Asset manager Blue Owl expands into real estate financing with $170 mln deal

Alternative asset manager Blue Owl Capital said on Tuesday it will buy Prima Capital Advisors for $170 million to expand into real estate financing, a market that traditional banks have been retreating from since last year.

Alternative asset manager Blue Owl Capital said on Tuesday it will buy Prima Capital Advisors for $170 million to expand into real estate financing, a market that traditional banks have been retreating from since last year. Investment firms, which are not subjected to harsh regulations as banks, have been rushing to grab a bigger slice of the commercial real estate (CRE) market as traditional lenders are backing out on fears of increasing borrower defaults due to low occupancy and high interest rates.

Investors have punished those with a high footprint in the CRE market, such as New York Community Bancorp, prompting lenders to evaluate options to cut their exposure to the industry. "There is a growing lack of capital availability in real estate today," Blue Owl co-CEOs Doug Ostrover and Marc Lipschultz said in a statement.

The Prima deal is expected to close in the second or third quarter of 2024 and will be financed with $157 million of equity and $13 million in cash. Prima's investors could also be eligible for an additional $35 million in equity, Blue Owl said, depending on the future performance of the business.

Three decade-old Prima manages nearly $10 billion of assets and invests primarily in commercial mortgage-backed securities. Its majority owner is Greenwich, Connecticut-based alternative asset manager Stone Point Capital. Blue Owl's shares have gained nearly 32% this year, outperforming asset management giants Blackstone and BlackRock and allowing it the flexibility to use its stock as currency for acquisitions.

The deal marks Blue Owl's second acquisition this month. Last week, it agreed to acquire Kuvare Asset Management for $750 million to gain access to life insurance assets. Blue Owl said Jesse Hom, previously the global head of real estate credit at Singapore's sovereign wealth fund GIC, will lead the new real estate finance investments division.

 

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)