管理層發言
Good morning, and welcome to Blue Owl Capital's Second Quarter 2026 Earnings Call. During the presentation, your lines will remain on listen-only. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press 1. If you would like to withdraw your question, press 1 again. Thank you. I would like to advise all parties that this conference call is being recorded. I will now turn the call over to Ann Dai, Head of Investor Relations for Blue Owl.
Thanks, operator, and good morning to everyone. Joining me today are Marc S. Lipschultz, our Co-Chief Executive Officer, and Alan J. Kirshenbaum, our Chief Financial Officer. I would like to remind our listeners that remarks made during the call may contain forward-looking statements, which are not a guarantee of future performance or results and involve a number of risks and uncertainties that are outside the company's control. Actual results may differ materially from those in forward-looking statements as a result of a number of factors, including those described from time to time in Blue Owl Capital's filings with the Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statements. We also would like to remind everyone that we will refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our earnings presentation available in the shareholders section of our website at blueowl.com. Please note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Blue Owl fund. This morning, we issued our financial results for the second quarter of 2026, reporting fee-related earnings, or FRE, of $0.25 per share and distributable earnings, or DE, of $0.22 per share. We declared a dividend of $0.23 per share for the second quarter, payable on August 27 to holders of record as of August 13. During the call today, we will be referring to the earnings presentation which we posted to our website this morning, so please have that on hand to follow along. With that, I would like to turn the call over to Marc.
Great. Thank you so much, Ann. This morning, we reported our financial results for the second quarter of 2026, highlighting 9% DE growth versus a year-ago quarter. This growth was broad-based across products and geographies, demonstrating the continued diversification of Blue Owl's platform and reinforcing the strength and stability of our business across a wide variety of market environments. Over the past few quarters, we have looked to address questions about our business and our ongoing goal is to continue to offer key facts that illuminate the diversification, resilient investment performance, and core growth trends we see across our business. On diversification, which we believe has been an overlooked theme and a key evolution of the Blue Owl story, we start with our real assets platform, which now constitutes nearly 30% of our AUM. We have grown real assets AUM by 25% and revenues by 27% versus a year ago, with particular strength from our net lease and digital infrastructure strategies. In this platform, our central positioning and strong track record in these markets have continued to resonate with institutional and wealth investors alike, and this has not gone unnoticed by industry participants. Recently, we were named PERE's Global Net Lease Investor of the Year, Global Data Center Investor of the Year, Global Retail Investor of the Year, and we have been ranked number two on PERE's Top 100 real estate fundraisers globally. This recognition highlights that our real assets platform—launched 4.5 years ago with $12 billion of AUM—has raised more money over the past five years than nearly every other real estate manager globally. We are honored to be leading such an esteemed list of managers and believe our success reflects our singular focus on creating differentiated risk-reward and strong yield-based outcomes for our investors. Since we first established our foothold in real assets in late 2021, we have expanded to 35% of our AUM compared to nearly half of our AUM just two years ago. In contrast, alternative credit, which is approaching 10% of our credit AUM, has experienced 35% AUM growth over the past year. During the second quarter, we reached the one-year anniversary of the inception of our alternative credit interval fund, which has surpassed $2.7 billion in size and has outperformed the leveraged loan index by more than 600 basis points over that period. We have also meaningfully scaled drawdown funds in alternative credit; our opportunistic fund, which held its final close last quarter, raised 1.6x more than the prior vintage against a market backdrop of private credit concerns and a challenging global fundraising environment. We continue to anticipate outsized growth from our alternative credit strategy. In GP strategic capital, our market-leading position in the specialist strategy has continued to pay off, with approximately $5.5 billion raised over the last year across the commingled fund, co-invest, and innovative strip sale structures. Finally, we continue to introduce de novo strategies that draw upon our investment expertise in various asset classes and offer incremental product-suite diversity. Over the last couple of years, we have highlighted GP-led secondaries and net lease Europe as some examples of these organic growth initiatives. Last quarter, we held the final close of our BOSE product at a total of $3 billion and we have closed $1.5 billion for Net Lease Europe. Adding to this list, we are now in market with the first vintages of our data center credit and real estate credit strategies and have raised over $1 billion in aggregate towards a $1.5 billion goal. Summarizing our thoughts on diversification: as we look at the first half of 2026 across Blue Owl, the period spanning the most acute headline noise and elevated redemptions for nontraded BDCs, we raised more than $16.5 billion of equity capital across the firm, or more than 40% of our last 12-month total. Over the last 12 months, more than 75% of the equity capital we have raised has been into non-direct lending strategies, and roughly two-thirds has been from institutional and insurance clients, underscoring the breadth and resilience of our business. Moving on to investment performance, we continue to experience strong outcomes across the board with no meaningful change in strategy-level performance. In direct lending, performance of our funds and vehicles has continued to outpace the relevant benchmarks. Importantly, the underlying portfolio companies we finance have continued to grow at a mid- to high-single-digit pace on average, providing incremental support to our position as the senior secured piece of these companies' capital structures. Across our direct lending strategy, credit health remains strong. We have seen no meaningful change in our watch list compared to a year ago. We remain vigilant on credit and are prepared for some normalization off of very low loss rates. Today, we are sitting at a 12-basis-point average annual realized loss rate with a net gain in our technology lending book. Through June, our nontraded BDC OCIC Class I shares have returned over 9% since inception, outperforming the leveraged loan and high-yield indices by more than 300 and 450 basis points since inception. Additionally, we have begun to see divergence across managers. We expect differentiation in outcomes to continue across market sizing, with the upper middle market outperforming the lower middle market as it has over the past years, and we anticipate further dispersion among upper middle market managers highlighting quality of underwriting and credit selection. In real assets, our net lease strategy has generated a 13.6% total return over the past 12 months, while the Class I shares of our nontraded REIT ORENT have returned 9% annualized since inception. Both ORENT and our nontraded digital infrastructure REIT ODiT have increased their dividends this past year. In GP stakes, we continue to rate very favorably against private equity products on the same vintages with top-quartile rankings across funds on DPI. While we are cognizant that sentiment can shift with market conditions and investor expectations, we believe our high-quality performance across strategies will allow Blue Owl to serve our investors well through a variety of market environments. With the diversification I highlighted earlier in my remarks ensuring balance for our platform in the midst of the crosswinds of fluctuating sentiment, the results we reported this morning continue to demonstrate the resilience of our business in the midst of many market crosscurrents, which do not uniquely impact Blue Owl. As I consider the growth we have achieved over the past year, two years, or even five years, we have done so through a wide range of risk-free rate environments, multiple geopolitical escalations, and a broad spectrum of capital market backdrops. Our growth rate has fluctuated through these landscapes, but we have consistently demonstrated growth and durability, and we have maintained very strong investment performance throughout. We are very proud of the business we have built. We are exceptionally thankful for the tireless efforts of our great Blue Owl team, and we are optimistic about the path forward from here. With that, let me turn it to Alan to discuss our financial results.
Thank you, Marc. Morning, everyone. As we highlighted in this morning's earnings presentation, Blue Owl grew earnings by 9% compared to the second quarter of 2025. Looking at the second quarter versus a year ago, management fees grew 8% excluding the impact of management fee offsets. FRE grew 9% and DE grew 9%. Our FRE margin was 58.5%, in line with our outlook for the year and modestly up from the first quarter and 2025 levels. AUM not yet paying fees increased to $31 billion, representing approximately $380 million of expected annual management fees once deployed. This is equivalent to approximately 15% embedded growth from our 2025 management fees. As this capital is drawn down and put to work, it converts into fee-paying AUM and will continue to support management fee growth across our platforms. To continue with Marc's themes, he covered in his remarks our continued diversification and strong investment performance. I will cover the core growth trends we see across our business. First, given the number of drawdown funds we have in market this year, we expect institutional fundraising to remain strong in the second half of the year. On our net lease strategy, during Q2, we exceeded the hard cap initially set for this vintage and have raised 1.5x more than the predecessor vintage. The investor interest and engagement here has been really impressive. So we wanted to share some stats, which include that just a year after the first close, we have raised $7.7 billion and surpassed the original hard cap. Inclusive of co-invest, we have raised $8.7 billion. Approximately 60% of these investor commitments are from first-time investors in the strategy. New consultant recommendations led to over $1.5 billion of this capital raise. And geographically, we added LPs from Australia, Korea, Scandinavia, Israel, Kuwait, and the UAE, constituting roughly 40% of capital raised to date. In wealth, we believe we have seen a bottoming of evergreen inflows at the May 1 close, supported by continued strong performance in these products and ongoing education across stakeholder groups. For the July 1 close, we saw a greater-than-50% increase in evergreen inflows versus that May 1 close. While we are still below historical levels, we are encouraged by this data and continue to see increased engagement from home offices and financial advisers. The recent redemption data is also supportive of better trends in the wealth channel. We saw a modest reduction in redemption requests in the second quarter for our nontraded BDCs. While we are not calling for a V-shaped recovery in sentiment around private credit, we do think that the strong fundamental performance of our products has played a role in the decline of redemption requests for the nontraded BDCs, which we continue to view as more sentiment driven and led by individual clients as opposed to financial advisers or distribution partners. For the second quarter in a row, we continued to see 90% of our OCIC fund investors not request a single dollar of redemptions. The small shareholder base that did submit redemption requests remained largely unchanged from last quarter with very limited new participation. And while we believe this has become very well understood by shareholders, as a reminder, the liquidity in our nontraded BDCs has remained very strong. As we highlight on Slide 25 of our earnings presentation, repayments in the loan book meaningfully more than covered the net outflows during the second quarter. Outside of the nontraded BDCs, we saw no increase in redemption activity across our other evergreen products over the past few quarters. We raised $7.8 billion of total capital during the quarter, bringing our last 12-month total capital raising to $50.5 billion, the equivalent of 18% of our total AUM at this time last year. All of this capital raising was organic and nearly 40% of it was raised during the first half of 2026 during a period of elevated headlines about private credit and in the midst of meaningful geopolitical uncertainty. Fundraising was particularly strong in real assets this quarter, with about 60% of our equity capital raised originating from this platform across a number of strategies and products. Institutional and insurance investors comprised about three-quarters of equity capital raised in the second quarter and roughly two-thirds of last 12 months equity capital raised. Compared to the prior 12-month period, institutional flows were more than 30% higher year over year, reflecting the expansion and diversification of our business that Marc highlighted in his remarks. Moving on to business performance across our platforms, in credit, we continue to generate strong absolute and relative performance across direct lending, alternative credit, and other credit categories. Last 12-month total returns were 8.3% for direct lending and 11.4% for alternative credit, comparing favorably to relevant public credit benchmarks over the same period. Deployment was robust across credit, led by alternative credit and investment-grade credit. Similar to the trends we are seeing in fundraising, our platform expansion has benefited deployment, with all credit deploying nearly $7 billion over the last 12 months—more than double the prior 12-month period—and we have seen meaningful deployment expansion for investment-grade credit as well. In direct lending, we continue to see deployment consistent with an industry backdrop of moderate sponsor-driven M&A activity. We continue to see meaningful repayments at par, another metric demonstrating health and liquidity within the portfolio. In real assets, we continue to see elevated pipelines with very attractive return dynamics, with nearly $160 billion of near-term opportunities across net lease and digital infrastructure. In Net Lease Fund 6, we have fully committed the funds and continue to have visibility with capital calls in motion, expected to be virtually fully called by the end of the year, which would be within three years of our final close. As I noted earlier, we are making excellent progress on the next vintage which has already exceeded its $7.5 billion hard cap and we plan to finish up capital raising this year. Our net lease strategy continues to focus on highly thematic investment including industrials and reshoring, cold storage, data centers, and health care, as demonstrated by recent announcements such as the Cellnex and Spirit transactions. In digital infrastructure, we continue to advance forward with a list of compelling development projects in progress and under discussion with exceptional partners. Today, our data center footprint spans more than 140 data centers owned or under construction globally, with 15.3 gigawatts of leased and owned capacity. In GP strategic capital, we raised approximately $1.3 billion during the quarter, driven by our flagship large-cap strategy and an additional strip sale transaction. The total raised in our sixth vintage was $10.6 billion inclusive of co-invest. Across the past two years, we have engaged in five strip sale transactions that have in aggregate provided $4.6 billion of return of capital for our investors. We have seen strong interest from new investors for these structures, which can provide a broader set of attachment points across the return spectrum and allow LPs to invest in a highly visible and proven pool of assets. Looking out at the rest of the year, there are a few items I would like to call out. On stock-based compensation, a quick reminder from our February earnings call: there are three categories running through our stock comp expense numbers, all shown on Slide 34 of our earnings presentation. First, our regular-year-end stock compensation, what we call equity-based compensation other—this is the number to focus on—and we continue to expect to run at $365 million for 2026. Second, business combination grants go to zero starting in the fourth quarter of this year. And third, acquisition-related GAAP amortization expense related to some of the acquisitions we have made over the last few years. As for an overall 2026 guidance update, on last quarter's call, we said we think we could beat Visible Alpha consensus estimates for 2026. We reaffirm that again today. To be specific, at that time, FRE per share was $1.02 and DE per share $0.89. We think we can beat those numbers this year. With that, why don't we jump into Q&A? Thank you very much for joining us this morning. Operator, can we please open the line for questions?
分析師問答
Thank you. We will now begin the question-and-answer session. We ask that you please limit yourself to one question. You may reenter the queue for any follow-up questions. Your first question today comes from the line of Glenn Schorr from Evercore ISI. Your line is open.
Oh, your last comment maybe changed my question. Alan, could you maybe address where you think you might be able to beat that Visible Alpha $1.32? Specifically, which line items do you think are the source?
Okay. Of course. Good morning. Look, we have some visibility into growth for the next couple quarters. For direct lending, we're going to look to net deployment numbers as an indicator to management fee growth for the next few quarters, but let's assume that is a push for now. We are wrapping up the latest GP stakes vintage and we are going to add a little growth there. And for net lease, let's break down the pieces. For Fund 6, that was 65% drawn at quarter end. We are out with a capital call now; that will bring us to 77% drawn next month. I mentioned earlier we have line of sight to effectively being fully called with Fund 6 by the end of the year. Our current vintage is about 10% called and about 40% committed already, so good early progress there. That 10% came in on June 25, so the full quarter is in motion there. Our next digital infrastructure flagship, I mentioned in our prepared remarks, we are expecting our first close later this year, so you will see more growth from that. There is an important difference: fundraising for net lease generally does not immediately link to management fee growth—it is deployment that links to the pace of management fee growth. For digital infrastructure, we charge on committed capital, so there is a more immediate management fee impact. Capital calls are lumpy, not straight lines. We are seeing long-term management fee growth. And remember, we have $31 billion of AUM not yet paying fees that will be deployed over time, which is about $380 million of expected annual management fees once deployed. We have visibility into the next quarter or two where we do see management fee growth building each of the next two quarters. Thanks, Glenn.
Your next question comes from the line of Craig Siegenthaler from Bank of America. Your line is open.
Hey. Good morning, Marc and Alan. Hope everyone's doing well. Quick two-parter on the data center book: I'm curious how cap rates are trending in light of increased competition across peers. Also, can you update us on the underlying tenant credit quality and the watch list? I know most tenants are investment-grade, but debt levels are rising and not all tenants are IG, so I'm curious if you saw any changes quarter over quarter.
Sure. Happy to. We continue to experience very strong cap rates. To be direct, we are not seeing compression in cap rates. We do something very distinct—there are a few people in the world that can do it, but only a few—and that is to build in partnership where we have the actual ability to design, build, and operate. We have roughly a thousand people across our deal, stack, and adjacent businesses, and that has made us the partner of choice for many hyperscalers. That ability to deliver on time, on budget, and at scale has led to mutual value for us and the hyperscalers. We are continuing to see very attractive rates, and in fact, with rising interest rates, that can even help accentuate those cap rates. In terms of tenant credit quality, the vast majority of our business is investment-grade. If you look at our funds, the single-digit percentage that is non-investment-grade is essentially inconsequential to what we do. So you can form your view on the credit quality of the double-A borrowers, but our business is an IG business, and non-IG exposure is minimal.
Your next question comes from the line of Steven Chubak from Wolfe Research. Your line is open.
Hey. Good morning. Thanks for taking my question. On fundraising strategy—given year-to-date BDC redemption trends have been much more concentrated across a subset of international investors—I'd like to better understand whether the recent turmoil within the nontraded BDC space has reshaped your approach to expanding your retail distribution abroad. Is there a way to isolate what might be considered hot money versus a secure core U.S. retail base across your platform?
Thanks, Steven. I appreciate the question. Overall, we feel good about what we are seeing right now. Pulling the lens back on wealth overall, we think we have troughed by way of inflows and we commented on that. Redemptions are down in our nontraded BDCs. We have not seen increased redemptions across our other wealth-dedicated products over the past few quarters. So we are cautiously optimistic that nontraded BDC redemptions will continue to come down. We're seeing strong flows into our ORENT product, and both ORENT and ODiT raised their dividend this year. Performance is strong across our wealth-dedicated products; for example, OWLCX, ORENT, and ODiT are running at a 10% to 12% annualized return so far this year. Taking ORENT as an example, since it launched in September 2022, ORENT has been the top-performing nontraded REIT, posting a consistent 9% annualized return. It has been a category leader in private evergreen real estate fundraising, on both a net and gross basis, and has become one of the largest private REITs in the market with $16 billion of AUM. More broadly in wealth, financial advisers and home offices have been very supportive because they see continued strong performance. We have been very transparent with them through the challenging period and are now seeing a broadening in adviser participation across our distribution partners. We have already launched on 13 new platforms this year and are slated to launch on 21 more platforms this year. We continue to see steady growth of new advisers allocating to our funds for the first time; among financial advisers that invested in our product, 74% are in more than one Blue Owl product versus 52% in 2025. Once advisers allocate capital, we see significant cross-selling, which is testament to continued strong performance. Internationally, we continue to grow our wealth platform across the board, and we have very minimal exposure across our wealth products to Asia.
I think one important point of color coming out of this narratively tumultuous period is the durability and rationality of the wealth channel. The performance numbers speak for themselves. We continue to deliver strong performance before, during, and after the heightened narrative. The market has largely kept the redemption behavior concentrated in the products where the narrative was strongest. Other concentric areas—one circle away, like asset-backed products—continue to see inflows and minimal outflows. Products like ORENT have raised dividends and continue to perform well. In our core income product, 90% of investors did not request redemptions, which demonstrates that redemption behavior was narrowed to about 10% of investors in a specific product. Looking out five years, I think the wealth channel has shown structures that work and a market that can discern. While a narrative moment can cause temporary pullback in inflows and some outflows, the channel is much more durable and narrower in impact than many anticipated. There is a lot to like about the wealth channel over the medium and long term.
Your next question comes from the line of Bill Katz from TD Cowen. Your line is open.
Great. Thank you. So I appreciate the updated confidence in beating guidance. I think it removes a lot of risks on the story. Looking at your margin profile, FRE margin: if I did the math correctly, it looks like you had about 80% incremental margin year on year. As you think about the trajectory for the second half of the year and into 2027, are you thinking there's an opportunity to drive better profitability?
Thanks, Bill. We do continue to feel good and very good about where we are and where we're going with FRE margin. 58.5% was the guide for the year and we have already achieved that in the second quarter. You should continue to expect modest increases as we go out over the next few years. We feel good about where we are and where we are going.
Your next question comes from the line of Brennan Hawken from BMO Capital. Your line is open.
Good morning. How are you? We would love to ask about GP stakes (GP 6). You mentioned you are at $10.6 billion to date. What are your updated expectations for size and timing for final close? More importantly, given expectations for consolidation among mid-market GPs, what are the long-term limitations to growth in this strategy, and what are you hearing from LPs about those concerns?
Sure. Since the beginning of fundraising for this vintage in total, we have actually raised about $15 billion when you include this vintage, co-invest, and the strip sales that we have done. Specifically, $10.6 billion in the flagship inclusive of co-invest and $9.7 billion in the vintage. We have also raised about $4.5 billion over the past two years across the strip sales. We are in the final stretch of the fundraise and will see where we wrap up this year, but we do expect to wrap up this year and continue to make steady progress toward where we want to be.
The opportunity to add on the GP stakes side is really about the evolving marketplace. There are many important franchise businesses of substantial scale and owners need ways to monetize. Our GP stakes business is a market leader, particularly at the large end of the market where we prefer to operate. This environment reinforces why you want to be in the large end rather than the middle market. The bigger firms are consolidating and need capital solutions to support growth and generational transition. That makes us a destination for those opportunities. We see a very strong addressable and growing market over time to deploy capital successfully in ways that work both for those firms and for our investors. Performance matters: we are delivering extremely strong results across our platforms and products. We've been rated among the very best performers in private equity on comparable vintages. We have developed our own approach to participate in the biggest asset class in alternatives without going head-to-head with many providers. We have attractive structures like BOSE and our GP stakes capabilities that allow us to participate in private equity in differentiated ways. We feel well-positioned and see promise for these strategies going forward.
Your next question comes from the line of Patrick Davitt from Autonomous Research. Your line is open.
Hey. Good morning, everyone. The market is still obviously hyper-focused on your exposure to retail direct lending. You have a great track record and clearly institutional relationships. What has your hesitancy been to do a large traditional drawdown fund like some of your competitors, and would you consider launching one to help fill in capital lost on the retail side?
Sure. I appreciate the setup. Performance in our retail direct lending product continues to be, and we expect will continue to be, extremely strong: low loss rates, good returns, and diversification. We are built to handle the periodic issues that occur. We understand the legitimate questions that were raised about the narrative, and time and deep study have increased our comfort regarding the manageability of those issues. We saw redemption requests come down in Q2 and the tone has changed meaningfully. We have seen upticks in institutional engagement as well. Regarding drawdown structures, we do have a product called ODL which actually is a drawdown structure with some nuances that make it slightly different from a traditional drawdown fund. We have no hesitation to launch a traditional drawdown product and, in fact, expect we will if that is where investors want to put capital. We're not going to force a structure; we'll meet investors where they want to be. It seems logical that we would launch the right traditional drawdown structure if demand exists. It's less about offsetting retail—retail already shows signs of recovery—and more about providing the structures investors want. Direct lending is a strong place to be in a rising-rate environment, and we expect institutions and others to continue allocating to this area.
Your next question comes from the line of Devin Ryan from Citizens Bank. Your line is open.
Thanks. Good morning, Marc and Alan. Appreciate the full-year outlook. Just want to connect the credit deployment theme: you mentioned direct lending activity is consistent with a moderate sponsor M&A environment. The flip side is alternative credit and investment-grade credit are growing quickly from smaller bases. Looking out 18 months, do we need a meaningful acceleration in sponsor-led M&A to drive fee-paying AUM growth, or are the newer strategies becoming large enough to move the needle? More broadly, what are you seeing in the sponsor M&A backdrop?
So the underpinning to our thinking is that it's not about a rapid recovery in sponsor activity. That day will come, and when it does it will be additive, but it is not the predicate for our growth commentary. We have many other strategies that are growing substantially and that is what we are counting on to drive growth. A meaningful cyclical or secular recovery in private equity would give us additional tailwind and be helpful, but we are not counting on that alone. With the tepid M&A environment today, we still grew our business 9% over the last year. As Alan discussed, we see sequential improvement coming in Q3 and Q4 and into 2027. Those other growth drivers—alternative credit, digital infrastructure, real assets—are already contributing meaningfully.
The only thing I'd add is we would expect a natural improvement in growth rates as deployment continues over time and the net flow picture improves. Since the May 1 close, we've seen net flows build nicely, though we have a long way to go. Overall, we expect institutional fundraising to remain strong in the second half of the year, and we think fundraising for the rest of the year could be better than the first half. Mathematically, we have the $31 billion of AUM not yet paying fees—about $380 million of expected annual fees—that will feed future revenue as it is deployed. We're taking a realistic approach and not counting on exogenous variables, but those events would be helpful when they arrive.
Your next question comes from the line of Crispin Love from Piper Sandler. Your line is open.
On digital infrastructure, your data center business has been a significant growth area and your focus has been on the infrastructure. Can you discuss further opportunities there? Do you see chip financing as an additional area you could add in the intermediate to long term?
Digital infrastructure is an important growth opportunity. We are among the leaders in hyperscale projects and that position gives us access to adjacent opportunities. We've been involved in fiber successfully and power is increasingly important as behind-the-meter power solutions become part of the data center solution in many markets. That brings us closer to the power side of the equation. Regarding chip financing, we already participate in chip financing in our lending business. For example, we participated in a meaningful financing for xAI. Chip financing is an area of opportunity in our lending business, though it needs to be structured correctly. It is a different proposition from triple-net lease strategies, but it fits within our broader capability set and capital solutions offering.
Your next question comes from the line of Alexander Blostein from Goldman Sachs. Your line is open.
Hey. Good morning. I was hoping to double-click into the wealth channel outside of the nontraded BDCs—for both the alternative credit fund and ODiT. You mentioned nice pickup in flows. I know some of these funds have fee waivers or incentives attached. Help us think through how those flows turn into management fees over the next 12 months. More broadly, are there other retail-dedicated products in the lab or pipeline?
Alexander, thanks. We continue to be encouraged by the flows we're seeing in OWLCX and ODiT. We're particularly excited about the growth opportunity in credit—there's a big pipeline and we've got a long track record. We think the interval fund opportunity set is very large and we're only a year out. Management fees will continue to build; you should note that in Q4 some offsets go down to zero. You'll see a partial offset for the interval fund in motion, and as we roll this out, we do see our wealth products coming to market over the next 6, 12, 18 months. There are interesting products we're working on that we'll discuss in coming quarters, and we're focused on expanding our presence and diversifying the product set.
It's important to note that OWLCX and ODiT are small today in the context of total capital raise, so they are not substantial contributors yet. What is happening is we are broadening distribution for those products. The first half of the year wasn't a great time to roll out many new products, so now we're broadening distribution and building out the product suite. You'll see us come with some equity-related products and continued innovation like BOSE as examples of distinctive capabilities that align with where the market is allocating private equity dollars. It's more about the forward opportunity set than today's contribution and speaks to acceleration opportunities going forward.
Your next question comes from the line of Mike Brown from KBW. Your line is open.
Great. Thanks for taking my question. Thinking about the $31 billion of AUM not yet paying fees, can you talk about how deployment will differ between credit versus real assets? On real assets, and specifically digital infrastructure Fund 4, can you touch on the cadence of closes, activation, and any potential co-investment demand?
We continue to see a lot of co-invest interest in digital infrastructure and data centers. We've closed a number of SMAs and co-invest vehicles alongside existing vintages. We expect the first close of the next vintage in the back half of this year, and fundraising will go through 2027 and into early 2028 in a normal cadence. We continue to target $10 billion as a goal for that franchise. In terms of the $31 billion, it breaks out mostly across credit—direct lending and alternative credit—and net lease. Net lease is actively being called; we have line of sight for Fund VI to be fully called. Direct lending's net deployment has been relatively light recently, similar to peers, and will depend on sponsor M&A activity over the next 6 to 12 months. We're seeing an inflection point: redemptions down in Q2 versus Q1, inflows trough at May 1, sequential growth in management fees, and we see the growth rate for management fees higher in 2027 than in 2026. Deployment is strong in net lease, digital infrastructure, and alternative credit, and most importantly, performance remains strong across our products.
Next question comes from the line of Benjamin Budish from Barclays Capital. Your line is open.
Hi. Good morning. This was another quarter of pretty strong administrative and transaction fees despite a more muted direct lending environment. It looks like real assets were strong again in Q2 and GP stakes had a sequential step-up. Can you talk about what's driving other fees and whether we should be seeing a structural step-up going forward?
Sure. We continue to see transaction fees come through consistent with our direct lending activity; that's been modest this year and relates to gross deployment. We also see interest opportunities in real estate credit similar to direct lending, which drives transaction fees on that side. Q1 was a good quarter and Q2 put up relatively similar results. You could see those build a bit over time as deployment increases. We continue to see good opportunities in the marketplace.
Your next question comes from the line of Wilma Jackson Burdis from Raymond James. Your line is open.
Hey. Good morning. Could you discuss fee-paying AUM in credit—why we saw fee-paying AUM go down a little given the dry powder? And do you see opportunities to offset outflows by leaning into institutional fundraising?
Sure. For fee-paying AUM: we raised a lot of institutional dollars in Q2—about 75% of our fundraise in the quarter was institutional. That generally goes straight into AUM not yet earning fees, which has increased by about $3 billion since year-end. That incremental $3 billion since year-end represents about $55 million of annualized management fees and sits in the queue until deployed. Direct lending net deployment has been light, and in net lease we saw capital call activity start to deploy. So when you see a lot of institutional dollars raised, that tends to increase AUM not yet earning fees, and as it gets deployed it converts into fee-paying AUM and supports management fee growth.
We are seeing good institutional interest in private credit and direct lending. We've got some large mandates that are advanced, so yes, institutional interest has picked up and that should benefit us as those commitments deploy.
And that concludes our question-and-answer session. I will now turn the call back over to Mr. Lipschultz for some final closing comments.
Thank you very much. We are excited about the inflection from here. We are pleased with the results for this quarter, particularly given the external atmospherics. Most importantly, performance of the underlying products is extremely strong. Job one is to deliver for our LPs; we will never lose sight of that, and job one will lead to great results for our shareholders. Diversification matters: you can see how many new businesses we have built successfully to scale. For example, the direct lending business is now 35% of our assets, and products that attracted the most acute narrative attention are actually only 11% of our fee-paying assets—namely, the wealth products in direct lending. You can see the benefits and power of diversification across our three platforms and that brings durability to the firm. We will continue to push forward on what we can control and, when exogenous things are helpful, we look forward to those being additive. We are excited looking into the back half of this year and into 2027, and appreciate the time today.
This concludes today's conference call. Thank you for your participation. You may now disconnect.