Blue Owl Capital Corporation Q4 FY2025 earnings call

• Craig Packer noted credit quality in OBDC remains strong and announced termination of merger with OBDC II, then sale of assets from OBDC II and other funds at book value, emphasizing strong portfolio quality. - Logan Nicholson discussed investment activity with healthy deal flow, OBDC's fundings and repayments leading to lower net leverage, portfolio composition and performance including sector performances and credit KPIs, and specialty finance/joint venture investments. - Jonathan Lamm reviewed financial results with adjusted NII per share in line with prior quarter, base dividend declared, share repurchases, and balance sheet management including net leverage and liquidity.

In the fourth quarter, OBDC delivered adjusted NII per share of $0.36, representing an ROE of 9.7%. NAV as of quarter end was $14.81, down modestly from prior quarter. In 2025, OBDC deployed more than $4 billion, and $45 billion across the Blue Owl direct lending platform. OBDC II sold a portfolio of assets totaling $600 million (35% of its total assets) and $1.4 billion of assets including $400 million from OBDC at book value. OBDC's portfolio had various sector performances with software borrowers seeing LTM revenue and EBITDA growth of 10% and 16% respectively in Q4, and healthcare investments with revenue and EBITDA growth of 11% and 10% respectively. Nonaccrual rate decreased to 1.1% this quarter. Specialty finance and joint venture investments generated ROEs of over 14% over last year.

Anticipates forward earnings impacted by lower base rates flowing through majority floating rate book and tighter spreads on new and repriced assets. Maintaining regular dividend of $0.37 for this quarter, but will evaluate dividend each quarter as full effect of lower rates and spreads impact portfolio. If macro uncertainty persists, could present opportunity to selectively deploy capital at higher spreads on new deals.

Renewed macro uncertainty could drive widening of spreads in public markets, which could impact private credit if environment persists.

Q: Are OBDC II halting redemptions permanently?

A: No, accelerating redemptions with 30% pro rata distribution immediately.

Q: What's the most accretive use of capital for OBDC?

A: Hopeful for spread widening environment to deploy capital, and buybacks still on table.

Q: Why not sell all of OBDC II?

A: Chose faster, certain transaction to return capital quickly leaving remaining portfolio in good shape.

Q: Appetite for new software loan purchases?

A: Discriminating, software percentage likely to modestly decline depending on opportunity set.

Q: Comparison of loan sale marks to prior fair value marks?

A: Sold at our marks consistent with recent valuations, endorsing valuation process.

Q: Inputs for dividend decision?

A: Earnings, credit performance, dividend coverage, and different rate environment considered.