Operator: Good morning, and welcome to Blue Owl Capital's Second Quarter 26 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 If you would like to withdraw your question, again, press 1. 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 BlueOwl.

Ann Dai: 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 L Capital's filings with the Securities and Exchange Commission. The company assumes no obligation to update any forward looking statements. We also 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 26 reporting fee related earnings or FRE of 25¢ per share and distributable earnings or DE of 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.

Marc S. Lipschultz: Great. Thank you so much, Ann. This morning, we reported our financial results for the second quarter of 26. Highlighting 9% DE growth versus a year ago quarter. This growth was broad based across products and geographies demonstrating the continued diversification of BlueOwl'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% 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 2 on PERE's top 100 real estate fundraisers globally. This recognition highlights that our real assets platform launched 4.5 years ago $12 billion of AUM, has raised more money over the past 5 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 21, we have expanded, 35% of our AUM. Compared to nearly half of our AUM just 2 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 1-year anniversary of the inception of our alternative credit interval fund, which has surpassed $2.7 billion in size and has outperformed the leverage 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's 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 sales 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 26 across BlueOwl, 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. For 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 nondirect lending strategies and roughly 2/3 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 Accredited Health and are prepared for some normalization off of very low loss rates. But 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 leverage loan and high yield indices by more than 300 and 450 and 50 basis points since inception. Additionally, we have begun to see divergence across managers, We expect differentiation and outcomes to continue across market sizing, with the upper middle market outperforming the lower middle market as it has over the past years and anticipate further dispersion among upper middle market managers highlighting quality of underwriting and credit selection. In real assets, our net lease strategy has generated 13.6% total return over the past 12 months, Well, the Class I shares of our nontraded REIT ORENT have returned 9% annualized since inception. And both ORENT and our non traded 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 BlueOwl 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. Bringing it back to where we started. Believe 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, 2 years, or even 5 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 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, we are optimistic about the path forward from here. With that, let me turn it to Alan to discuss our financial results.

Alan J. Kirshenbaum: 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 25. 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 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 in the May 1 close supported by continued strong performance in these products and ongoing education across stakeholder groups. And 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. And 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 put in for redemption requests remain 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 non traded BDCs has remained very strong. As we highlight on Slide 25 of our earnings presentation, with repayments in the loan book meaningfully more than covering 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, nearly 40% of it was raised during the first half of 26 during a period of elevated headlines about private credit and software 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 3/4 of equity capital raised in the second quarter and roughly 2/3 of last 12 months equity capital raised. And 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 and to be virtually fully called by the end of the year. Which would be within 3 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's 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 $10.6 billion inclusive of co invest. Across the past 2 years, we have engaged in 5 strip sale transactions that have in aggregate $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 3 categories running through our stock comp expense numbers. All shown on Slide 34 of our earnings presentation. First, our regular way 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 goes to 0 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. And 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 do not we jump into Q&A? You very much for joining us this morning. Operator, can we please open the line for questions?

Operator: Thank you. We will now begin the question and answer session. We ask that you please limit yourself to 1 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.

Glenn Schorr: Oh, your last comment maybe changed my question. Alan, could you maybe address the where you can where you think you, the geography of where you might be able to beat that Visible Alpha $1.32? Just to which line items do you think are the source?

Alan J. Kirshenbaum: Okay. Of course. You are definitely allowed to change your question, Glenn. Good morning. Look, we have some visibility into growth. For the next couple quarters. Right? So for direct lending, we are gonna 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. We are going to add a little a little growth there. And for net lease, let's let's break down the pieces there. 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. And I mentioned earlier, we have line of sight to effectively fully called with that 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 on that capital call, that 10%. Came in on June 25. So full quarter in motion there. And our next digital infrastructure flagship, I mentioned also, I think, in our prepared remarks that we are expecting our first close later this year. So you will see more growth from that. And there is a difference here. If you recall, fundraising for net lease generally does not immediately link to management fee growth. it is deployment, right, as we know. That links to the pace of management fee growth. For digital infrastructure, we charge on committed capital. So more immediate management fee growth impact there. So, look, there can always be fluctuations on a quarterly basis. Capital calls are lumpy. They are not straight lines. We are seeing long term management fee growth. And remember, we have the $31 billion of AUM not yet paying fees that will get deployed over time. And that is that is $380 million over time. But we have we have visibility into the next quarter or 2 where we do see management fee growth building each of the next 2 quarters. Thanks, Sam. Thanks, Glenn.

Operator: Your next question comes from the line of Craig Siegenthaler from Bank of America. Your line is open.

Craig Siegenthaler: Hey. Good morning, Marc and Alan. Hope everyone's doing well. Doing well, Craig. So we have a 2-parter on the data center book. I am curious how are cap rates trending in light of an increase in competition across the peers And also, can you update us on the underlying tenant credit quality watch list? I know most are IG tenants, but debt levels are rising, and not all are IG. So I am curious if you saw any changes quarter over quarter.

Marc S. Lipschultz: Sure. Happy to. We continue to experience very strong cap rates. So to be direct, we are not seeing compression in cap rates from-- again, we do something very, very distinct There are a few people in the world that can do it, but only a few and do it. And that is to build in partnership where we have the actual ability to design, build, operate We have 1 thousand people in our stack, deal, and adjacent businesses, and that has made us the partner often of choice for all of the hyperscalers. And that partner, that ability to deliver on time, on budget, and do it in a reliable fashion at scale 140x we are now at 15 gigawatts of data center capacity that we have either built or are building, including the biggest project currently underway in the world down in Louisiana. Or at least best of our knowledge in the world. I guess we do not know what is happening in China. So you know, that leads to a value mutual value for us and Viperscalar. So, no, we are continuing to see and are developing a very attractive rates. And in fact, with rising interest rates, you know, perhaps that even helps escalate those cap rates. In terms of what was the-- that sidebar was credit quality. Look, of our business, if you look at our funds, the single-digit percentage is done with people that are noninvestment grade. So you could take your own view of the current double a borrowers and whether they are double a credits, or strengthening, weakening, or neutral. But our business is an IG business, Non IG is essentially inconsequential to what we do. Thank you, Marc. Thank you.

Operator: Your next question comes from the line of Steven Chubak from Wolfe Research. Your line is open.

Steven Chubak: Hey. Good morning. Thanks for taking my question. So Hi, Steven. I wanted to ask on the fundraising strategy. Just given year to date BDC redemption trends have been much more concentrated across the subset of international investors, Just wanted to better understand whether the recent turmoil within the nontrader BDC space whether it is reshaped your approach to expanding your retail distribution abroad, And is there a way to isolate what might be considered hot money versus a secure core US retail base across your platform?

Alan J. Kirshenbaum: Thanks, Steven. I will take that. I appreciate the question. Yeah. Look, overall, we feel good about what we are seeing right now. Just pulling the lens back with wealth overall. We think we have troughed by way of inflows and we commented on that. Redemptions are down in our non traded BDCs. And I commented earlier, 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 keep coming down. It appears others are seeing that too. We are seeing strong flows into our ORENT product, and both ORENT and ODiT raised their dividend this year. And to that point, performance is strong across our wealth dedicated products. there is been so much focus on the nontraded BDC space. Looking outside of that, we are running at 10% to 12% annualized return so far this year for OWLCX, ORENT, and ODiT. And so let's take a product like ORENT just to double click on that. Since it is launched in September 2022, ORENT has been the top performing non traded REIT, putting up a consistent 9% annualized return. Been a category leader in private evergreen real estate fundraising, on both a net and gross basis in just 4 years. To become the largest or second-largest, sorry, private REIT in the market. $16 billion of AUM. And look, more broadly in wealth, what we are seeing is financial advisors and home offices have been very supportive of us and our products because they see us continuing to post these strong performance returns. And we have been very transparent with them through the challenging period that we just went through. And we are now seeing a broadening in adviser participation across our distribution partners. So just to share what we are seeing and hearing, we have already launched on 13 new platforms this year. So talking about, you know, where are we seeing the opportunities in wealth and in growth. We are also slated to launch on 21 more platforms this year. Continue to see a very steady growth of new advisors allocating to our funds for the first time and for financial advisors that invested in our product. In February, 74% are in more than 1 Blue Owl product. versus 52% in 2025. What we are seeing is once advisers allocate capital, we are seeing significant cross selling which is really a testament to continued strong performance. You continue to see that. You continue to hear that theme from us. And having built a really diversified product offering for the financial adviser community. So all this shows us we are really seeing a strong level of financial adviser and investor confidence in Blue Owl. And so internationally, we continue to I do not wanna say minimize, but we continue to grow our wealth platform across the board. We have very minimal exposure across our wealth products to Asia.

Marc S. Lipschultz: That was 1 I think important point of color coming out of this very tumultuous period or at least narratively tumultuous which is there is a lot actually to take away about the durability of the wealth channel and its rationality. You know, recognize the performance numbers speak, I think, for themselves at this point. We continue to deliver and expect we will continue to deliver very strong performance. That was true before the superstorm of the narrative. It was true during, and it is true after. And I think actually the channel and it there is a lot to take away that is favorable even though none of us would have, you know, wished this experience, which is first of all, it stayed very concentrated in the products where the narrative and the conversations perhaps got most carried away. Actually, the concentric circles away from that, even 1 circle away, go to something like asset backed and we continue to see both inflows and very minimal outflows. Go to things like Orent. You know, again, they are 1 of the most successful products in the marketplace, raising dividend. Investors are delineating between asset categories. And even those who, where the narrative perhaps drove behavior, it actually stayed very concentrated. We made this comment before but the redemption, you know, in our core income product, 90% of the investors did not ask and were appreciative of it, for a single share back because they know the product's working. So the redemption behavior was, you know, narrowed to about 10% of the investors in a very specific product. So actually look out 5 years and say, what do we now know about the wealth channel? I actually think what we know is the structures work, and we know that the market is very much able to discern indeed when there are narrative moments We all appreciate it is gonna have a slightly different, you know, feel in that market where people are going to quickly pull back on inflows, and you are going to have to deal with outflows for a period of time. But it is much, much more durable and much more narrow than I think anybody probably thought. And even again, the way I think the narrative is today, there is a lot to like about the wealth channel over the medium and long term. Oh, that is really great color. I appreciate the fulsome response and perspectives.

Operator: Thanks. Your next question comes from the line of Bill Katz from TD Cowen. Your line is open.

William Katz: Great. Thank you very much. So I appreciate the updated confidence in beating guidance. Great to hear. I think it removes a lot of risks on the story. And just thinking about that and looking at your margin profile, FRE margin, if I did the math correct, it looks like you had about 80% incremental margin year on year. So as you think about the trajectory for the second half of the year and then again into 2027, you are thinking about maybe the opportunity here to drive a little bit better profitability? Thank you.

Alan J. Kirshenbaum: Thanks, Bill. I appreciate that. Look, we do continue to feel good, and very good about where we are and where we are going with FRE margin. 58.5% was the guide for the year. We have already achieved that in the second quarter of the year. You should continue to expect modest increases as we go out. Over the next few years, but we feel good about where we are and where we are going there. Okay. So just to clarify, then the opportunity for the beat or meet expectations is more of a top line? Story at this point? Just so I am I understand the modeling. Sure. Yeah. Yes. Okay. Great. Thank you. Thanks, Bill.

Operator: Your next question comes from the line of Brennan Hawken from BMO Capital. Your line is open.

Brennan Hawken: Good morning. Hey. How are you? So we would love to ask about GP 6. So you mentioned that you are at $10.6 billion to date. Believe that is what you mentioned. what is your updated expectations for size and timing for final close? And then really more importantly, given sort of the expectations for consolidation among mid market GPs, why are there more long-term, why are there limitations to growth on this strategy? And what are you hearing from LPs around some of those concerns? Thanks.

Alan J. Kirshenbaum: Sure. I will take the first part of that, Brennan. Since the beginning of fundraise 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. So it is $10.6 billion in the flagship in co invest. Specifically $9.7 billion in the vintage. And then about $4.5 billion that we have raised over the past 2 years across the strip sales. We are in the final stretch of the fundraise We will see where we wrap up this year, but we will wrap up this year, and we continue to make steady progress towards where we wanna be there.

Marc S. Lipschultz: The opportunity to add, you know, on that side, you know, is really more about the evolving marketplace. You have a lot of very important franchise businesses that are of substantial scale and people need to find the proper way to monetize. And fortunately, our GP stakes business is the singular market leader. If you look at the large end of the market, which is very much where we like to operate and by the way, I think this environment is reinforcing why you very much want to be in the large end of the market and not in the middle market. The middle market, as a general matter with some exceptions, we see them in our growth fund, is an area where, you know, it is a question of, like, what is the franchise over the long term? The big firms are not thankfully, are gonna actually consolidate their role as we are all seeing. The bigger are getting bigger. And those owners need to find capital solutions over time to support that growth and support generational transition. So, you know, that really makes us the destination for those opportunities. So, you know, we definitely see a very strong addressable growing market over time. To be able to deploy and deploy very successfully in a way that works for those firms and clearly work for our investors. Again, I think you will hear this a few times. The results speak for themselves. And you look across the board, and I wanna to go down this road deep on this question, but performance really matters. And if you look, we are delivering extremely strong performance in all of our platforms and all of our products. there is an example where we were rated amongst the very best performers in the land of PE. And as you know, we have talked about this Dow Jones ranking before. You know, number 1 in the world by that measure. So I think we feel very good that this is a very attractive way to participate in the PE landscape. And as a note, you know, if you think about what we have been able to do at BlueOwl, listen. There are some wonderful PE firms in the world. And boy, are they good at what they do. We are lucky enough to do business with a lot of them, and then lucky enough to own stakes in a lot of them. We have also created our own approach to this asset class. So we have the GP stakes business. So you can be an owner on the alt side as opposed to the LPP payer. And we have our BOSE product, which is now a $3 billion product in an rapidly growing market, where we are buying the self selected best of breed assets, and it is really working. Our portfolio has come together in excellent form. We are deployed at a really attractive rate. And that product, I think, has a lot of promise in the future. So think we have developed, again, as you would, I think, hopefully expect of us, you know, our own way that very consistent with our DNA, to participate in this frankly, the biggest asset class in alts without going head to head, which was a very different proposition with the many, many good providers. In a place where there is already a lot of capital sort of trapped. So I think we have got a couple of very, very good ways to skin that cat. Thanks for that color. Thanks, Brennan.

Operator: Your next question comes from the line of Patrick Davitt from Autonomous Research. Your line is open.

Patrick Davitt: Hey. Good morning, everyone. The market is still obviously hyper focused on your exposure to retail direct lending. You have a great track record, clearly have institutional relationships. Where it looks like demand might actually be leaning in. What has your hesitancy been to do a big traditional drawdown fund like some of our competitors have, and would you consider launching 1 to help fill in the capital lost on the retail side? Thank you.

Marc S. Lipschultz: Sure. Happy to start on that 1. So I appreciate the predicate to the question. Performance in our, retail direct lending product continues to be, and we expect will continue to be extremely strong. Low loss rates, great, strong returns, good diversification. So, you know, we feel very good about the product. Again, we do understand, well, 2 things. We understand that there are legitimate questions that have been raised, although I will tell you that time and deep study have led us to ever increasing comfort about the manageability of, you know, the software transition question. So but we appreciate that was a valid and remains a valid conversation. But at the same time, these are very diversified portfolios, and they are performing extremely well. And we are built to handle you know, very well built to handle when there are, the periodic issues that there undoubtedly are and will be. We think that channel will recover very nicely. That does not mean V shaped or rapidly, We can already see it. The tone has changed meaningfully. And, we have even, from our knowledge, high levels, you know, we already saw our redemption request come down in Q2, and we see a tone continuing to settle and people realizing these products really work. And in fact, in a rising rate environment, which apparently now is the new norm from 6 months ago, direct lending is exactly the place to be, and I think investors appreciate that. Institutions do. We absolutely have seen meaningful uptick in institutional engagement. You know, timing is always a little trickier with things like big SMAs, but we expect to post some really attractive results on fundraising in total, in Q3, but including the credit side, on the institutional side. As for drawdown, not drawdown, we do have a product called ODL. Which actually is a drawdown structure, but has some nuances to make it slightly different from a traditional 1. We have no hesitation to launch a drawdown product. And in fact, I expect we will if that is where people wanna put the capital. We are never trying to force feed people a structure for our purposes. We wanna meet them where they wanna be. So it seems quite logical that we would actually launch the right drawdown traditional drawdown structure. And it is it is less about, you know, kind of offsetting retail as I think I think retail will indeed already show signs of recovery Not rapidly. We are not trying to get anybody ahead of themselves in this market. Takes time for-- after a hurricane blows through to clean back up again. But we feel good about retail. We also do feel good about institutional, and we will absolutely-- we are absolutely open minded to creating a drawdown product. We have certainly talked about it actually. And imagine we will if that is where our investors wanna be. And you will finally let's again just go back to the rate environment we are in. Is exactly when you ought to be in direct, individual or institutional alike. I mean, how many years in a row has it been now that everyone was sure rates are about to come down everyone has been wrong, every time. And so, I am sure it will be true eventually. But the point being, a product that insulates and provides for that is a really good place for any type of investor, insurance, institutional, retail alike. Thanks, Patrick.

Operator: Your next question comes from the line of Devin Ryan from Citizens Bank. Your line is open.

Analyst: Thanks. Good morning, Marc and Alan. How are you? Good morning, Devin. Good. Appreciate the full year outlook. Just want to connect kind of the credit deployment theme You guys mentioned direct lending activities consistent with a moderate sponsor M&A environment. that is pretty consistent with the data we are tracking right now as well. The flip side, alternative credit, investment grade credit, some of the other newer strategies are growing pretty quickly from smaller bases. So just trying to think about credit fee paying AUM growth, maybe looking out a little bit further, maybe next 18 months or so, do we need to see a more meaningful acceleration in kind of the broader sponsor led M&A backdrop? Are some of the newer strategies large enough or becoming large enough to move the needle? And just more broadly on that sponsor kind of M&A backdrop, what are you seeing there as well? You just want to get some of the puts and takes.

Marc S. Lipschultz: Yeah. So, look, the underpinning to our thinking and to what Alan has commented out, and he can add anything here, that is that is additional. Is not about a rapid recovery in the sponsor activity market. Now that day will come, and we are you know, I get we are hopeful and, frankly, kind of the math tells you eventually, capital gets deployed and eventually assets have to go back. But that is not the predicate for what we are talking about. We have all these other strategies, as you note. That are growing very substantially. And that, as Alan noted, is really what we are looking at when we talk about driving the growth. When there is a more meaningful cyclical recovery or secular recovery, whatever the case may be, in private equity, you know, that should give us some additional wind in our sails. So it is not predicated on a meaningful rebound. That indeed would be additive helpful, supportive. I do think it will happen. But, you know, there is no point getting ahead of ourselves on that either. it is not happened yet. that is apparent. We can all look and see in the M&A market on the PE side. it is a tepid environment. That all said, you know, with the let's call it the storm this industry went through the last 6 months, at a very tepid PE environment, we grew our business 9%. And you will and as Alan talked about, we see sequential improvement now coming in Q3 and Q4 and into 2027. So I think those other things would be very nice to have, a meaningful recovery in retail would be nice to have. Recovery in fee activity. Nice to have And those would all be nice, you know, additive and reinforcing forces.

Alan J. Kirshenbaum: The only thing I would add here is we would expect, as I think you would, a natural improvement in the growth rates as we see deployment continue over time as we see that start to come back at some point in the future. And the net flow picture gets better. We commented on the net flows. We have seen that build. Since the month of April, the May 1 closing. We have seen it build since then. it is built nicely. We have a long ways to go there. But it has built nicely. And if I pull the lens back a little bit more than that, overall, when we talk about, I guess, this question in the last question, institutional fundraising, we commented that overall, we do see that remaining strong in the second half of the year. And overall, we do think fundraising for the second half, we think could be better than the first half. So we continue to be cautiously optimistic about where we are sitting. Well, at the end of the day, look, mathematically, we have $31 billion of capital that is not yet paying fees. $380 million that is coming into the P&L, again, without trying to take a position on exactly when activity levels rise, you know, that is forthcoming. So, you know, I think we were trying to take a very, realistic approach and not counting on exogenous variables to carry today, that those will come, and they will be helpful and additive. Yep. Thanks for perspective. Thanks so much.

Operator: Your next question comes from the line of Crispin Love from Piper Sandler. Your line is open.

Crispin Love: On digital infrastructure that your data center business has definitely been a significant growth area for you, and your focus has been on the infrastructure. Can you just discuss further opportunities there? Do you see chips financing as being an additional place where you could add in this area and 1 that you would be interested in over the intermediate, long term?

Marc S. Lipschultz: Yeah. Digital infrastructure is a really important, growth opportunity, and, you know, I do not want to say we are scratching the surface because we are amongst the leaders in these hyperscale projects. But you are absolutely correct. There are areas that surround that, some of which we already touched and do well, and we have been involved in fiber that, you know, surrounds the data centers. Very successfully. Power is clearly an area that is both capital intensive and becoming endemic As you know, behind the meter power solutions are becoming a part of the data center solution as opposed to, you know, leveraging the grid in many markets. So that brings us, you know, ever more proximate and engaged in the power side of the equation. So we absolutely continue to see, look, and believe we are in a pretty distinctive position by virtue of being the partner of choice and therefore helping in partnership with these wonderful companies control the project that gives us access to a lot of the other opportunities beyond the data centers. You asked specifically about chip financing. We already do participate in chip financing, not in our Bony product, not in triple net lease because, remember, those are about very long dated arrangements with extremely strong counterparties. But we already do in our lending business participate in chip finance. For example, we participated in a meaningful financing a while back for x AI. Which I guess, you know, now is part of SpaceX. And we so that is an area yes. that is an area of opportunity. It has to be done structurally right. it is a different proposition from triple net, but, again, a good example of where as a firm, by being very integrated as we are, and staying focused on this choice partner of choice for capital solutions, long dated capital solutions absolutely. Ships continue to be an area of opportunity in our lending business in particular. Thanks, Crispin.

Operator: Your next question comes from the line of Alexander Blostein from Goldman Sachs. Your line is open.

Alexander Blostein: Hey. Hey, guys. Good morning. I was hoping we can double click into the wealth channel outside of the non traded BDCs, for both the alt credit fund and ODiT. You guys seeing nice pickup and flows as you talked about. I think there is a good chunk of them that is still have fee waivers attached or incentives attached to them. So help us maybe think through how those flows turn into management fees over the kind of next 12 months And then more broadly, are there other retail dedicated products you are thinking about and kind of what is in the lab, what is in the pipeline? Sure.

Alan J. Kirshenbaum: Alexander, thanks for the question. Look, we continue to be encouraged by the flows that we are seeing certainly ORENT as well, but your focus for the question, at least, on OWLCX and ODIT We are we are we are particularly excited about the growth opportunity in credit. We have done a lot there already. We have a big pipeline We have a 20 plus year track record there. We think this is 1 of the biggest interval funds out there already. We are only 1 year out. So the opportunity set there is very large for us. And management fees will continue. We have, I think, in Q4, the offset goes down to zero. You will see a partial offset for the interval fund in motion. And then, as you roll this out, we do see our wealth products coming to market over the next 6, 12, 18 months there is some interesting things that we have been working on that we will we will talk more about in the coming quarters, but we are very focused on expanding our presence there. We already have a diversified set of products there. it is only gonna become more diversified. So we are we are encouraged there.

Marc S. Lipschultz: And I think it is important to note that when we look at products like OWL CX and ODiT, they are very small today in terms of Inflow. it is not even very substantial. In terms of the total capital raise. They are big participants in the market, so they are important. But, actually, the funds flow is there, just to clarify, are very modest. In fact, you dare say inconsequential in the context of our business, today. But what is happening, to be more specific, is we are broadening now the distribution of those products. Safe to say in the first 6 months of this year was not the time the platform was saying, great. This would be a really unique time to go out and roll out some new products. So that is what started is the, you know, kind of build back up again is the broadening of that distribution. The broadening of the product suite, as you asked. You will see us, I think, come with some equity related products. I mentioned Bose before as an example. Of a place where we have a really distinctive capability that is so on trend with where market correctly is allocating PE dollars. So it is much more about the forward opportunity set than it is on anything we are experiencing today. And that, again, speaks more to the acceleration opportunity going forward, not about today's results. Yep. All makes sense. Thanks, guys. Thanks, Alex.

Operator: Your next question comes from the line of Mike Brown from KBW. Your line is open.

Mike Brown: Great. Thanks for taking my question. Hi, Mike. So, thinking about the $31 billion here, can you talk a little bit about how the deployment will be kind of different in credit versus real assets? In real assets, I guess, maybe focus a little more there since you already touched on the credit side. And then with digital infrastructure, fund 4 coming through, can you maybe just touch on the cadence of the of the closes, the activation, and then any potential co investment demand there? Sure.

Alan J. Kirshenbaum: We are certainly seeing in-- we have been doing we continue to see a lot of co invest interest. In what we are doing in digital infrastructure and what we are doing specifically in data centers. We have continued to close a number of SMAs and co invest vehicles alongside some of our existing fundraise vintages. As we continue to go here, we pointed to back end of this year, back half of this year for the first close of the next vintage. That fundraising will go through 27, I would expect, into early 28. And so, you know, that will have its normal cadence. We continue to be excited about that. We continue to have $10 billion as our goal that we think is achievable. In deployment, in net lease, or the $31 billion that breaks out mostly across credit, direct lending, alt credit, and net lease The net lease, we are actively I touched on that, as you pointed out. We are actively doing capital calls. We have line of sight for Fund VI to be fully called. We have already been doing calls on the existing current vintage Direct lending, we are gonna continue to see. it is gonna it is going to matter where the deployment happens across our direct lending vehicles. You know, right now, we are running at roughly net-zero deployments not different than what we are seeing out across our peers. And we will see what the M&A environment looks like over the next, you know, 6, 12 months. But as that picks up over time, you know, you will certainly see our net deployment continue to pick up. You know, may maybe more overall, Mike, just to think about the dialogue today, your question and some other questions. We are certainly seeing an inflection point in our business today. Again, just broad picture here, saw redemptions down in Q2 versus Q1. Saw inflows trough for our May 1 close. Still have a ways to go there, but progress. We touched on already today quarter over quarter sequential growth. In our management fees in Q3 and in Q4. We see the growth rate for management fees higher in 2027. Than in 2026. We just touched on this. We see a lot happening with our fundraisers across our platforms. We got follow on vintages, new products, new strategies. We really are seeing a lot of success here. We just touched on deployment. Excuse me. Deployment is strong in net lease and digital infrastructure and alternative credit. And most importantly, and Marc touched on this in his opening remarks, we continue to see strong performance returns. For products across our platforms. So, generally, we are pretty sober about where we are today in the last 6 or 8 months. We are optimistic about growth increasing as we go from here. Great. Thank you for all that. color, Alan. Thank you. Of course. Thanks, Mike.

Operator: Next question comes from the line of Benjamin Budish from Barclays Capital. Your line is open.

Benjamin Budish: Hi. Good morning. Thanks for taking my question. Good morning. This was another quarter of pretty strong administrative and transaction fees despite, you know, a more muted direct lending environment. It looks like real assets I think the messaging was, like, maybe Q1 was a little elevated, but it looks like that was strong again in Q2. And then in GP stakes, had a little bit of a sequential step up. Just curious if you could talk about what is going on there. And obviously, on the credit side, maybe that will be more on what is going on in the direct lending market. But should we otherwise be seeing more of a structural step up going forward? If you could talk a little bit about what you are seeing in the other segments of the business, that would be helpful. Thank you.

Alan J. Kirshenbaum: Sure. Of course. We continue to see good as we do in direct lending, you see transaction fees come through. that is been modest this year. That goes along with the ultimately gross deployment that you see. We continue to see interest opportunities in real estate credit. So very similar on the direct lending-- very similar as direct lending on the real estate credit side. We have transaction opportunities there. Q1, we had a good quarter. Q2, we, I think, put up relatively similar results. You could see that building a little bit over time as we go here. We continue to see good opportunities in the marketplace. Alright. Thank you, Alan.

Operator: Your next question comes from the line of Wilma Jackson Burdis from Raymond James. Your line is open.

Wilma Burdis: Hey. Good morning. Could you talk a little bit about fee-paying AUM and credit Curious why we saw that go down a little bit given the dry powder And do you see opportunities to offset outflows by leaning into institutional fundraising? Thanks.

Alan J. Kirshenbaum: Sure. So for fee paying AUM, you know, we raised a lot of institutional dollars in 2Q, Wilma. So about 75% of our fund raise in the quarter was in institutional. That goes generally straight over to AUM not yet earning fees. Which we have seen increase by about $3 billion since year-end. So that incremental $3 billion since year end, that is about $55 million of annualized management fees. That gets put into that queue. For as we deploy it, that starts to get opened up, if you will. So direct lending, obviously, net deployment's been light. In net lease, we saw the capital call activity. We have talked about that. So that is starting to get deployed. But overall, when you see a lot of institutional dollars raised, that goes generally straight over to the AUM not yet earning fees. And then as it gets deployed, that starts getting, put into the management fee growth rate.

Marc S. Lipschultz: And we are indeed seeing good institutional interest in private credit and direct lending. So to your point, again, we look to build both, you know, versus sort of so to speak, the offset, and expect we can build both on the individual side and on institutional. But institutional, we have some quite large mandates that are very advanced. So, yes, institutional interest has picked up, and we expect that to benefit us. Okay. Thank you. Thanks, Wilma.

Operator: And that concludes our question and answer session. I will now turn the call back over to Mr. Lipshultz for some final closing comments.

Marc S. Lipschultz: Thank you very much. I think for us, look, we are excited about the inflection from here. We are pleased with the results for this quarter, but, you know, considering the atmospherics that have surrounded it. And, you know, most importantly, performance of the underlying products is extremely strong, Job 1 is to deliver for our LPs. We will never lose sight of job 1, and job 1 will lead to great results for our shareholders. Diversification. You can see the power of how many new businesses, you know, we have built successfully to real scale, like the direct lending business, but remember, it is now, you know, 35% of our assets. And the products that have been kind of the most acute focused, they have probably been 90% of the narrative are actually 11% of our fee-paying assets, which is the wealth products in direct lending. And you can see the benefits and power of the diversification across our 3 platforms. And that brings to durability of the firm in total, with both the results we have and the results we see forthcoming. So we will continue to push forward on managing that, which is controllable and when exogenous things are helpful, well, that we look forward to that being additive. But we are excited looking into the back half and into 2027 from here, and appreciate the time today.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.