Owl Rock(OBDC) - 2025 Q4 - Annual Report

Asset Management - As of December 31, 2025, Blue Owl Credit Advisers managed $157.76 billion in assets under management (AUM), with $115.01 billion attributed to direct lending strategies[29]. - As of December 31, 2025, the company had investments in 234 portfolio companies with an aggregate fair value of $16.47 billion, up from $13.19 billion in 2024, representing a growth of approximately 24.5%[79]. - Outstanding commitments to fund unfunded investments totaled $1.67 billion as of December 31, 2025, an increase from $1.44 billion in 2024[79]. - The company's first-lien senior secured debt investments amounted to $12.05 billion as of December 31, 2025, with a net unrealized loss of $167.06 million, compared to $9.88 billion and a loss of $104.19 million in 2024[79]. Investment Strategy - The diversified lending strategy targets favorable risk-adjusted returns by making loans to U.S. middle-market companies, emphasizing capital preservation[33]. - The company believes that the current middle-market lending environment presents attractive investment opportunities due to limited availability of capital from traditional lenders[34]. - The investment strategy includes targeting middle-market companies with EBITDA between $25 million and $500 million and annual revenues of $125 million to $5 billion[77]. - The company invests in various types of debt, including first-lien, second-lien, and mezzanine debt, to achieve target returns while managing credit risk[71]. - The Adviser aims to invest in established companies with positive cash flow, focusing on upper middle-market companies with a history of profitability and limited cyclicality[51]. - The Adviser seeks to invest in companies with strong competitive positions in their industries, analyzing factors such as product pricing, quality, and customer loyalty[52]. - The Adviser focuses on senior secured loans, which offer a superior return profile due to their floating rate structure and strong defensive characteristics[40]. - The Adviser maintains direct contact with various sources, including banks and corporate advisory firms, to generate investment opportunities with attractive risk-adjusted return characteristics[44]. Financial Performance - The asset coverage ratio for Blue Owl is set at 150%, allowing it to borrow up to $2 for every $1 of investor equity under certain conditions[138]. - As of December 31, 2025, the asset coverage ratio was 178%, consistent with the previous year, indicating a stable financial position[88]. - The company anticipates generating future cash from common stock issuance, debt securities, and operational cash flows, including interest from debt investments[87]. - The target leverage ratio is set between 0.90x and 1.25x, allowing for strategic borrowing under specific conditions[88]. Regulatory Compliance - The company intends to qualify as a Regulated Investment Company (RIC) and must distribute at least 90% of its investment company taxable income to avoid federal income tax[170]. - To maintain RIC status, the company must derive at least 90% of its gross income from specific sources, including dividends and interest[178]. - The company is subject to periodic examinations by the SEC for compliance with the 1940 Act and must adhere to reporting requirements[159]. - The company must meet asset coverage tests under the 1940 Act before making distributions to shareholders[176]. Risk Management - The company is subject to financial market risks, including valuation risk, interest rate risk, currency risk, credit risk, and inflation risk, which may impact market conditions[703]. - The majority of cash balances are held with a single highly rated money center bank, exceeding Federal Deposit Insurance Corporation insured limits, to minimize credit risk exposure[712]. - The company may utilize hedging techniques such as forward contracts or cross currency swaps to mitigate currency risk associated with foreign investments and borrowings[710]. - As of December 31, 2025, 96.4% of the company's debt investments based on fair value were floating rates, with a weighted average floor of 0.8%[708]. Corporate Governance - The Investment Advisory Agreement was approved by the Board and shareholders, effective January 12, 2025, and will remain in effect for two years unless terminated[102]. - The Adviser is not liable for actions taken in connection with its duties under the Investment Advisory Agreement, except for breaches of fiduciary duty[115]. - The company does not currently have any employees; services are provided by individuals employed by the Adviser or its affiliates[127]. - The Board approved the Investment Advisory Agreement as being in the best interests of shareholders on August 6, 2024[119]. Responsible Investing - Blue Owl has adopted an ESG and responsible investing policy applicable to all asset classes, industries, and countries in which it operates[130]. - The Responsible Investing Working Group coordinates responsible investing efforts across the company's business units[129]. - The Adviser aims to strengthen its ability to manage and monitor ESG risks and opportunities within investment portfolios[131]. - Blue Owl is committed to building a robust citizenship program that is community-centered and employee-enriched[135].