeited	—	—		(104,830)	14.05		—	—
March 31, 2022	24,660,662	$	13.89	10,757,116	$	13.80	26,074,330	$	12.53

Incentive Units

During the first quarter of 2022, the Company granted Incentive Units in connection with ordinary compensation-related grants. The grant date fair value of Incentive Units was determined using the Company’s Class A Share price on the grant date, adjusted for the lack of dividend participation during the vesting period, and the application of a 14% discount for lack of marketability on certain Incentive Units that are subject to a one-year post-vesting transfer restriction. As of March 31, 2022, unamortized expense related to Incentive Units was $310.1 million, with a weighted-average amortization period of 4.4 years.

RSUs

During the first quarter of 2022, the Company granted RSUs in connection with ordinary compensation-related grants. The fair value of RSUs was determined using the Company’s Class A Share price on the grant date, adjusted for the lack of dividend participation during the vesting period, and the application of a 14% to discount for lack of marketability on RSUs that are subject to a one-year post-vesting transfer restriction. As of March 31, 2022, unamortized expense related to RSUs was $103.9 million, with a weighted-average amortization period of 3.6 years.

F-24

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

Oak Street Earnout Units

The fair value of the Oak Street Earnout Units was determined using a Monte Carlo simulation valuation model, with the following weighted average assumptions: annualized revenue volatility of 38%, revenue discount rate of 15%, discount for lack of marketability of 13% and expected holding period of approximately 2 years. As of March 31, 2022, unamortized expense related to the Oak Street Earnout Units was $265.9 million, with a weighted average amortization period of 1.3 years.

8. FAIR VALUE DISCLOSURES

Financial assets and liabilities measured at fair value are classified and disclosed into one of the following categories based on the observability of inputs used in the determination of fair values:

•Level I – Quoted prices that are available in active markets for identical financial assets or liabilities as of the reporting date.

F-25

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

Fair Value Measurements Categorized within the Fair Value Hierarchy

The table below summarizes the Company’s liabilities measured at fair value on a recurring basis as of March 31, 2022. There were no assets measured at fair value on a recurring basis as of March 31, 2022.


	March 31, 2022
(dollars in thousands)	Level I		Level II		Level III		Total





Liabilities, at Fair Value
TRA liability	$	—	$	—	$	120,978	$	120,978
Warrant liability	32,240		—		18,800		51,040
Earnout liability	—		—		144,296		144,296
Total Liabilities, at Fair Value	$	32,240	$	—	$	284,074	$	316,314

The table below summarizes the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2021.


	December 31, 2021
(dollars in thousands)	Level I		Level II		Level III		Total
Investments, at Fair Value
Corporate bonds	$	—	$	1,311	$	—	$	1,311

	$	—	$	1,311	$	—	$	1,311

Liabilities, at Fair Value
TRA liability	$	—	$	—	$	111,325	$	111,325
Warrant liability	43,048		—		25,750		68,798
Earnout liability	—		—		143,800		143,800
Total Liabilities, at Fair Value	$	43,048	$	—	$	280,875	$	323,923

Reconciliation of Fair Value Measurements Categorized within Level III

Unrealized gains and losses on the Company’s liabilities carried at fair value on a recurring basis are included within other loss in the consolidated and combined statements of operations. There were no transfers in or out of Level III. The following table sets forth a summary of changes in the fair value of the Level III measurements for the three ended March 31, 2022:


	Level III Liabilities
(dollars in thousands)	TRA Liability		Warrant Liability		Earnout Liability		Total
Beginning balance	$	111,325	$	25,750	$	143,800	$	280,875
Issuances	—		—		—		—
Settlements	—		—		—		—
Net (gain) loss	9,653		(6,950)		496		3,199
Ending Balance	$	120,978	$	18,800	$	144,296	$	284,074
Change in net unrealized losses on liabilities still recognized at the reporting date	$	9,653	$	(6,950)	$	496	$	3,199

F-26

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

Valuation Methodologies for Fair Value Measurements Categorized within Levels II and III

Corporate Bonds

The fair value of corporate bonds are estimated based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs. These investments are generally classified as Level II. The Company obtains prices from independent pricing services that generally utilize broker quotes and may use various other pricing techniques, which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data.

TRA Liability

The TRA related to the Dyal Acquisition is considered contingent consideration and is measured at fair value based on discounted future cash flows. The remaining TRA liability on the Company’s consolidated and combined statements of financial condition is not measured at fair value.

Warrant Liability

The Company uses a Monte Carlo simulation model to value the Private Placement Warrants. The Company estimates the volatility of its Class A Shares based on the volatility implied by the Public Warrants. The risk-free interest rate is based on U.S. Treasuries for a maturity similar to the expected remaining life of the warrants. The expected term of the warrants is assumed to be equivalent to their remaining contractual term. The Public Warrants are traded on the NYSE and are stated at the last reported sales price without any valuation adjustments, and therefore are classified as Level I.

Earnout Liability

The fair value of the earnout liability was comprised of the Oak Street Cash Earnout that was deemed to be contingent consideration on the Oak Street Acquisition. The fair value of the Oak Street Cash Earnout was determined using a Monte Carlo simulation model. The model incorporates management revenue forecast and makes the following adjustments: historical revenue volatility, risk free rate based on U.S. Treasuries for a maturity similar to the expected remaining life and a discount rate to adjust management’s revenue forecast from a risk-based forecast to a risk-neutral forecast.

F-27

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

Quantitative Inputs and Assumptions for Fair Value Measurements Categorized within Level III

The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of March 31, 2022:


(dollars in thousands)	Fair Value		Valuation Technique	Significant Unobservable Inputs	Input	Impact to Valuation from an Increase in Input

TRA liability	$	120,978	Discounted cash flow	Discount rate		9	%	Decrease
Warrant liability	18,800		Monte Carlo simulation	Volatility		36	%	Increase


Earnout liability	144,296		Monte Carlo simulation	Revenue volatility		45	%	Increase

				Discount rate		16	%	Decrease

Total Liabilities, at Fair Value	$	284,074

The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2021:


(dollars in thousands)	Fair Value		Valuation Technique	Significant Unobservable Inputs	Input	Impact to Valuation from an Increase in Input

TRA liability	$	111,325	Discounted cash flow	Discount rate		10	%	Decrease
Warrant liability	25,750		Monte Carlo simulation	Volatility		26	%	Increase


Earnout liability	143,800		Monte Carlo simulation	Revenue volatility		38	%	Increase

				Discount rate		15	%	Decrease

Total Liabilities, at Fair Value	$	280,875

Fair Value of Other Financial Instruments

As of March 31, 2022, the fair value of the Company’s debt obligations was approximately $1.3 billion compared to a carrying value of $1.4 billion, and such fair value measurements are categorized as Level I within the fair value hierarchy. Management estimates that the carrying value of the Company’s other investments, which are not carried at fair value, approximated their fair values as of March 31, 2022, and such fair value measurements are categorized as Level III within the fair value hierarchy. As of December 31, 2021, management estimates that the carrying value of the Company’s other investments and debt obligations, which are not carried at fair value, approximated their fair values, and such fair value measurements are categorized as Level I within the fair value hierarchy.

9. INCOME TAXES

The Registrant is a domestic corporation for U.S. federal income tax purposes and is subject to U.S. federal and state and local corporate-level income taxes on its share of taxable income from the Blue Owl Operating Group. Further, the Registrant’s income tax provision and related income tax assets and liabilities are based on, among other things, an estimate of the impact of exchanges of Common Units for Class A Shares, inclusive of an analysis of tax basis and state tax implications of the Blue Owl Operating Group and their underlying assets and liabilities. The Company’s estimate is based on the most recent information available. The tax basis and state impact of the Blue Owl Operating Group and their underlying assets and liabilities are based on estimates subject to finalization of the Company’s tax returns. The Blue Owl Operating Partnerships, are partnerships for U.S. federal income tax purposes and taxable entities for certain state and local taxes, such as New York City and Connecticut UBT.

The Company had an effective tax rate of 18.0% and 0.5% for the three months ended March 31, 2022 and 2021, respectively. The three months ended March 31, 2022 effective tax rates differed from the statutory rate primarily due to the portion of income allocated to noncontrolling interests, nondeductible compensation and state and local taxes. Prior to the Business Combination, the Company was not generally subject to U.S. federal and state and local corporate-level income taxes.

F-28

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

The Company regularly evaluates the realizability of its deferred tax asset and may recognize or adjust any valuation allowance when it is more-likely-than-not that all or a portion of the deferred tax asset may not be realized. As of March 31, 2022, the Company has not recorded any valuation allowances. As of and prior to March 31, 2022, the Company has not recognized any liability for uncertain tax positions.

In connection with and subsequent to the Business Combination, the Company recorded to additional paid-in capital various adjustments to deferred tax assets and liabilities, as well as related impacts to the TRA liability, related to capital transactions. These adjustments primarily resulted from differences between the Company’s GAAP and tax basis in its investment in the Blue Owl Operating Partnerships, as well as portions related to the TRA liability that will eventually lead to additional tax basis in the Blue Owl Operating Partnerships upon future TRA payments. The deferred tax assets will be recovered as the basis is amortized. See the Company’s consolidated and combined statements of shareholders’ equity for these amounts.

10. COMMITMENTS AND CONTINGENCIES

Tax Receivable Agreement

F-29

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

The table below presents management’s estimate as of March 31, 2022, of the maximum amounts that would be payable under the TRA assuming that the Company will have sufficient taxable income each year to fully realize the expected tax savings. In light of the numerous factors affecting the Company’s obligation to make such payments, the timing and amounts of any such actual payments may differ materially from those presented in the table.


(dollars in thousands)	Potential Payments Under the Tax Receivable Agreement
April 1, 2022 to December 31, 2022	$	—
2023	37,338
2024	54,637
2025	61,474
2026	45,609
Thereafter	607,392
Total Payments	806,450
Less adjustment to fair value for contingent consideration	(111,255)
Total TRA Liability	$	695,195

Unfunded Product Commitments

As of March 31, 2022, the Company had unfunded investment commitments to its products of $41.6 million, which is exclusive of commitments that employees and other related parties have directly to the Company’s products.

Indemnification and Guarantee Arrangements

In the normal course of business, the Company enters into contracts that contain indemnities or guarantees for related parties of the Company, including the Company’s products, as well as persons acting on behalf of the Company or such related parties and third parties. The terms of the indemnities and guarantees vary from contract to contract and the Company’s maximum exposure under these arrangements cannot be determined or the risk of material loss is remote, and therefore no amounts have been recorded in the consolidated statements of financial condition. As of March 31, 2022, the Company has not had prior claims or losses pursuant to these arrangements.

Litigation

11. RELATED PARTY TRANSACTIONS

The majority of the Company’s revenues, including all management fees and certain administrative, transaction and other fees, are earned from the products it manages, which are related parties of the Company.

F-30

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)


(dollars in thousands)	March 31, 2022		December 31, 2021
Management fees	$	174,397	$	168,057
Realized performance income	—		10,496
Administrative fees and other expenses paid on behalf of the Company’s products and other related parties	37,185		46,023
Due from Related Parties	$	211,582	$	224,576

Reimbursements from the Company’s Products

Administrative fees represent allocable compensation and other expenses incurred by the Company, pursuant to administrative and other agreements, that are reimbursed by products it manages. These administrative fees are included within administrative, transaction and other fees on the consolidated and combined statements of operations and totaled $9.1 million and $3.4 million during the three months ended March 31, 2022 and 2021, respectively.

Dealer Manager Revenues

Dealer manager revenues represent commissions earned from certain of the Company’s products for distribution services provided. These dealer manager revenues are included within administrative, transaction and other fees on the consolidated and combined statements of operations and totaled $5.9 million and $1.1 million during the three months ended March 31, 2022 and 2021, respectively.

Expense Support and Caps Arrangements

The Company is party to expense support and cap arrangements with certain of the products it manages. Pursuant to these arrangements, the Company may absorb certain expenses of these products when in excess of stated expense caps or until such products reach certain profitability, cash flow or fundraising thresholds. In certain cases, the Company is able to recover these expenses once certain profitability, cash flow or fundraising thresholds are met. The Company recorded net expenses related to these arrangements of $7.0 million and $2.3 million for the three months ended March 31, 2022 and 2021, respectively. These net expenses are included in general, administrative and other expenses within the consolidated and combined statements of operations.

Aircraft and Other Services

In the normal course of business, the Company reimburses certain related parties for business use of their aircraft based on current market rates. Personal use of the aircraft is not charged to the Company. The Company recorded expenses for these aircraft reimbursements of $0.3 million and $0 for the three months ended March 31, 2022 and 2021, respectively.

F-31

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

12. EARNINGS (LOSS) PER SHARE

The table below presents the Company’s treatment for basic and diluted earnings (loss) per share for instruments outstanding at the Registrant and the Blue Owl Operating Group. Potentially dilutive instruments are only considered in the calculation to the extent they would be dilutive.


	Basic	Diluted
Class A Shares(1)	Included	Included
Class B Shares	N/A - None outstanding	N/A - None outstanding
Class C Shares and Class D Shares	Excluded Non-economic voting shares of the Registrant	Excluded Non-economic voting shares of the Registrant
Vested RSUs(1)	Included Contingently issuable shares	Included Contingently issuable shares
Unvested RSUs	Excluded	Included Treasury stock method
Warrants	Excluded	Included Treasury stock method(2)
Potentially Dilutive Instruments of the Blue Owl Operating Group:
Vested Common and Incentive Units	Excluded	Included If-converted method(3)
Unvested Incentive Units	Excluded	Included The Company first applies the treasury stock method to determine the number of units that would have been issued, then applies the if-converted method to the resulting number of units(3)
Oak Street Earnout Units(4)	Excluded	Excluded Performance condition not satisfied as of period-end

(1)Included in the weighted-average Class A Shares outstanding for the three months ended March 31, 2022, were 10,928,095 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.

(2)The treasury stock method for warrants carried at fair value includes adjusting the numerator for changes in fair value impacting net income (loss) for the period.

(3)The if-converted method includes adding back to the numerator any related income or loss allocations to noncontrolling interest, as well as any incremental tax expense had the instruments converted into Class A Shares as of the beginning of the period. In the case of Earnout Securities carried at fair value, the numerator is also adjusted for changes in fair value impacting net income (loss) for the period.

(4)As of March 31, 2022, the Oak Street Triggering Events with respect to the Oak Street Earnout Units had not been met, and therefore such units have not been included in the calculation of diluted earnings (loss) per share.


Three Months Ended March 31, 2022	Net Loss Attributable to Class A Shareholders		Weighted-Average Class A Shares Outstanding	Loss Per Class A Share		Weighted-Average Number of Antidilutive Instruments
	(dollars in thousands, except per share amounts)
Basic	$	(11,815)	417,108,929	$	(0.03)
Effect of dilutive instruments:
Unvested RSUs	—		—			10,777,018
Warrants	—		—			14,159,170
Vested Common Units	—		—			992,307,278
Vested Incentive Units	—		—			251,183
Unvested Incentive Units	—		—			24,517,020
Oak Street Earnout Units	—		—			26,074,330
Diluted	$	(11,815)	417,108,929	$	(0.03)

For periods prior to the Business Combination, earnings per share results in values that would not be meaningful to the users of the consolidated and combined financial statements, as the Company’s capital structure completely changed as a result of the Business Combination. Therefore, earnings (loss) per share information has not been presented for periods prior to the Business Combination.

F-32

Table of Contents

Blue Owl Capital Inc.

(Prior to May 19, 2021, Owl Rock)

Notes to Consolidated and Combined Financial Statements (Unaudited)

13. SUBSEQUENT EVENTS

Dividend

On May 5, 2022, the Company announced a cash dividend of $0.10 per Class A Share. The dividend is payable on May 27, 2022, to holders of record as of the close of business on May 20, 2022.

Wellfleet Acquisition

On April 1, 2022, the Company closed its acquisition of Wellfleet Credit Partners LLC (“Wellfleet”) from affiliates of Littlejohn & Co., LLC. The purchase price consisted of $108.0 million cash consideration on closing and earnout payments of up to an additional $15.0 million of cash and 940,668 Class A Shares payable in equal installments on each of the first 3 anniversaries from the closing date. The Company is in the process of completing its accounting for the transaction.

F-33


	September 30, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	138,875	$	11,630
Investments (includes $292,602 and $— at fair value)	300,649		2,678
Due from related parties	184,349		92,698
Operating lease assets	66,605		—
Strategic Revenue-Share Purchase consideration, net	504,244		—
Deferred tax assets	514,098		800
Intangible assets, net	2,150,473		—
Goodwill	3,563,422		—
Other assets, net	27,434		13,791
Total Assets	$	7,450,149	$	121,597
Liabilities
Debt obligations, net	$	683,557	$	356,386
Accrued compensation	173,493		207,957
Operating lease liabilities	67,846		—
Deferred tax liabilities	50,386		—
TRA liability (includes $123,122 and $— at fair value)	482,510		—
Warrant liability, at fair value	67,891		—
Earnout Securities liability, at fair value	661,707		—
Accounts payable, accrued expenses and other liabilities	81,166		58,415
Total Liabilities	2,268,556		622,758
Commitments and Contingencies (Note 11)	0		0
Shareholders’ Equity (Deficit)
Members’ deficit prior to the Business Combination	—		(507,687)

Class A Shares, par value $0.0001 per share, 2,500,000,000 and none authorized, 357,201,703 and none issued and outstanding	36		—

Class C Shares, par value $0.0001 per share, 1,500,000,000 and none authorized, 658,647,360 and none issued and outstanding	66		—
Class D Shares, par value $0.0001 per share, 350,000,000 and none authorized, 306,894,250 and none issued and outstanding	31		—
Class E Shares, par value $0.0001 per share, 100,000,000 and none authorized, 7,495,432 and none issued and outstanding	1		—
Additional paid-in capital	1,879,040		—
Accumulated deficit	(463,612)		—
Total Shareholders’ Equity Attributable to Blue Owl Capital Inc.	1,415,562		—
Shareholders’ equity attributable to noncontrolling interests	3,766,031		6,526
Total Shareholders’ Equity (Deficit)	5,181,593		(501,161)
Total Liabilities and Shareholders’ Equity (Deficit)	$	7,450,149	$	121,597


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues
Management fees, net (includes Part I Fees of $43,659, $2,701, $108,646 and $9,052)	$	203,750	$	39,146	$	440,598	$	112,830
Administrative, transaction and other fees	44,125		14,897		94,761		30,979
Total Revenues, Net	247,875		54,043		535,359		143,809
Expenses
Compensation and benefits	96,910		44,214		1,366,459		108,658
Amortization of intangible assets	46,191		—		67,527		—
General, administrative and other expenses	28,438		13,642		94,818		48,457
Total Expenses	171,539		57,856		1,528,804		157,115
Other Loss
Net losses on investments	(145)		—		(145)		—
Net losses on retirement of debt	—		—		(16,145)		—

Interest expense	(6,112)		(6,127)		(17,787)		(18,007)
Change in TRA liability	(4,733)		—		(5,879)		—
Change in warrant liability	(27,462)		—		(42,762)		—
Change in Earnout Securities liability	(293,122)		—		(756,092)		—
Total Other Loss	(331,574)		(6,127)		(838,810)		(18,007)
Loss Before Income Taxes	(255,238)		(9,940)		(1,832,255)		(31,313)
Income tax benefit	(14,391)		(26)		(43,402)		(119)
Consolidated and Combined Net Loss	(240,847)		(9,914)		(1,788,853)		(31,194)
Net loss attributable to noncontrolling interests	187,524		1,292		1,412,600		3,069
Net Loss Attributable to Blue Owl Capital Inc. (After May 19, 2021) / Owl Rock (Prior to May 19, 2021)	$	(53,323)	$	(8,622)	$	(376,253)	$	(28,125)

	Three Months Ended September 30, 2021				May 19, 2021 through September 30, 2021

Net Loss Attributable to Class A Shares	$	(53,323)			$	(450,512)
Net Loss per Class A Share
Basic	$	(0.16)			$	(1.34)
Diluted	$	(0.16)			$	(1.36)
Weighted-Average Class A Shares
Basic(1)	338,472,456				335,472,904
Diluted	338,472,456				1,281,179,067


	September 30, 2021		Useful Life (in years)			Remaining Weighted-Average Amortization Period as of September 30, 2021
Investment management agreements	$	1,859,900	1.4	-	20.0	14.0 years
Institutional investor relationships	291,400				10.0	9.6 years
Trademarks	66,700				7.0	6.6 years
Total Intangible Assets	2,218,000
Less: accumulated amortization	(67,527)
Total Intangible Assets, Net	$	2,150,473


Period	Amortization
October 1, 2021 to December 31, 2021	$	46,362
2022	183,180
2023	180,937
2024	181,433
2025	178,587
Thereafter	1,379,974
Total	$	2,150,473


	September 30, 2021
	Current Maturity Date	Aggregate Facility Size		Outstanding Debt		Amount Available(1)		Net Carrying Value		Average Interest Rate(2)
2031 Notes	6/10/2031	$	700,000	$	700,000	$	—	$	683,557	3.13	%
Revolving Credit Facility	4/15/2024	150,000		—		149,842		—		N/A
Total		$	850,000	$	700,000	$	149,842	$	683,557


Lease Cost	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021

Operating lease cost	$	2,181		$	4,809
Short term lease cost	117			166


Net Lease Cost	$	2,298		$	4,975


	Strategic Revenue-Share Purchase Consideration
(dollars in thousands)	Cash		Class A Shares		Total
December 31, 2020	$	—	$	—	$	—
Consideration paid	50,194		455,020		505,214
Amortization	(96)		(874)		(970)
September 30, 2021	$	50,098	$	454,146	$	504,244


	Common Units			Seller Earnout Units			Equity-Classified RSUs
	Unvested	Weighted-Average Grant Date Fair Value Per Unit		Unvested	Weighted-Average Grant Date Fair Value Per Unit		Unvested	Weighted-Average Grant Date Fair Value Per Unit
December 31, 2020	—	$	—	—	$	—	—	$	—
Granted	132,808,673	9.00		11,608,004	5.43		9,050,000	10.00
Vested	(132,808,673)	9.00		(5,804,002)	6.39		(9,050,000)	10.00

September 30, 2021	—	$	—	5,804,002	$	4.47	—	$	—


Three Months Ended September 30, 2021	Net Income Attributable to Class A Shareholders		Weighted-Average Class A Shares Outstanding	Loss Per Class A Share		Number Units Excluded from Diluted Calculation
	(dollars in thousands, except per share amounts)
Basic	$	(53,323)	338,472,456	$	(0.16)
Effect of dilutive securities:
Common Units	—		—			956,301,495
Warrants	—		—			14,159,381

Earnout Securities	—		—			49,999,962
Diluted	$	(53,323)	338,472,456	$	(0.16)


	Three Months Ended September 30, 2021										Three Months Ended September 30, 2020
(dollars in millions)	Diversified Lending		Technology Lending		First Lien Lending		Opportunistic Lending		Direct Lending AUM		Diversified Lending		Technology Lending		First Lien Lending		Opportunistic Lending		Direct Lending AUM
Beginning Balance	$	19,792	$	6,233	$	3,217	$	1,914	$	31,156	$	13,892	$	3,929	$	2,688	$	—	$	20,509
New capital raised	501		—		150		73		724		734		127		—		1,039		1,900
Change in debt	1,907		199		316		—		2,422		445		449		193		1		1,088
Distributions	(158)		(26)		(55)		—		(239)		(139)		(14)		(11)		—		(164)
Change in value	197		247		32		38		514		259		50		30		(2)		337
Ending Balance	$	22,239	$	6,653	$	3,660	$	2,025	$	34,577	$	15,191	$	4,541	$	2,900	$	1,038	$	23,670


	Nine Months Ended September 30, 2021										Nine Months Ended September 30, 2020
(dollars in millions)	Diversified Lending		Technology Lending		First Lien Lending		Opportunistic Lending		Direct Lending AUM		Diversified Lending		Technology Lending		First Lien Lending		Opportunistic Lending		Direct Lending AUM
Beginning Balance	$	17,234	$	5,387	$	3,014	$	1,466	$	27,101	$	12,490	$	3,491	$	2,655	$	—	$	18,636
New capital raised	945		8		150		605		1,708		1,486		444		—		1,039		2,969
Change in debt	3,915		861		510		(133)		5,153		1,524		563		246		1		2,334
Distributions	(451)		(62)		(103)		—		(616)		(547)		(33)		(27)		—		(607)
Change in value	596		459		89		87		1,231		238		76		26		(2)		338
Ending Balance	$	22,239	$	6,653	$	3,660	$	2,025	$	34,577	$	15,191	$	4,541	$	2,900	$	1,038	$	23,670