Blue Owl Capital was not looking to enter real estate in 2021 so much as seeking growth through acquisition. But it found both with one of private real estate’s fastest growing managers: Chicago-based Oak Street Real Estate Capital, which the New York-based manager purchased in October 2021.

Blue Owl Capital


AUM ($10.8 billion in real estate)

Founded: 2010 (Dyal Capital) and 2016 (Owl Rock)

Headquarters: New York

Market differentiator: One of private real estate’s fastest growing managers and top triple-net lease specialist

Blue Owl was formed last year in a three-way merger between private lender Owl Rock Capital, GP stakes investor Dyal Capital Partners and a special purpose acquisition company called Altimar Acquisitions Corp. The result was a New York Stock Exchange-listed company with a $12.5 billion market capitalization and mandate to grow. Yet the growth had to fit the new firm’s business model: strong, steady returns with low volatility.

“In that regard, real estate was always on the logical list, because done really well, as Oak Street has done it, it has those attributes,” Blue Owl president and co-founder Marc Lipschultz says. “But it also had to be a market-leading enterprise.”

Oak Street holds the moniker of private real estate’s top triple-net lease specialist, with the bulk of its $10.8 billion of AUM in the space. Founded in 2009, the firm’s primary business line is buying mission critical properties from investment-grade companies then leasing them back on 15-year terms. Targeting 12-14 percent returns, the firm has scaled its fundraising totals from $20 million for its debut vehicle in 2010 to $2.5 billion for its fifth fund, which closed in 2020.

Just like Blue Owl was not in the market for a real estate platform, Oak Street was not looking to be acquired, says Marc Zahr, the firm’s co-founder and chief executive. Nonetheless, he was put in touch with Lipschultz and Blue Owl CEO Douglas Ostrover through mutual acquaintances at Dyal Capital.

Both Zahr and Lipschultz left the meeting feeling that a combination made a lot of sense. Like Blue Owl’s other business lines, Oak Street provides a capital solution for corporations, Zahr says. Instead of receiving an equity investment or loan, companies access liquidity by selling their property holdings and leasing them.

“Many don’t realize how scalable the opportunity set is,” he says. “There are trillions of dollars of assets on balance sheets of corporates, and that’s an inefficient use of their capital base.”

The firms see further opportunity for growth by combining Oak Street’s net lease expertise with the credit underwriting capabilities within Blue Owl to expand the platform’s reach to non-investment grade corporations, Lipschultz says.

“What is special in this combination is the unique skills in real estate and triple net lease technology married with one of the broadest platforms in private lending to non-investment grade companies,” he says. “You need to be really good at both if you’re truly going to try to address this market.”