Blue Owl Capital Corp false 0001655888 0001655888 2023-11-08 2023-11-08

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 8, 2023

 

 

BLUE OWL CAPITAL CORPORATION

(Exact name of Registrant as Specified in Its Charter)

 

 

 

Maryland   814-01190   47-5402460
(State or Other Jurisdiction
of Incorporation)		   (Commission
File Number)		   (IRS Employer
Identification No.)

 

399 Park Avenue,

37th Floor

New York, NY

   10022
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s Telephone Number, Including Area Code: (212) 419-3000

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. Emerging growth company ☐

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. ☐

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading
Symbol(s)

  

Name of each exchange
on which registered

Common Stock, par value $0.01 per share   OBDC   The New York Stock Exchange

 

 

 

Item 2.02. Results of Operations and Financial Condition

On November 8, 2023, Blue Owl Capital Corporation (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2023. The press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for any purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such Section. The information in this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

 

Exhibit Number    Description
99.1    Press Release, dated November 8, 2023.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

SIGNATURES

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

 

  Blue Owl Capital Corporation
November 8, 2023   By:  

/s/ Jonathan Lamm

    Name:     Jonathan Lamm
    Title:       Chief Operating Officer and Chief Financial Officer

Exhibit 99.1

Blue Owl Capital Corporation Reports Third Quarter Net Investment Income Per Share of $0.49 and

NAV Per Share of $15.40; Increases Quarterly Dividend

NEW YORK — November 8, 2023 — Blue Owl Capital Corporation (NYSE: OBDC, or the “Company”) today announced financial results for its third quarter ended September 30, 2023.

THIRD QUARTER 2023 HIGHLIGHTS

 

  •  

Third quarter net investment income (“NII”) of $0.49 per share, which represents the third consecutive quarter of record NII for the Company

 

  •  

As a result, Board declared a third quarter supplemental dividend of $0.08 per share

 

  •  

Total dividends for the third quarter were $0.41 per share, which represents a 21% increase from the same period a year ago

 

  •  

For the fourth quarter 2023, increased quarterly dividend by $0.02 to $0.35 per share

 

  •  

Delivered NII ROE1 of 12.7% in the third quarter, up from 10.2% the prior year

 

  •  

Net asset value per share increased to $15.40 compared to $15.26 as of June 30, 2023, which represents the Company’s highest NAV since inception

Craig W. Packer, Chief Executive Officer of Blue Owl Capital Corporation commented, “We saw continued strong momentum in the third quarter, delivering excellent credit performance across the portfolio and our third consecutive quarter of record net investment income. These earnings continue to translate into an attractive return on equity of 12.7%, in addition to growing dividend distributions for our shareholders.”

Dividend Declarations

The Company’s Board of Directors has declared a fourth quarter 2023 dividend of $0.35 per share for stockholders of record as of December 29, 2023, payable on or before January 12, 2024 and a third quarter 2023 supplemental dividend of $0.08 per share for stockholders of record as of November 30, 2023, payable on or before December 15, 2023.

PORTFOLIO AND INVESTING ACTIVITY

For the three months ended September 30, 2023, new investment commitments totaled $500.2 million across seven new portfolio companies and six existing portfolio companies. This compares to $183.0 million for the three months ended June 30, 2023 across five new portfolio companies and six existing portfolio companies.

For the three months ended September 30, 2023, the principal amount of new investments funded was $386.6 million. For this period, the Company had $389.7 million aggregate principal amount in sales and repayments.

For the three months ended June 30, 2023, the principal amount of new investments funded was $169.6 million. For this period, the Company had $566.2 million aggregate principal amount in sales and repayments.

As of September 30, 2023 and June 30, 2023, the Company had investments in 187 portfolio companies with an aggregate fair value of $12.9 billion. As of September 30, 2023, the average investment size in each portfolio company was $69.0 million based on fair value.

As of September 30, 2023, based on fair value, our portfolio consisted of 68.9% first lien senior secured debt investments, 13.8% second lien senior secured debt investments, 2.1% unsecured debt investments, 3.1% preferred equity investments, 9.2% common equity investments, and 2.9% joint ventures.

As of June 30, 2023, based on fair value, our portfolio consisted of 69.1% first lien senior secured debt investments, 14.1% second lien senior secured debt investments, 2.1% unsecured debt investments, 3.1% preferred equity investments, 8.8% common equity investments, and 2.8% joint ventures.

As of September 30, 2023 and June 30, 2023, approximately 82.7% and 83.2% of the portfolio was invested in senior secured debt, respectively. As of September 30, 2023, 97.7% of our debt investments based on fair value in our portfolio were at floating rates.

 

(1)

NII ROE is calculated as annualized Q3’23 net investment income divided by average Q3’23 and Q2’23 net asset value.

As of September 30, 2023 and June 30, 2023, the weighted average total yield of accruing debt and income-producing securities at fair value (which includes interest income and amortization of fees and discounts) was 12.3% and 12.2%, respectively, and the weighted average total yield of accruing debt and income-producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 12.4% and 12.2%, respectively.

As of September 30, 2023, three portfolio companies with an aggregate fair value of $103.0 million were on non-accrual status, representing 0.9% of the total fair value of the debt portfolio.

RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2023

Investment Income

Investment income increased to $399.0 million for the three months ended September 30, 2023 from $314.1 million for the three months ended September 30, 2022, primarily due to an increase in our portfolio’s weighted average yield from 10.0% as of September 30, 2022 to 11.8% as of September 30, 2023, partially offset by a decrease in our debt investments portfolio from $11.7 billion as of September 30, 2022 to $11.2 billion as of September 30, 2023. Included in investment income is dividend income which includes income earned from our controlled, affiliated and non-controlled, affiliated equity investments. Included in interest income are other fees such as prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns. Period over period, income generated from these fees was relatively consistent. Other income decreased period over period due to a decrease in incremental fee income, which are fees that are generally available as a result of closing investments and normally paid at the time of closing. We expect that investment income will vary based on a variety of factors including the pace of our originations and repayments.

Expenses

Total expenses, excluding taxes, increased to $206.2 million for the three months ended September 30, 2023 from $165.7 million for the three months ended September 30, 2022, primarily due to an increase in interest expense and incentive fees. The increase in interest expense was primarily driven by an increase in the average interest rate. As a percentage of total assets, professional fees, directors’ fees and other general and administrative expenses remained relatively consistent period over period.

Liquidity and Capital Resources

As of September 30, 2023, we had $432.0 million in cash and restricted cash, $7.2 billion in total principal value of debt outstanding, and $1.4 billion of undrawn capacity on our credit facilities. The Company’s weighted average interest rate on debt outstanding was 5.6% and 3.9% for the three months ended September 30, 2023 and September 30, 2022, respectively. Ending net debt to equity was 1.13x and 1.18x as of September 30, 2023 and September 30, 2022, respectively.

CONFERENCE CALL AND WEBCAST INFORMATION

Conference Call Information:

The conference call will be broadcast live on November 9, 2023 at 10:00 a.m. Eastern Time on the Events section of OBDC’s website at www.BlueOwlCapitalCorporation.com. Please visit the website to test your connection before the webcast.

Participants are also invited to access the conference call by dialing one of the following numbers:

 

  •  

Domestic: (877) 737-7048

 

  •  

International: +1 (201) 689-8523

All callers will need to reference “Blue Owl Capital Corporation” once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected.

Replay Information:

An archived replay will be available for 14 days via a webcast link located on the Events section of OBDC’s website, and via the dial-in numbers listed below:

 

  •  

Domestic: (877) 660-6853

 

  •  

International: +1 (201) 612-7415

 

  •  

Conference ID: 13741060

FINANCIAL HIGHLIGHTS

 

     For the three months ended  
($ in thousands, except per share amounts)    September 30,
2023		     June 30, 2023     September 30,
2022		  

Investments at Fair Value

    $ 12,896,158     $ 12,892,943     $ 12,835,918  

Total Assets

    $ 13,461,820     $ 13,393,278     $ 13,413,191  

Net Asset Value Per Share

    $ 15.40     $ 15.26     $ 14.85  

Investment Income

    $ 399,022     $ 394,223     $ 314,053  

Net Investment Income

    $ 190,053     $ 186,676     $ 146,774  

Net Income

    $ 206,938     $ 195,562     $ 265,427  

Net Investment Income Per Share

    $ 0.49     $ 0.48     $ 0.37  

Net Realized and Unrealized Gains (and Losses) Per Share

    $ 0.04     $ 0.02     $ 0.30  

Net Income Per Share

    $ 0.53     $ 0.50     $ 0.67  

Distributions Declared from Net Investment Income Per Share

    $ 0.33     $ 0.33     $ 0.31  

Supplemental Distributions Declared from Net Investment Income Per Share

    $ 0.08     $ 0.07     $ 0.03  

Weighted Average Yield of Accruing Debt and Income Producing Securities at Fair Value

      12.3 %      12.2 %      10.2 % 

Weighted Average Yield of Accruing Debt and Income Producing Securities at Amortized Cost

      12.4 %      12.2 %      10.2 % 

Percentage of Debt Investment Commitments at Floating Rates

      97.7 %      98.1 %      98.3 % 

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(Amounts in thousands, except share and per share amounts)

 

     September 30, 2023
(Unaudited)		      December 31, 2022  

Assets

      

Investments at fair value

      

Non-controlled, non-affiliated investments (amortized cost of $11,500,055 and $12,133,062, respectively)

    $ 11,471,820      $ 12,010,369  

Non-controlled, affiliated investments (amortized cost of $19,352 and $6,224, respectively)

      19,805        6,175  

Controlled, affiliated investments (amortized cost of $1,303,464, and $906,846, respectively)

      1,404,533        993,801  
  

 

 

     

 

 

  

Total investments at fair value (amortized cost of $12,822,871 and $13,046,132, respectively)

      12,896,158        13,010,345  

Cash (restricted cash of $89,264 and $96,420, respectively)

      429,676        444,278  

Foreign cash (cost of $2,357 and $809, respectively)

      2,354        809  

Interest receivable

      107,112        108,085  

Receivable from a controlled affiliate

      22,532        17,709  

Prepaid expenses and other assets

      3,988        3,627  
  

 

 

     

 

 

  

Total Assets

    $ 13,461,820      $ 13,584,853  
  

 

 

     

 

 

  

Liabilities

      

Debt (net of unamortized debt issuance costs of $80,535 and $95,647, respectively)

    $ 7,062,399      $ 7,281,744  

Distribution payable

      128,612        129,517  

Management fee payable

      47,796        47,583  

Incentive fee payable

      40,314        34,462  

Payables to affiliates

      6,292        6,351  

Accrued expenses and other liabilities

      176,398        202,793  
  

 

 

     

 

 

  

Total Liabilities

      7,461,811        7,702,450  
  

 

 

     

 

 

  

Commitments and contingencies (Note 7)

      

Net Assets

      

Common shares $0.01 par value, 500,000,000 shares authorized; 389,732,868 and 392,476,687 shares issued and outstanding, respectively

      3,897        3,925  

Additional paid-in-capital

      5,936,644        5,970,674  

Accumulated undistributed (overdistributed) earnings

      59,468        (92,196 ) 
  

 

 

     

 

 

  

Total Net Assets

      6,000,009        5,882,403  
  

 

 

     

 

 

  

Total Liabilities and Net Assets

    $ 13,461,820      $ 13,584,853  
  

 

 

     

 

 

  

Net Asset Value Per Share

      15.40        14.99  

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share amounts)

 

     For the Three Months Ended
September 30,		     For the Nine Months Ended
September 30,		  
     2023     2022     2023     2022  

Investment Income

         

Investment income from non-controlled, non-affiliated investments:

         

Interest income

    $ 307,701     $ 240,601     $ 894,371     $ 655,303  

Payment-in-kind interest income

      40,925       30,539       128,783       79,698  

Dividend income

      17,324       14,867       52,764       36,280  

Other income

      2,332       5,408       12,539       14,794  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total investment income from non-controlled, non-affiliated investments

      368,282       291,415       1,088,457       786,075  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment income from non-controlled, affiliated investments:

         

Dividend income

      36       —         213       —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Total investment income from non-controlled, affiliated investments

      36       —         213       —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment income from controlled, affiliated investments:

         

Interest income

      5,717       2,140       13,944       5,767  

Payment-in-kind interest income

      773       —         773       —    

Dividend income

      24,032       20,303       66,720       59,136  

Other Income

      182       195       760       520  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total investment income from controlled, affiliated investments

      30,704       22,638       82,197       65,423  
  

 

 

    

 

 

    

 

 

    

 

 

  
Total Investment Income      399,022       314,053       1,170,867       851,498  
  

 

 

    

 

 

    

 

 

    

 

 

  
Expenses         

Interest expense

      110,445       81,210       324,416       209,935  

Management fees

      47,796       46,886       143,911       141,172  

Performance based incentive fees

      40,314       31,134       117,640       83,630  

Professional fees

      3,890       3,788       11,697       11,022  

Directors’ fees

      445       276       960       832  

Other general and administrative

      3,349       2,381       9,158       6,656  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Operating Expenses

      206,239       165,675       607,782       453,247  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss) Before Taxes

      192,783       148,378       563,085       398,251  
  

 

 

    

 

 

    

 

 

    

 

 

  

Income tax expense (benefit), including excise tax expense

      2,730       1,604       8,495       3,998  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss) After Taxes

    $ 190,053     $ 146,774     $ 554,590     $ 394,253  
  

 

 

    

 

 

    

 

 

    

 

 

  
Net Realized and Change in Unrealized Gain (Loss)         

Net change in unrealized gain (loss):

         

Non-controlled, non-affiliated investments

    $ 22,371     $ 75,368     $ 91,855     $ (147,545 ) 

Non-controlled, affiliated investments

      507       —         502       —    

Controlled, affiliated investments

      (2,076 )      47,026       14,113       31,632  

Translation of assets and liabilities in foreign currencies

      (2,292 )      (3,807 )      278       (7,510 ) 

Income tax (provision) benefit

      (1,521 )      —         (4,217 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Net Change in Unrealized Gain (Loss)

      16,989       118,587       102,531       (123,423 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net realized gain (loss):

         

Non-controlled, non-affiliated investments

      235       201       353       4,853  

Non-controlled, affiliated investments

      —         —         (52,482 )      —    

Foreign currency transactions

      (339 )      (135 )      (647 )      (1,218 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Net Realized Gain (Loss)

      (104 )      66       (52,776 )      3,635  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Net Realized and Change in Unrealized Gain (Loss)

      16,885       118,653       49,755       (119,788 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Increase (Decrease) in Net Assets Resulting from Operations

    $ 206,938     $ 265,427     $ 604,345     $ 274,465  

Earnings Per Share - Basic and Diluted

    $ 0.53     $ 0.67     $ 1.55     $ 0.70  
  

 

 

    

 

 

    

 

 

    

 

 

  

Weighted Average Shares Outstanding - Basic and Diluted

      389,703,612       393,823,013       390,223,606       394,103,935  
  

 

 

    

 

 

    

 

 

    

 

 

  

PORTFOLIO AND INVESTMENT ACTIVITY

 

     For the Three Months Ended
September 30,		  
($ in thousands)    2023     2022  

New investment commitments

     

Gross originations

    $ 510,987     $ 427,436  

Less: Sell downs

      (10,803 )      —    
  

 

 

    

 

 

  

Total new investment commitments

    $ 500,184     $ 427,436  
  

 

 

    

 

 

  

Principal amount of investments funded:

     

First-lien senior secured debt investments

    $ 363,504     $ 230,494  

Second-lien senior secured debt investments

      —         —    

Unsecured debt investments

      —         —    

Preferred equity investments

      —         24,716  

Common equity investments

      22,266       17,047  

Joint ventures(3)

      875       31,500  
  

 

 

    

 

 

  

Total principal amount of investments funded

    $ 386,645     $ 303,757  
  

 

 

    

 

 

  

Principal amount of investments sold or repaid:

     

First-lien senior secured debt investments

    $ (342,060 )    $ (206,828 ) 

Second-lien senior secured debt investments

      (42,663 )      —    

Unsecured debt investments

      —         (22,433 ) 

Preferred equity investments

      (4,963 )      —    

Common equity investments

      —         —    

Joint ventures(3)

      —         —    
  

 

 

    

 

 

  

Total principal amount of investments sold or repaid

    $ (389,686 )    $ (229,261 ) 
  

 

 

    

 

 

  

Number of new investment commitments in new portfolio companies(1)

      7       13  

Average new investment commitment amount

    $ 61,240     $ 25,296  

Weighted average term for new debt investment commitments (in years)

      4.3       6.0  

Percentage of new debt investment commitments at floating rates

      92.2 %      80.8 % 

Percentage of new debt investment commitments at fixed rates

      7.8 %      19.2 % 

Weighted average interest rate of new debt investment commitments(2)

      11.7 %      10.5 % 

Weighted average spread over applicable base rate of new floating rate debt investment commitments

      6.3 %      6.3 % 

 

(1)

Number of new investment commitments represents commitments to a particular portfolio company.

(2)

For the three months ended September 30, 2023, assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) or 3-month SOFR, which was 5.40% as of September 30, 2023. For the three months ended September 30, 2022, assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) or 3-month SOFR, which was 3.59% as of September 30, 2022.

(3)

This was disclosed as “Investment funds and vehicles” as of September 30, 2022.

ABOUT BLUE OWL CAPITAL CORPORATION

Blue Owl Capital Corporation (NYSE: OBDC) is a specialty finance company focused on lending to U.S. middle-market companies. As of September 30, 2023, OBDC had investments in 187 portfolio companies with an aggregate fair value of $12.9 billion. OBDC has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. OBDC is externally managed by Blue Owl Credit Advisors LLC, an SEC-registered investment adviser that is an indirect affiliate of Blue Owl Capital Inc. (“Blue Owl”) (NYSE: OWL) and is a part of Blue Owl’s Credit platform.

Certain information contained herein may constitute “forward-looking statements” that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about OBDC, its current and prospective portfolio investments, its industry, its beliefs and opinions, and its assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond OBDC’s control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors identified in OBDC’s filings with the SEC. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date on which OBDC makes them. OBDC does not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law.

INVESTOR CONTACTS

Investor Contact:

Dana Sclafani

212-419-3000

credit-ir@blueowl.com

Media Contact:

Prosek Partners

Josh Clarkson

pro-blueowl@prosek.com

v3.23.3
Document and Entity Information
Nov. 08, 2023
Cover [Abstract]  
Entity Registrant Name Blue Owl Capital Corp
Amendment Flag false
Entity Central Index Key 0001655888
Document Type 8-K
Document Period End Date Nov. 08, 2023
Entity Incorporation State Country Code MD
Entity File Number 814-01190
Entity Tax Identification Number 47-5402460
Entity Address, Address Line One 399 Park Avenue
Entity Address, Address Line Two 37th Floor
Entity Address, City or Town New York
Entity Address, State or Province NY
Entity Address, Postal Zip Code 10022
City Area Code (212)
Local Phone Number 419-3000
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Security 12b Title Common Stock, par value $0.01 per share
Trading Symbol OBDC
Security Exchange Name NYSE
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