BLUE OWL CAPITAL INC.OWL
BLUE OWL CAPITAL INC. Fair Value Disclosure
4. INVESTMENTS AND FAIR VALUE DISCLOSURES
The following table presents the components of the Company’s investments:
| (dollars in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Preferred equity investment, at fair value | $ | 290,594 | $ | 267,169 | |||||||
| Equity investments in the Company’s products, equity method | 67,391 | 63,465 | |||||||||
Loans and deferred purchase price receivable, at amortized cost (includes $27,797 and $48,094 in the Company’s products, respectively) | 58,845 | 54,186 | |||||||||
Equity investments in the Company’s products, at fair value | 61,906 | 96,956 | |||||||||
| Investments in the Company’s CLOs, at fair value | 5,653 | 5,169 | |||||||||
| Total | $ | 484,389 | $ | 486,945 | |||||||
Fair Value Measurements Categorized within the Fair Value Hierarchy
Fair value represents the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date (i.e., an exit price). The Company and the products it manages hold a variety of assets and liabilities, certain of which are not publicly traded or that are otherwise illiquid. Significant judgment and estimation go into the assumptions that drive the fair value of these assets and liabilities. The fair value of these assets and liabilities may be estimated using a combination of observed transaction prices, prices from third parties (including independent pricing services and relevant broker quotes), models or other valuation methodologies based on pricing inputs that are neither directly nor indirectly market observable. Due to the inherent uncertainty of valuations of assets and liabilities that are determined to be illiquid or do not have readily ascertainable fair values, the estimates of fair value may differ from the values ultimately realized, and those differences can be material.
GAAP prioritizes the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is impacted by a number of factors, including the type of assets and liabilities and the specific characteristics of the financial assets and liabilities. Financial assets and liabilities with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and lesser degree of judgment used in measuring fair value.
Financial assets and liabilities measured at fair value are classified and disclosed into one of the following categories based on the observability of inputs used in the determination of fair values:
•Level I – Quoted prices that are available in active markets for identical financial assets or liabilities as of the reporting date.
•Level II – Valuations obtained from independent third-party pricing services, the use of models or other valuation methodologies based on pricing inputs that are either directly or indirectly market observable as of the measurement date. These financial assets and liabilities exhibit higher levels of liquid market observability as compared to Level III financial assets and liabilities.
•Level III – Pricing inputs that are unobservable in the market and includes situations where there is little, if any, market activity for the financial asset or liability. The inputs into the determination of fair value of financial assets and liabilities in this category may require significant management judgment or estimation. The fair value of these financial assets and liabilities may be estimated using a combination of observed transaction prices, independent pricing services, models or other valuation methodologies based on pricing inputs that are neither directly nor indirectly market observable (e.g., cash flows, implied yields).
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial asset or liability when the fair value is based on unobservable inputs.
The tables below summarizes the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and December 31, 2024:
| December 31, 2025 | ||||||||||||||||||||||||||
| (dollars in thousands) | Level I | Level II | Level III | Total | ||||||||||||||||||||||
| Investments, at Fair Value | ||||||||||||||||||||||||||
| Preferred equity investment | $ | — | $ | — | $ | 290,594 | $ | 290,594 | ||||||||||||||||||
| Equity investments in the Company’s products | — | 61,906 | — | 61,906 | ||||||||||||||||||||||
| CLOs | — | — | 5,653 | 5,653 | ||||||||||||||||||||||
| Total Assets, at Fair Value | $ | — | $ | 61,906 | $ | 296,247 | $ | 358,153 | ||||||||||||||||||
| Liabilities, at Fair Value | ||||||||||||||||||||||||||
| TRA liability | $ | — | $ | — | $ | 106,793 | $ | 106,793 | ||||||||||||||||||
| Earnout liability | — | — | 163,700 | 163,700 | ||||||||||||||||||||||
| Total Liabilities, at Fair Value | $ | — | $ | — | $ | 270,493 | $ | 270,493 | ||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| (dollars in thousands) | Level I | Level II | Level III | Total | ||||||||||||||||||||||
| Investments, at Fair Value | ||||||||||||||||||||||||||
| Preferred equity investment | $ | — | $ | — | $ | 267,169 | $ | 267,169 | ||||||||||||||||||
| Equity investments in the Company’s products | — | 96,956 | — | 96,956 | ||||||||||||||||||||||
| CLOs | — | — | 5,169 | 5,169 | ||||||||||||||||||||||
| Total Assets, at Fair Value | $ | — | $ | 96,956 | $ | 272,338 | $ | 369,294 | ||||||||||||||||||
| Liabilities, at Fair Value | ||||||||||||||||||||||||||
| TRA liability | $ | — | $ | — | $ | 108,257 | $ | 108,257 | ||||||||||||||||||
| Earnout liability | — | 529 | 167,912 | 168,441 | ||||||||||||||||||||||
| Total Liabilities, at Fair Value | $ | — | $ | 529 | $ | 276,169 | $ | 276,698 | ||||||||||||||||||
Reconciliation of Fair Value Measurements Categorized within Level III
Unrealized gains and losses on the Company’s assets and liabilities carried at fair value on a recurring basis are included within other loss in the consolidated statements of operations. There were no transfers in or out of Level III. The following table sets forth a summary of changes in the fair value of the Level III measurements for the years ended December 31, 2025 and 2024:
| Year Ended December 31, 2025 | Level III Assets | ||||||||||||||||
| (dollars in thousands) | Preferred Equity | CLOs | Total | ||||||||||||||
| Beginning balance | $ | 267,169 | $ | 5,169 | $ | 272,338 | |||||||||||
Purchases(1) | 34,284 | 3,986 | 38,270 | ||||||||||||||
| (10,859) | (3,502) | (14,361) | |||||||||||||||
| Ending Balance | $ | 290,594 | $ | 5,653 | $ | 296,247 | |||||||||||
| $ | (10,859) | $ | (3,502) | $ | (14,361) | ||||||||||||
(1)Preferred equity purchases includes $34.3 million of cumulative unpaid cash preferential dividends that compound quarterly and are payable when declared.
| Year Ended December 31, 2024 | Level III Assets | ||||||||||||||||
| (dollars in thousands) | Preferred Equity | CLOs | Total | ||||||||||||||
| Beginning balance | $ | — | $ | 2,521 | $ | 2,521 | |||||||||||
Purchases(1) | 263,395 | 3,700 | 267,095 | ||||||||||||||
| 3,774 | (1,052) | 2,722 | |||||||||||||||
| Ending Balance | $ | 267,169 | $ | 5,169 | $ | 272,338 | |||||||||||
| $ | 3,774 | $ | (1,052) | $ | 2,722 | ||||||||||||
(1)Preferred equity purchases includes $23.1 million of cumulative unpaid cash preferential dividends that compound quarterly and are payable when declared.
| Year Ended December 31, 2025 | Level III Liabilities | ||||||||||||||||
| (dollars in thousands) | TRA Liability | Earnout Liability | Total | ||||||||||||||
| Beginning balance | $ | 108,257 | $ | 167,912 | $ | 276,169 | |||||||||||
| Issuances | — | 140,083 | 140,083 | ||||||||||||||
| Settlements | (14,556) | (113,350) | (127,906) | ||||||||||||||
| 13,092 | (30,945) | (17,853) | |||||||||||||||
| Ending Balance | $ | 106,793 | $ | 163,700 | $ | 270,493 | |||||||||||
| $ | 13,092 | $ | 697 | $ | 13,789 | ||||||||||||
| Year Ended December 31, 2024 | Level III Liabilities | ||||||||||||||||||||||
| (dollars in thousands) | TRA Liability | Warrant Liability | Earnout Liability | Total | |||||||||||||||||||
| Beginning balance | $ | 116,398 | $ | 22,600 | $ | 92,119 | $ | 231,117 | |||||||||||||||
| Issuances | — | — | 135,600 | 135,600 | |||||||||||||||||||
| Settlements | (8,551) | (60,900) | (87,874) | (157,325) | |||||||||||||||||||
| 410 | 38,300 | 28,067 | 66,777 | ||||||||||||||||||||
| Ending Balance | $ | 108,257 | $ | — | $ | 167,912 | $ | 276,169 | |||||||||||||||
| $ | 819 | $ | — | $ | 27,820 | $ | 28,639 | ||||||||||||||||
Valuation Methodologies for Fair Value Measurements Categorized within Levels II and III
Preferred Equity Investment
The fair value of the preferred equity investment is determined using a discounted cash flow model, which estimates the present value of future expected cash flows. The key inputs in this model include the projected cash flows attributable to the preferred interest and the discount rate. The expected cash flows are based on management’s forecasts and projections, taking into consideration market conditions and redemption of the preferred interest. The discount rate applied reflects the time value of money and the risks associated with the preferred interest, which includes assumptions about the risk-free rate, credit risk, and market volatility. This investment is generally classified as Level III.
Equity Investments in the Company’s Products
The fair value of equity investments in the Company’s products is determined based on the published net asset value of these investments, as such values are the price at which contributions and redemptions are effectuated on a monthly basis. These investments are generally classified as Level II. The remaining balance is generally redeemable on a monthly basis at the Company’s option.
CLOs
The fair value of CLOs is determined based on inputs from independent pricing services. These investments are classified as Level III. The Company obtains prices from independent pricing services that utilize discounted cash flows, which take into account unobservable significant inputs, such as yield, prepayments and credit quality.
TRA Liability
The TRA liability related to the Dyal Acquisition is considered contingent consideration and is measured at fair value based on discounted future cash flows. The remaining TRA liability on the Company’s consolidated statements of financial condition is not measured at fair value.
Earnout Liability
As of December 31, 2025, the earnout liability was comprised of contingent consideration payable for the Prima Earnouts, KAM Earnouts and Atalaya Earnouts (each as defined in Note 3). As of December 31, 2024, the earnout liability was comprised of contingent consideration payable for the Wellfleet Earnout Shares (defined in Note 10), Prima Earnouts, KAM Earnouts and Atalaya Earnouts.
The Company uses a Monte Carlo simulation model to value certain earnouts where revenue milestones need to be achieved before a payment is due. These models consider current progress towards revenue targets, as well as forecasts, to simulate a range of outcomes based on market inputs such as volatility. For other earnouts, the Company uses a discounted cash flow model, which estimates the present value of future expected cash flows. The key inputs in this model include the projected cash flows attributable to the respective earnout and the discount rate.
Quantitative Inputs and Assumptions for Fair Value Measurements Categorized within Level III
The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2025:
| (dollars in thousands) | Fair Value | Valuation Technique | Significant Unobservable Inputs | Range | Weighted Average | Impact to Valuation from an Increase in Input | ||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||
| Preferred equity | $ | 290,594 | Discounted cash flow | Discount Rate | 14 | % | - | 14% | 14 | % | Decrease | |||||||||||||||||||||||||||||||||
| CLOs | 5,653 | Discounted cash flow | Yield | 10 | % | - | 14% | 12 | % | Decrease | ||||||||||||||||||||||||||||||||||
| Total Assets, at Fair Value | $ | 296,247 | ||||||||||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||||||||
| TRA liability | $ | 106,793 | Discounted cash flow | Discount Rate | 13 | % | - | 13% | 13 | % | Decrease | |||||||||||||||||||||||||||||||||
| Earnout liability | 163,700 | Monte Carlo Simulation | Volatility | 21 | % | - | 24% | 22 | % | Increase | ||||||||||||||||||||||||||||||||||
| Total Liabilities, at Fair Value | $ | 270,493 | ||||||||||||||||||||||||||||||||||||||||||
The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2024:
| (dollars in thousands) | Fair Value | Valuation Technique | Significant Unobservable Inputs | Range | Weighted Average | Impact to Valuation from an Increase in Input | ||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||
| Preferred equity | $ | 267,169 | Discounted cash flow | Discount Rate | 13 | % | - | 13% | 13 | % | Decrease | |||||||||||||||||||||||||||||||||
| CLOs | 5,169 | Discounted cash flow | Yield | 10 | % | - | 16% | 12 | % | Decrease | ||||||||||||||||||||||||||||||||||
| Total Assets, at Fair Value | $ | 272,338 | ||||||||||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||||||||
| TRA liability | $ | 108,257 | Discounted cash flow | Discount Rate | 13 | % | - | 13% | 13 | % | Decrease | |||||||||||||||||||||||||||||||||
| Earnout liability | ||||||||||||||||||||||||||||||||||||||||||||
| 163,001 | Monte Carlo Simulation | Volatility | 20 | % | - | 37% | 29 | % | Increase | |||||||||||||||||||||||||||||||||||
| 4,911 | Discounted cash flow | Discount Rate | 6 | % | - | 6% | 6 | % | Decrease | |||||||||||||||||||||||||||||||||||
| 167,912 | ||||||||||||||||||||||||||||||||||||||||||||
| Total Liabilities, at Fair Value | $ | 276,169 | ||||||||||||||||||||||||||||||||||||||||||
Fair Value of Other Financial Instruments
As of December 31, 2025, the fair value of the Company’s debt obligations was approximately $3.2 billion compared to a carrying value of $3.3 billion, of which $2.3 billion of the fair value would have been categorized as Level II within the fair value hierarchy and the remainder as Level III. As of December 31, 2024, the fair value of the Company’s debt obligations was approximately $2.5 billion, compared to a carrying value of $2.6 billion, of which $2.3 billion of the fair value would have been categorized as Level II within the fair value hierarchy and the remainder as Level III.
As of December 31, 2025 and December 31, 2024, the fair value of the portion of the TRA liability that is not carried at fair value in the Company’s consolidated balance sheets was approximately $652.3 million and $535.7 million, respectively, compared to a carrying value of $1.6 billion and $1.3 billion, respectively, and such fair value measurements would have been categorized as Level III within the fair value hierarchy.
Management estimates that the carrying value of the Company’s other financial instruments, which are not carried at fair value, approximated their fair values as of December 31, 2025 and December 31, 2024, respectively, and such fair value measurements would have been categorized as Level III within the fair value hierarchy.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 24, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.