Blue Owl Capital Corporation III Reports Second Quarter Net Investment Income Per Share of $0.41 and Net Asset Value Per Share of $15.56
Rhea-AI Summary
Blue Owl Capital III (NYSE: OBDE) reported strong Q2 2024 results, with net investment income (NII) per share of $0.41, exceeding the regular dividend of $0.35 by over 15%. The company declared a Q3 2024 dividend of $0.35 per share and announced the second of five special dividends of $0.06 per share. Net Asset Value (NAV) per share increased to $15.56, up $0.28 from June 30, 2023.
OBDE's portfolio grew significantly, with new investment commitments totaling $1.0 billion across 31 new and 24 existing portfolio companies. The portfolio consisted of 85.0% first lien senior secured debt investments, with a weighted average total yield of 11.5% on accruing debt and income-producing securities.
Importantly, OBDE announced a definitive merger agreement with Blue Owl Capital (NYSE: OBDC), subject to shareholder approvals and closing conditions.
Positive
- NII per share of $0.41, exceeding the regular dividend by over 15%
- NAV per share increased to $15.56, up $0.28 from previous year
- New investment commitments of $1.0 billion in Q2 2024
- Portfolio growth to 207 companies with aggregate fair value of $4.3 billion
- Weighted average total yield of 11.5% on accruing debt and income-producing securities
- Announced merger agreement with Blue Owl Capital (OBDC)
Negative
- Net debt-to-equity increased to 1.22x from 1.04x in the previous quarter
- Total expenses increased to $72.5 million from $36.3 million in the same period last year
- Loans on non-accrual represented 0.5% of the total fair value of the debt portfolio
Insights
Blue Owl Capital III's Q2 2024 results demonstrate solid financial performance and portfolio growth. The NII of
The increased investment activity, with
However, the rising leverage (net debt-to-equity of 1.22x) and increased expenses warrant monitoring. The announced merger with OBDC could bring scale benefits but needs careful execution.
The 10.5% annualized dividend yield based on NAV is attractive in the current market, potentially driving investor interest. The special dividend series adds to shareholder returns, though it's important to note these are not guaranteed long-term.
The increased investment pace (
The merger with OBDC could be a game-changer, potentially creating a larger, more liquid entity with improved access to capital markets. However, merger integration risks and potential portfolio overlap should be considered.
SECOND QUARTER 2024 HIGHLIGHTS
- Second quarter net investment income ("NII") per share of
$0.41 $0.35 15% - As previously announced in January, the Board of Directors (the "Board") declared five special dividends of
$0.06 10.5% annualized dividend yield based on second quarter net asset value ("NAV") per share1- NAV per share of
$15.56 $0.28 - Net debt-to-equity increased to 1.22x for quarter ending June 30, 2024, up from 1.04x as of March 31, 2024
- Also announced today that OBDE entered into a definitive merger agreement with Blue Owl Capital Corporation (NYSE: OBDC)
"In our first full quarter as a publicly traded company, we continued to make significant progress towards growing our portfolio, deploying capital into attractive opportunities which enabled OBDE to deliver a strong return on equity of
OBDC to Merge with OBDE
OBDC and OBDE today announced that they have entered into a definitive merger agreement, with OBDC as the surviving company, subject to certain shareholder approvals and other customary closing conditions. Following the recommendation of each of their special committees, the boards of directors of both OBDC and OBDE have unanimously approved the transaction. A separate press release and investor presentation can be found on the Company's website, www.BlueOwlCapitalCorporationIII.com.
Dividend Declarations
The Company's Board declared a third quarter 2024 dividend of
In addition, and as previously announced, the Board declared a series of five special dividends of
PORTFOLIO AND INVESTING ACTIVITY
For the three months ended June 30, 2024, new investment commitments totaled
For the three months ended June 30, 2024, the principal amount of new investments funded was
For the three months ended March 31, 2024, the principal amount of new investments funded was
As of June 30, 2024 and March 31, 2024, the Company had investments in 207 and 188 portfolio companies with an aggregate fair value of
As of June 30, 2024, based on fair value, the portfolio consisted of
As of March 31, 2024, based on fair value, the portfolio consisted of
As of June 30, 2024 and March 31, 2024, approximately
As of June 30, 2024 and March 31, 2024, the weighted average total yield of accruing debt and income-producing securities at fair value (which includes interest income and amortization of fees and discounts) was
As of June 30, 2024, loans on non-accrual represented
RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED JUNE 30, 2024
Investment Income
Investment income increased to
Expenses
Total expenses increased to
Liquidity and Capital Resources
As of June 30, 2024, the Company had
(1) | Dividend yield reflects regular Q2'24 dividend of | |||||||||||||||||||
CONFERENCE CALL AND WEBCAST INFORMATION
Conference Call Information:
The conference call will be broadcast live on August 8, 2024 at 11:00 a.m. Eastern Time on the Events section of OBDE's website at www.BlueOwlCapitalCorporationIII.com. Please visit the website to test your connection before the webcast.
Participants are also invited to access the conference call by dialing one of the following numbers:
- Domestic: (877) 407-9714
- International: +1 (201) 689-8865
All callers will need to reference "Blue Owl Capital Corporation III" once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected.
Replay Information:
An archived replay will be available for 14 days via a webcast link located on the Events section of OBDE's website, and via the dial-in numbers listed below:
- Domestic: (877) 660-6853
- International: +1 (201) 612-7415
- Conference ID: 13747167
ABOUT BLUE OWL CAPITAL CORPORATION III
Blue Owl Capital Corporation III (NYSE: OBDE) is a specialty finance company focused on lending to
Certain information contained herein may constitute "forward-looking statements" that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about OBDE, its current and prospective portfolio investments, its industry, its beliefs and opinions, and its assumptions. Words such as "anticipates," "expects," "intends," "plans," "will," "may," "continue," "believes," "seeks," "estimates," "would," "could," "should," "targets," "projects," "outlook," "potential," "predicts" and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond OBDE's control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors identified in OBDE's filings with the SEC. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date on which OBDE makes them. OBDE does not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law.
INVESTOR CONTACTS
Investor Contact:
BDC Investor Relations
Michael Mosticchio
credit-ir@blueowl.com
Media Contact:
Prosek Partners
Josh
pro-blueowl@prosek.com
FINANCIAL HIGHLIGHTS | ||||||
For the Three Months Ended | ||||||
($ in thousands, except per share amounts) | June 30, 2024 | March 31, 2024 | December 31, 2023 | |||
Investments at Fair Value | $ 4,346,302 | $ 3,987,997 | $ 3,590,701 | |||
Total Assets | $ 4,502,757 | $ 4,180,538 | $ 3,761,097 | |||
Net Asset Value Per Share | $ 15.56 | $ 15.65 | $ 15.56 | |||
Investment Income | $ 123,175 | $ 113,445 | $ 111,542 | |||
Net Investment Income | $ 50,381 | $ 48,275 | $ 71,647 | |||
Net Income | $ 39,615 | $ 54,061 | $ 80,557 | |||
Net Investment Income Per Share | $ 0.41 | $ 0.39 | $ 0.58 | |||
Net Realized and Unrealized Gains (and Losses) Per Share | $ (0.09) | $ 0.05 | $ 0.07 | |||
Net Income Per Share | $ 0.32 | $ 0.44 | $ 0.66 | |||
Distributions Declared from Net Investment Income Per Share | $ 0.35 | $ 0.35 | $ 0.49 | |||
Weighted Average Yield of Accruing Debt and Income Producing Securities at Fair Value | 11.5 % | 11.7 % | 12.1 % | |||
Weighted Average Yield of Accruing Debt and Income Producing Securities at Amortized Cost | 11.5 % | 11.7 % | 12.1 % | |||
Percentage of Debt Investments at Floating Rates at Fair Value | 97.5 % | 98.2 % | 98.1 % | |||
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | ||||
(Amounts in thousands, except share and per share amounts) | ||||
June 30, 2024 (Unaudited) | December 31, 2023 | |||
Assets | ||||
Investments at fair value | ||||
Non-controlled, non-affiliated investments (amortized cost of | $ 4,232,211 | $ 3,498,800 | ||
Non-controlled, affiliated investments (amortized cost of | 114,091 | 91,901 | ||
Total investments at fair value (amortized cost of | 4,346,302 | 3,590,701 | ||
Cash | 120,344 | 141,448 | ||
Interest receivable | 31,482 | 25,147 | ||
Prepaid expenses and other assets | 4,629 | 3,801 | ||
Total Assets | $ 4,502,757 | $ 3,761,097 | ||
Liabilities | ||||
Debt (net of unamortized debt issuance costs of | $ 2,434,508 | $ 1,754,496 | ||
Distribution payable | 43,175 | 60,779 | ||
Management fee payable | 15,491 | 4,517 | ||
Incentive fee payable | 10,687 | — | ||
Payables to affiliates | 4,197 | 896 | ||
Payable for investments purchased | 37,157 | — | ||
Accrued expenses and other liabilities | 38,382 | 29,297 | ||
Total Liabilities | $ 2,583,597 | $ 1,849,985 | ||
Commitments and contingencies (Note 7) | ||||
Net Assets | ||||
Common shares | 1,234 | 1,228 | ||
Additional paid-in-capital | 1,837,067 | 1,829,029 | ||
Accumulated undistributed (overdistributed) earnings | 80,859 | 80,855 | ||
Total Net Assets | $ 1,919,160 | $ 1,911,112 | ||
Total Liabilities and Net Assets | $ 4,502,757 | $ 3,761,097 | ||
Net Asset Value Per Share | $ 15.56 | $ 15.56 | ||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
(Amounts in thousands, except share and per share amounts) | ||||||
(Unaudited) | ||||||
For the Three Months | For the Six Months | |||||
2024 | 2023 | 2024 | 2023 | |||
Investment Income | ||||||
Investment income from non-controlled, non-affiliated investments: | ||||||
Interest income (excluding payment-in-kind ("PIK") interest income) | $ 103,848 | $ 84,665 | $ 199,478 | $ 164,205 | ||
PIK interest income | 11,341 | 12,389 | 20,903 | 24,872 | ||
Dividend income | 4,706 | 6,395 | 10,031 | 11,374 | ||
Other income | 1,003 | 2,246 | 2,696 | 3,305 | ||
Total investment income from non-controlled, non-affiliated investments | 120,898 | 105,695 | 233,108 | 203,576 | ||
Investment income from non-controlled, affiliated investments: | ||||||
Interest income (excluding PIK interest income) | 381 | — | 789 | — | ||
PIK interest income | — | — | 29 | — | ||
Dividend income | 1,894 | 495 | 2,689 | 495 | ||
Other income | 2 | — | 5 | — | ||
Total investment income from non-controlled, affiliated investments | 2,277 | 495 | 3,512 | 495 | ||
Total Investment Income | 123,175 | 106,190 | 236,620 | 204,071 | ||
Expenses | ||||||
Interest expense | 42,707 | 29,713 | 78,485 | 58,252 | ||
Management fee | 15,491 | 4,463 | 27,342 | 8,856 | ||
Performance based incentive fees | 10,687 | — | 17,827 | — | ||
Professional fees | 1,610 | 1,316 | 3,194 | 2,575 | ||
Directors' fees | 227 | 197 | 455 | 393 | ||
Listing advisory fees | — | — | 6,040 | — | ||
Other general and administrative | 1,756 | 640 | 3,907 | 1,371 | ||
Total Expenses | 72,478 | 36,329 | 137,250 | 71,447 | ||
Net Investment Income (Loss) Before Taxes | 50,697 | 69,861 | 99,370 | 132,624 | ||
Income tax expense (benefit), including excise tax expense (benefit) | 316 | 209 | 714 | 1,393 | ||
Net Investment Income (Loss) After Taxes | $ 50,381 | $ 69,652 | $ 98,656 | $ 131,231 | ||
Net Realized and Change in Unrealized Gain (Loss) | ||||||
Net change in unrealized gain (loss): | ||||||
Non-controlled, non-affiliated investments | (10,525) | 172 | (2,816) | 23,971 | ||
Non-controlled, affiliated investments | 154 | (402) | 1,689 | (376) | ||
Translation of assets and liabilities in foreign currencies | 545 | 115 | 268 | 167 | ||
Income tax (provision) benefit | — | — | 1 | (1) | ||
Total Net Change in Unrealized Gain (Loss) | (9,826) | (115) | (858) | 23,761 | ||
Net realized gain (loss): | ||||||
Non-controlled, non-affiliated investments | 137 | 33 | (3,252) | (11,465) | ||
Foreign currency transactions | (1,077) | (40) | (870) | (21) | ||
Total Net Realized Gain (Loss) | (940) | (7) | (4,122) | (11,486) | ||
Total Net Realized and Change in Unrealized Gain (Loss) | (10,766) | (122) | (4,980) | 12,275 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ 39,615 | $ 69,530 | $ 93,676 | $ 143,506 | ||
Earnings (Loss) Per Share - Basic and Diluted | $ 0.32 | $ 0.57 | $ 0.76 | $ 1.18 | ||
Weighted Average Shares Outstanding - Basic and Diluted | 123,322,207 | 121,873,455 | 123,175,249 | 121,539,291 | ||
PORTFOLIO AND INVESTMENT ACTIVITY | |||
For the Three Months Ended | |||
($ in thousands) | 2024 | 2023 | |
New investment commitments | |||
Gross originations | $ 1,016,705 | $ 62,258 | |
Less: Sell downs | — | (566) | |
Total new investment commitments | $ 1,016,705 | $ 61,692 | |
Principal amount of investments funded: | |||
First-lien senior secured debt investments | 714,903 | 39,760 | |
Second-lien senior secured debt investments | 8,000 | — | |
Unsecured debt investments | 34,875 | — | |
Preferred equity investments | 488 | 10,000 | |
Common equity investments | 7,432 | 4,600 | |
Total principal amount of investments funded | $ 765,698 | $ 54,360 | |
Principal amount of investments sold or repaid: | |||
First-lien senior secured debt investments | (253,012) | (57,269) | |
Second-lien senior secured debt investments | (29,576) | (2,400) | |
Unsecured debt investments | (31,606) | — | |
Preferred equity investments | (24,153) | (1,033) | |
Common equity investments | — | (195) | |
Total principal amount of investments sold or repaid | $ (338,347) | $ (60,897) | |
Number of new investment commitments in new portfolio companies(1) | 31 | 4 | |
Average new investment commitment amount | $ 24,725 | $ 9,147 | |
Weighted average term for new debt investment commitments (in years) | 5.8 | 3.8 | |
Percentage of new debt investment commitments at floating rates | 96.4 % | 100.0 % | |
Percentage of new debt investment commitments at fixed rates | 3.6 % | — % | |
Weighted average interest rate of new debt investment commitments(2) | 10.7 % | 11.7 % | |
Weighted average spread over applicable base rate of new floating rate debt investment commitments | 5.2 % | 6.4 % | |
________________ |
(1) Number of new investment commitments represents commitments to a particular portfolio company. |
(2) For the three months ended June 30, 2024 and 2023, assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) or 3-month SOFR, which was |
Forward-Looking Statements
Some of the statements in this press release constitute forward-looking statements because they relate to future events, future performance or financial condition of OBDC or OBDE or the two-step merger (collectively, the "Mergers") of OBDE with and into OBDC. The forward-looking statements may include statements as to: future operating results of OBDC and OBDE and distribution projections; business prospects of OBDC and OBDE and the prospects of their portfolio companies; and the impact of the investments that OBDC and OBDE expect to make. In addition, words such as "anticipate," "believe," "expect," "seek," "plan," "should," "estimate," "project" and "intend" indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this press release involve risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with (i) the timing or likelihood of the Mergers closing; (ii) the expected synergies and savings associated with the Mergers; (iii) the ability to realize the anticipated benefits of the Mergers, including the expected accretion to net investment income and the elimination or reduction of certain expenses and costs due to the Mergers; (iv) the percentage of OBDC and OBDE shareholders voting in favor of the proposals submitted for their approval; (v) the possibility that competing offers or acquisition proposals will be made; (vi) the possibility that any or all of the various conditions to the consummation of the Mergers may not be satisfied or waived; (vii) risks related to diverting management's attention from ongoing business operations; (viii) the risk that shareholder litigation in connection with the Mergers may result in significant costs of defense and liability; (ix) changes in the economy, financial markets and political environment; (x) the impact of geo-political conditions, including revolution, insurgency, terrorism or war, including those arising out of the ongoing war between
Additional Information and Where to Find It
In connection with the Merger, OBDC and OBDE plan to file with the SEC and mail to their respective shareholders a joint proxy statement/prospectus (the "Joint Proxy Statement") and OBDC plan to file with the SEC a registration statement on Form N-14 (the "Registration Statement") that will include the Joint Proxy Statement and a prospectus of OBDC. The Joint Proxy Statement and the Registration Statement will contain important information about OBDC, OBDE, the Merger and related matters. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. SHAREHOLDERS OF OBDC AND OBDE ARE URGED TO READ THE JOINT PROXY STATEMENT AND THE REGISTRATION STATEMENT AND OTHER DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT OBDC, OBDE, THE MERGER AND RELATED MATTERS. Investors and security holders will be able to obtain the documentation filed with the SEC free of charge at the SEC's website, http://www.sec.gov and for documents filed by OBDC, from OBDC's website at https://www.blueowlcapitalcorporation.com and for documents filed by OBDE, from OBDE's website at https://www.blueowlcapitalcorporationiii.com.
Participation in the Solicitation
OBDC, its directors, certain of its executive officers and certain employees and officers of Blue Owl Credit Advisors LLC and its affiliates may be deemed to be participants in the solicitation of proxies in connection with the Merger. Information about directors and executive officers of OBDC is set forth in its proxy statement for its 2024 Annual Meeting of Shareholders, which was filed with the SEC on March 28, 2024. OBDE, its directors, certain of its executive officers and certain employees and officers of Blue Owl Diversified Credit Advisors LLC and its affiliates may be deemed to be participants in the solicitation of proxies in connection with the Merger. Information about directors and executive officers of OBDE is set forth in its proxy statement for its 2024 Annual Meeting of Shareholders, which was filed with the SEC on March 28, 2024. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the OBDC and OBDE shareholders in connection with the Merger will be contained in the Joint Proxy Statement when such document becomes available. These documents may be obtained free of charge from the sources indicated above.
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SOURCE Blue Owl Capital Corporation III
FAQ
What was Blue Owl Capital III's (OBDE) net investment income per share in Q2 2024?
How much did OBDE's NAV per share increase compared to June 30, 2023?
What was the total amount of new investment commitments for OBDE in Q2 2024?
What is the merger agreement announced by OBDE on August 7, 2024?
What was OBDE's dividend yield based on Q2 2024 NAV per share?
