Blue Owl Capital Inc. has agreed to acquire Chicago-based real estate investment firm Oak Street Real Estate Capital LLC and its investment advisory business for $950 million.
According to a statement by Blue Owl, the closing purchase price of $950 million will be funded through a combination of cash and Blue Owl common units (up to an aggregate of approximately 39 million Blue Owl common units issuable at closing).
”In addition, upon the achievement of certain performance thresholds, Oak Street equity holders will be entitled to earnouts up to a total of approximately $650 million, payable in cash at future dates or in Blue Owl common units (up to an aggregate of approximately 39 million Blue Owl common units subject to vesting). The transaction is anticipated to be approximately 5-7% accretive to Distributable Earnings per Share starting in 2022,” said in the statement.
The transaction is expected to close in the fourth quarter of 2021.
Blue Owl said the transaction adds a complementary real estate capability to Blue Owl’s suite of financing solutions for users of capital and offers institutional and retail investors additional compelling investment options.
Oak Street is a Chicago-based firm, founded in 2009 with over 35 employees and with $10.8 billion of assets under management as of June 30, 2021. The firm focuses on two primary strategies: structuring sale-leasebacks, which includes triple net leases, as well as providing seed and strategic capital.
Doug Ostrover, Co-Founder and CEO of Blue Owl, said: “We are very excited about this strategic transaction and believe that Oak Street’s experienced team and strong franchise will both contribute to and benefit from the scale and positive network effects of the Blue Owl platform.”
Marc Lipschultz, Co-Founder and Co-President of Blue Owl, said: “Oak Street has created a market-leading platform in the net lease sector, leveraging the expertise and disciplined underwriting of its investment team to generate very strong returns for its investors. We believe their focus on flexible real estate related financing solutions will be very complementary to our existing Direct Lending and GP solutions capabilities.”
Marc Zahr, Co-Founder and CEO of Oak Street, said: “There is a strong fit between Blue Owl and Oak Street, highlighted by our mutual drive to be market leaders in what we do, our shared deep appreciation for the value of long-duration capital, and our focus on downside protection and robust income generation for our investors. My team and I look forward to partnering with the Blue Owl team to bring Oak Street’s differentiated product offerings to a new base of investors and to collaborate to bring additional investment opportunities to investors in Oak Street’s funds down the line.”
Upon closing of the transaction, key members of the Oak Street leadership team will remain in place leading the Oak Street business, and Oak Street’s Chicago office will become an additional office for Blue Owl.
In addition, Marc Zahr will join Blue Owl’s board of directors and executive committee.
Blue Owl is an alternative asset manager that provides investors access to Direct lending and GP Capital Solutions strategies through a variety of products. The firm had approximately $62.4 billion of assets under management as of June 30, 2021.