Blue Owl Aims to Compete in CMBS Lending Market

Blue Owl Capital, an alternative asset manager with an estimated $165B AUM, is aiming to be a major player in real estate financing with its $170M acquisition of Prima Capital Advisors, a lender specializing in CMBS.

New York-based Blue Owl announced last week it is acquiring Prima, which is majority owned by Greenwich, CT-based Stone Point Capital, in a transaction that will be funded by a combination of $157M of equity and $13M of cash.

In its announcement, Blue Owl described the acquisition as the launching of its Real Estate Finance strategy. The company announced that it has hired Jesse Hom, previously global head of real estate credit at GIC, the Singapore sovereign wealth fund, to lead the Real Estate Finance effort as chief investment officer.

An estimated $2T in CMBS loans backed by commercial real estate are coming due between now and the end of 2026. Most of these loans originated before the Fed’s campaign of rate hikes, confronting property owners with higher borrowing costs and plunging CRE valuations as loans come due and traditional lenders pull back from the market.

The perfect storm in the CRE debt market has created a huge opportunity for other sources of financing, including private equity players.

“There is a growing lack of capital availability in real estate today,” Doug Ostrover and Marc Lipshultz, Blue Owl’s co-CEOs said, in a statement. “We believe that Prima’s strong underwriting capabilities and track record, combined with the scale of Blue Owl’s ecosystem, can address those needs while creating attractive risk-reward opportunities for investors.”

Marc Zahr, co-president of Blue Owl, described the real estate financing market as a $5 trillion opportunity and Prima as “a phenomenal entry point” in the market in an interview on Bloomberg Television.

“As traditional lenders are slowing down and you’re seeing a pickup in rates and spreads, we think it’s a great time to enter that marketplace,” Zahr said.

“As rates creep up—especially with the combination of higher rates, less credit availability and spreads increasing as well—when you take that combination, it makes it harder for groups to transact, which makes it a better buying opportunity,” he said, in the TV interview.

Blue Owl Capital was formed in 2021 in the merger of Owl Rock and Dyal Capital. Later that year, the company acquired Oak Street Real Estate Capital.

Earlier this month, Blue Owl acquired Kuvare Asset Management, an insurance and reinsurance specialist, for $750M.