Blue Owl expects $400M of incremental fees as $36B of AUM not yet earning fees deploys, while targeting $10B for BODI IV

• “This morning, we reported our financial results for the third quarter of 2026, highlighting 15% FRE growth and 14% DE growth over the last 12 months.” (Co-Founder, Co-CEO & Director Marc S. Lipschultz)
• “This fundraising came from a diversified set of strategies, investors and geographies, driving AUM growth of 12% year-over-year to $330 billion.” (Co-CEO Lipschultz)
• “Our AUM not yet earning fees continues to grow with more than $36 billion of AUM, nearly 30% higher than the same time last year that will drive an incremental $400 million of fees as deployed.” (Co-CEO Lipschultz)
• “Blue Owl grew FRE by 15% and DE by 14% over the last 12 months, with management fee growth of 11%, excluding the impact of management fee offsets.” (Chief Financial Officer Alan Kirshenbaum)
• “We raised $12.6 billion of total capital during the quarter, bringing our last 12-month total capital raise to $49 billion.” (CFO Kirshenbaum)
• “For the full year 2026, we remain confident on our ability to beat $1.02 of FRE per share and $0.89 of DE per share, as we noted on our last earnings call.” (CFO Kirshenbaum)

Outlook

• “Last quarter, we also said that we expected the growth rate for management fees to be higher in 2027 than in 2026, and that continues to be our expectation.” (CFO Kirshenbaum)
• “We expect to over-earn our dividend again in the fourth quarter… and we expect to continue this for the year 2027 and forward.” (CFO Kirshenbaum)
• “We would expect modest margin expansion in ’27 as well.” (CFO Kirshenbaum)
• “$10 billion continues to be the overall fundraise goal here.” (CFO Kirshenbaum)

Financial Results

• “We issued our financial results for the third quarter of 2026, reporting fee-related earnings, or FRE of $0.27 per share and distributable earnings or DE of $0.24 per share.” (MD & Head of Investor Relations Ann Dai)
• “We declared a dividend of $0.23 per share for the third quarter payable on November 23 to holders of record as of November 10.” (IR Dai)
• “Our FRE margin for the 9 months year-to-date is 58.6%, slightly above our outlook for the year.” (CFO Kirshenbaum)
• “In Credit, last 12-month gross returns were 9.3% for direct lending and 10.3% for alternative credit.” (CFO Kirshenbaum)
• “In real assets, last 12-month gross returns were 12.3% for net lease, 13.4% for digital infrastructure and 6.4% for real estate credit.” (CFO Kirshenbaum)

Q&A

• William Katz, TD Cowen: asked about “what might be normalized” for transaction/administrative fees; CFO Kirshenbaum: “We booked about 12 capital markets transactions in 3Q… There’s no doubt I would expect 4Q to be a little quieter… as we go here into 2027, we do expect the direction of travel to be up.”
• Steven Chubak, Wolfe Research: asked about “stabilized data center funds”; Co-CEO Lipschultz: “These data centers stabilized with these very high-quality counterparties are really special assets… we absolutely see opportunities… [for] additional businesses and pools of capital that are the homes for those pretty special assets.”
• Devin Ryan, Citizens JMP: asked about real estate credit demand and pricing vs prior quarters; Co-CEO Lipschultz: “We’re seeing a very significant backlog of opportunities… it’s a buyer’s market… we’ve already started to create dedicated pools of capital for that purpose.”
• Glenn Schorr, Evercore ISI: asked about GP stakes liquidity and fundraising; CFO Kirshenbaum: “We… raised over $15 billion in total in this area… We will look to wrap up fundraising end of this year… Some may slip into early next year in 1Q.”
• Brennan Hawken, BMO: asked why direct lending net deployment was negative; Co-CEO Lipschultz: “Gross originations went to $5.2 billion this quarter… repayments of $4.7 billion… Until there’s a more robust M&A environment, I don’t think one would logically expect there to be rapid net deployment.”
• Patrick Davitt, Autonomous: asked if large credit SMAs contributed in 3Q and whether more are coming; CFO Kirshenbaum: “A lot came together in 3Q… You should not expect a similar quarter in 4Q.”
• Michael Brown, UBS: asked about BODI IV fundraising duration and political pushback; CFO Kirshenbaum: “This will be an 18- to 24-month fundraise likely through, call it, mid-2028… $10 billion continues to be the overall fundraise goal here.”
• Benjamin Budish, Barclays: asked about FRE margin run-rate and operating leverage; CFO Kirshenbaum: “We would expect a modest spike in 4Q… and… modest margin expansion in ’27 as well.”

Sentiment Analysis

• “Slightly positive” analyst tone, with recurring focus on fee sustainability, deployment, and data centers; questions included “normalized” transaction fees and whether investors are “hesitat[ing] around allocations.” (William Katz, TD Cowen; Michael Brown, UBS)
• “Positive” management tone in prepared remarks and Q&A, emphasizing growth and embedded fees: “we remain very confident,” and “we remain very optimistic about what is ahead for Blue Owl.” (CFO Kirshenbaum; Co-CEO Lipschultz)
• Compared with Q2 2026, management language shifted from “cautiously optimistic” to more definitive framing around dividend coverage and margins: Q3 included “we have crossed the threshold to now over earning our dividend,” while Q2 said “we’re cautiously optimistic that non-traded BDC redemptions will keep coming down.” (CFO Kirshenbaum)

Quarter-over-Quarter Comparison

• Q3 emphasized faster growth versus Q2: Q3 said “15% FRE growth and 14% DE growth,” while Q2 said “highlighting 9% DE growth versus a year ago quarter.” (Co-CEO Lipschultz)
• Q3 raised the embedded-fee backlog figure to “more than $36 billion… [driving] an incremental $400 million of fees,” versus Q2 “$31 billion… approximately $380 million.” (Co-CEO Lipschultz; CFO Kirshenbaum in Q2)
• Q3 guidance language repeated and reinforced Q2’s full-year confidence: Q2 said “we think we can beat [FRE per share] $1.02 and… $0.89,” and Q3 said “we remain confident on our ability to beat $1.02… and $0.89.” (CFO Kirshenbaum)
• Analysts stayed concentrated on transaction fees and data centers in both quarters, while Q3 added more explicit scrutiny on direct lending net deployment and evergreen product positioning (ODIT/BODI). (Brennan Hawken, BMO; Michael Brown, UBS)

Risks and Concerns

• “You should not expect a similar quarter in 4Q” signaled potential variability in institutional fundraising cadence after a record quarter. (CFO Kirshenbaum)
• “Until there’s a more robust M&A environment… [don’t] expect… rapid net deployment” framed direct lending fee growth sensitivity to sponsor activity and repayments. (Co-CEO Lipschultz)
• On data centers, management highlighted complexity and local execution: “It’s very complex… That takes a local ground game.” (Co-CEO Lipschultz)

Final Takeaway

Management framed Q3 2026 as an acceleration point driven by record institutional fundraising, higher embedded fee runway from $36B of AUM not yet earning fees, and reiterated confidence in beating full-year 2026 FRE and DE per-share targets, while expecting continued dividend coverage, modest margin expansion into 2027, and an extended BODI IV fundraising cycle with a $10B goal.

Read the full Earnings Call Transcript

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