Operator
Good morning, and welcome to the Blue Owl Capital's fourth quarter and full year 2024 earnings call. During the presentation, your alliance will remain on listen-only mode. After the speaker's prepared remarks, there will be a question-and-answer session. If you'd like to ask a question by that time, please press star, followed by one on your telephone keypad. I'd like to advise all parties that this conference call is being recorded. Thank you. I will now turn the call over to Anne Dye, Head of Investor Relations for Blue Owl. Please go ahead.
Thanks, Operator, and good morning to everyone. Joining me today are Mark Lipschultz, our Co-Chief Executive Officer, and Alan Kirchenbaum, our Chief Financial Officer. I'd like to remind our listeners that remarks made during the call may contain forward-looking statements which are not a guarantee of future performance or results and involve a number of risks and uncertainties that are outside the company's control. Actual results may differ materially from those in forward-looking statements as a result of a number of factors, including those described from time to time in Blue Owl Capital's filings with the Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statements. We'd also like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our earnings presentation, available on the shareholders section of our website at blueowl.com. Please note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Blue Owl fund. This morning, we issued our financial results for the fourth quarter of 2024, reporting fee-related earnings, or FRE, of $0.23 per share and distributable earnings, or DE, of $0.21 per share. For the full year 2024, we reported FRE of $0.86 per share and DE of $0.77 per share. We declared a dividend of $0.18 per share for the fourth quarter, payable on February 28th to holders of record as of February 19th, and we also announced an annual fixed dividend of $0.90 for 2025, or $0.22.5 per quarter, starting with our first quarter 2025 earnings, up 25% from the prior year.
During the call today, we'll be referring to the earnings presentation, which we posted to our website this morning, so please have that on hand to follow along. with that i'd like to turn the call over to mark great thank you so much ann we capped off a highly successful year for blue owl with a record quarter of fundraising reflecting the ongoing diversification of our business and high levels of investor interest in our differentiated products this brings our total equity raised in 2024 to 27.5 billion dollars about 75 higher than 2023 and including debt, we raised over $47 billion, also a record for us. On top of our robust fundraising, we deployed substantial amounts of capital across the business, including a record $52 billion in gross deployment and credit, driving 26% FRE growth for the year. Taking a step back, we have now grown FRE at least 25% each year since we've been public, despite highly inflationary periods, geopolitical events, rate volatility, and a significant slowdown in capital markets. To us, this has been an incredible test of the durability of our business and the power of permanent capital. We've had a very active year across the business with some simple themes that defined our direction of travel, innovation, diversification, and scale. And thinking about what we've accomplished this year, I'd like to call out a few highlights that exemplify these themes. On innovation, we've been very aligned with the ongoing evolution of the alternatives industry, focused on asset classes such as direct lending and GP stakes that have expanded to meet the financing needs of the private markets. Net lease has followed a similar trajectory, becoming a truly institutional category. All of these market opportunities have significant runway ahead of it, and we expect to meaningfully participate in that growth given our leadership positions in each area. In thinking about where the puck is going next, we have made strategically important acquisitions in markets with growing capital needs, namely alternative credit and digital infrastructure. We've also expanded our insurance capabilities to deliver a more holistic solution in that market. And we brought on a real estate credit manager with an incredible 30-year record to take advantage of the disintermediation we're seeing there. It's clear to us that private solutions providers are going to take an increasingly larger role in the financing of all of these markets. We plan to meet these opportunities head-on with differentiated strategies, product innovation, and best-in-class market leaders that have invested in these asset classes for decades. On diversification, it's apparent, even in our 2024 results, how much more diversified our business is today than a couple of years ago. This diversification spans investment capabilities, sources of capital, and geographic footprint. Looking ahead, we see tremendous growth for both the newer businesses under our umbrella and our existing capabilities. We plan to continue expanding our global distribution while introducing new strategies and product structures that further strengthen Blue Owls value proposition for institutional, private wealth, and insurance clients. On scale, we ended the year at a quarter of a trillion dollars of AUM and At pro-forma for the acquisition of IPI, which closed on January 3rd, we now have $265 billion of AUM. Over the past decade, we have seen the largest managers consolidate market share in the alternatives industry. We expect this trend to continue for the next decade, and we fully expect to be one of those consolidated managers. With the full suite of capabilities we have today and our scale permanent capital, we're able to create even more of the bespoke solutions that counterparties are looking for, further positioning ourselves to be the first call. And subsequent year-end, we closed the merger of OBDC and OBDE, our publicly traded diversified lending BDCs, resulting in the second largest publicly traded BDC with assets under management of about $21.5 billion. We're also working towards the proposed merger of OTF and OTF-2. Once merged and listed, we expect to have the largest technology focused BDC in the markets. Zooming in on the fourth quarter, we had our highest quarter fundraising with $9.5 billion of equity capital raised and over $18 billion including debt raised. Private wealth fundraising remained very strong at nearly $4 billion, driven by our perpetually distributed products and fundraise for GP stakes. For the year, private wealth drove over $13.5 billion of equity commitments, an increase of 50% year over year. And we are excited about what 2025 will bring with an alternative credit product launching shortly and currency-specific solutions coming for OCIC and OREP, in addition to the ongoing cross-selling and expansion on existing platforms. We had our highest quarter of fundraising in our institutional channel, raising $5.6 billion across a variety of strategies, including a number of mandates within credit, large cap and mid cap GP stakes, insurance solutions, and real assets. For the year, institutional fundraising drove half of total capital raised and doubled from the prior year. As of this week, we are approaching $1 billion committed for our European net lease strategy headed towards our $1.5 billion hard cap, and we are also approaching $1 billion of capital committed for our GP-led continuation strategy. Our fourth quarter results reflect the impact that both organic new product development and recent acquisitions are having on the range of fundraising across Blue Owl, and we see much more to come ahead. The over $47 billion we have raised organically across equity and debt over the past 12 months is equivalent to 29% of our AUM a year ago. Now turning to business performance, in credit, we had another solid quarter of deployment specifically for direct lending. Gross and net originations were over $13 billion and $2 billion for the quarter, reflecting a high level of repayments and refinancings that stayed within our system. Taking a step back, consider the environment we've been in this past year. The CLO market returned in full force at the beginning of 2024, sporting historically high levels of broadly syndicated market activity driven by refinances. In the midst of that environment, we deployed nearly $52 billion on a gross basis and $16.6 billion on a net basis in 2024. So even in a tepid M&A market, with active broadly syndicated markets competing, we doubled net deployment year over year. And I think it's a great demonstration of the power of scale and incumbency coming together to drive strong origination outcomes for the investors in our province. Credit quality metrics and direct lending continue to reinforce the strength of our underwriting. On average, underlying revenue and EBIT.growth was high single digits across the portfolio, with no significant step-ups in non-accools or amendment requests, and we're at 11 basis point average annual realized loss rate. As for the alternative credit, the team has already well integrated and working with direct lending and ensured solutions on transactions, having completed several deals that bring together the sourcing and execution capabilities of our combined credit platform. During the fourth quarter, we announced a sizable forward flow agreement with Upstart and have subsequently seen significant demand from large lending platforms looking to partner with us as a source of stable capital. More broadly, we view the additional alternative credit as a strategically important expansion of our credit capabilities, focused on lending to Main Street segments such as consumer spending, small business borrowing, and residential finance. These complement the corporate leaning of our direct lending businesses very nicely. Not only are the Main Street opportunity sets very significant in their own right, But having a scaled alternative credit capability under the umbrella sharpens our 30,000-foot view of the broader credit marketplace, enhancing outcomes for investors across the board. Finally, we're making great progress toward launching a new alternative credit product for both the wealth and institutional markets and look forward to providing an update in coming quarters. In GP Stakes, 2024 was a year that proved out our longstanding thesis that the largest and most diversified managers are best suited to navigate and thrive in this next stage of the alternatives industry. Over the past year, the AUF of our partner managers increased by approximately 11%, and we continue to see significant interest for managers looking to source growth capital for their businesses to better position themselves in a market landscape that favors scale. As we mentioned in our last earnings call, we completed two strip sales worth on three during the third and fourth quarters, returning significant capital to our LPs and bringing new investors into the strategy. These sales generated $1.4 billion of gross proceeds at a 4.1x gross multiple on invested capital, 2.7x net. Between the strip sales, other opportunistic liquidity events, and regular distributions for partner-manager earnings from our flagship products, we distributed $2.4 billion to GPs stake fund investors in 2024, during a period where many GPs struggled to provide liquidity to their LPs. This not only benefits the current investors in our strategy, but provides an excellent case study for prospective investors. In real assets, we continue to actively deploy across our drawdown fund, our non-traded REIT, and now real estate credit. In net lease, we are over 75% committed to fund six a year-end after having just completed fundraising in the first quarter of 2024. This sets us up extremely well to be back in the market in 2025. Market dynamics in the net lease market remain fairly unchanged for us as we utilize our scale and proprietary relationships to drive premium cap rates and monetize a meaningful spread. During the fourth quarter, we deployed nearly $4 billion of capital, bringing full-year deployment to over $7.5 billion at an average 8% cap rate. Concurrently, we monetized over half a billion dollars during 2024 at an average 5.9% cap rate, reflecting incredible spread capture. As we look at the quarter and into the first half of 2025, we have a number of new products and structures to talk about, underscoring the ongoing diversification of real assets. For instance, we raised over a half a billion dollars during the fourth quarter for our European net lease strategy, which is now approaching our $1 billion target and well on our way to the $1.5 billion hard cap. On top of that, we anticipate a co-mingled real estate credit product to be launched in the first half of the year. And, of course, the IPI acquisition closed on January 3rd, adding more than $14 billion of AUM on a pro forma basis. This figure reflects an incremental $3.3 billion raised during the fourth quarter prior to the closing of the transaction. Since the transaction announcement, AUM has already increased 35%, driven primarily by capital raising. We expect to finish up the current vintage of our flagship digital infrastructure fund at the hard cap of $7 billion in short order, and we are very excited to show the market what we can do with this business. In fact, you'll hear more about our plans tomorrow at Investor Day. Bringing it all together, we're highly confident in Abu'lala's position for the future. There's a lot more to say on this front, but I think we'll save that for Investor Day. We're looking forward to seeing you in person or on the webcast, and I think it will be a very illuminating and educational morning as we lay out our five-year strategic plan for Blue Owl and show you the chessboard we have in front of us. With that, let me turn it down to discuss our financial results.
Thank you, Mark, and good morning, everyone. We're ending 2024 on a strong note with over a quarter of a trillion dollars of assets under management, our 15th consecutive quarter of management fee and FRE growth, and a record fundraising quarter for the firm. Some additional highlights for the year include management fees up 30 percent and 91 percent of these management fees are from permanent capital vehicles, FRE up 26 percent, DE up 22 percent, and as you can see on slide 12, we raised nine and a half billion dollars of equity in the fourth quarter and 27.5 billion in 2024, an increase of 74% from the prior year. And inclusive of debt, we raised $47.5 billion in 2024. To help break down the fourth quarter fundraising numbers across our strategies and products, in credit, we raised $4.3 billion. $3.1 billion was raised in our direct lending strategies, of which $1.7 billion came from our non-traded BDCs, OCIC and OCIC. We also closed on approximately $1.4 billion across SMAs and ODL, our institutional evergreen father. The remainder was raised across investment-grade credit, alternative credit, and our GP-led secondary strategy. Overall for the year, in credit, we raised $13.9 billion, including $7.3 billion in our dedicated wealth products, OCIC and OTIC. In GP Strategic Capital, we raised $3.2 billion during the quarter, including another $1.7 billion for our large cap strategy, bringing the latest vintage to $7 billion. We've always expected the fundraise here to be somewhat back-ended, which means overall, we're a little ahead of where we thought we would be with our $13 billion target. I would continue to assume more fundraising comes in back-ended this year than straight line. We also held a second close for our mid-cap strategy, bringing it up to $1 billion raised to date. And in real assets, we raised $1.9 billion primarily from O-Rent, European net lease, and SMA and insurance solutions. As Mark mentioned earlier, we are approaching $1 billion raised for our European net lease strategy. Overall, for the year in real assets, we raised $4.9 billion, including $2.5 billion in our dedicated wealth product O-Rent, in which we expect to see an increase to this $2.5 billion level for 2025. We've mentioned the ongoing breadth and diversification of fundraising, and this quarter is another great example of the power of our organic growth engine. We generated robust flows from our established direct lending, GP stakes, and net lease products, while approaching the billion-dollar mark for three new strategies, European net lease, our GP-led secondary strategy, and our mid-cap GP stake strategy. Over 30% of our capital raised in the fourth quarter came from products which did not exist or were not part of our platform a year ago. We're very proud of the progress we have made in expanding Blue Owl's suite of capabilities, and we'll have a lot more to talk about regarding the diversification of our business tomorrow at Investor Day. We continue to have high levels of visibility on earnings growth with substantial embedded earnings driven by future deployment and a listing of our software lending DDC. AUM not yet paying fees was $22.6 billion as of the end of the fourth quarter, corresponding to over $300 million of incremental annual management fees once deployed. This number has increased from $14.5 billion this time last year, reflecting robust fundraising and products that earn fees upon deployment. Upon a listing of our software lending BDC, we have approximately $135 million of incremental management fees that will turn off. These two items alone would represent an increase in management fees of nearly $450 million, dollars or 20 plus percent growth from our 2024 management fee level. These aspects combined with our business model of being virtually all permanent capital and 100% FRE just gives us a higher quality of earnings than any of our peers in the industry. Focusing now on our credit platform, our credit portfolio growth returns were 3.1% in the fourth quarter and 13.9% over the last 12 months. Weighted average LTBs remain in the high 30s across direct lending and in the low 30s specifically in our software lending portfolio. As Mark mentioned earlier, our overall portfolio continues to perform extremely well. For our GP strategic capital platform, total invested capital for our fifth GP stakes fund, including agreements in principle, are over $11.6 billion of capital, with line-of-sight into over $4 billion of opportunity, which, if all are signs, would bring us well through the remaining capital available in Fund 5. Performance across these funds remains strong, with a net IRR of 22% for Fund 3, 39% for Fund 4, and 19% for Fund 5. And in real assets, we continue to deploy meaningful amounts of capital in our latest net lease drawdown fund, which is over 75% to me. Even with robust deployment, our net lease pipeline continues to grow with approximately $34 billion of transaction volume under letter of intent for contract to close. With regards to performance, gross returns across our real estate portfolio was flat for the fourth quarter and 4% for the last 12 months and continues to compare very favorably to the broader real estate market over this time period. The net IRR across our fully realized net lease funds has been 24% for investment-grade and credit-worthy benefits, reflecting the favorable value creation driven by our scale and solutions-based partnership. Okay, let's wrap up with a few remaining items to cover. On our effective tax rate, we ended the year at just under 4%, in line with where we guided everyone to at the beginning of this past year. For 2025, you can expect an effective tax rate in the mid to high single digits. And for the few years beyond, you should see our effective tax rate increase a little bit each year, maybe a few percent per year. So overall, the story here remains the same. You should expect our effective tax rate to be lower for longer. As a reminder, we pay our tax receivable agreement out during the first quarter, so expect a higher level for the first quarter of 2025. This is the same timetable as in 2024. higher effective tax rate in the first quarter, and much lower for the second, third, and fourth quarter. As we announced earlier, our dividend for 2025 is $0.90 per share. We are very pleased with our 2024 results, our industry-leading growth, and how we've built a differentiated business, a steady, consistent, predictable, cash-flowing business that will continue to pay the bulk of our earnings out in dividends. As a final note from the entire management team here at Blue Owls, It's been an extremely successful few years, and we're very proud of what we've accomplished for our shareholders. At our Investor Day tomorrow, we're looking forward to laying out what we think is a very achievable path for continuing to lead our industry with robust, long-term growth. We look forward to seeing you in the audience or on the webcast. Operator, can we please open the line for questions?
Operator
We are now opening the floor for question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. Kindly limit your questions to one question only, and then you can jump back in the queue by pressing star and one again. Thank you. Your first question comes from Glenn Shore from Evercore ISI. Your line is now open.
Hi, thanks very much. um maybe i'll ask on on gross to net uh deployment um probably not the number you want it to be but i'm curious how much you focus on that in credit on any given quarter and and do you do you think that's a function of the deal environment or does that say something about the attractiveness of deals out there just curious how we should look at that yeah thanks for the uh the question and Great to have a chance to chat with you this morning.
So growth to net has a couple dimensions to it. So, look, the one observable fact is the net deployment, of course, relates to getting new dollars to work. But I guess I'd start with this. The incredibly active both growth and ultimately net year in total, I would take as a sign of great strength. I mean, this was a very tepid M&A year. And so when you think about how much activity we had in a year that was both low on M&A, but with a very open syndicated market, I actually foretells of very good things to come in 2025 as we see the M&A market turn active again. Again, we're always all waiting for the, quote, dam to break, and I'm not here to call the time it'll happen. But clearly, there's already been an uptick in M&A pipeline and activities, compression of bids and asks. So I think we're, like many people, pretty optimistic that 2025 will be a more favorable M&A environment. So I start with, actually, it's a pretty interesting baseline year because our most active overall origination year in a macro setting you would not consider, quote, good for direct lending. Now, the gross to net itself has two dimensions. It's actually really good news from the point of view of credit. And it's really good news from the point of view of the power of incumbency. because what you're seeing in gross to net often is obviously, as you know, is refinancings of credit facilities that were done some time ago. And so what we end up getting to do, of course, is relook at the credit and re-decide if we still want to own it. So it's really a kind of a credit enhancing exercise, number one. Number two, speaks a lot to the power of incumbency, which is a huge advantage you know we and just a couple others have which is once these loans are in our system they often stay with us uh and i think that also is positive so when we look at it i have to say we don't look at a a like a large gross low net as as a problem we look at it as a set of data in context obviously we want some quarters that have big net but we love some quarters that have big growth and low net also so the balance is good i i don't think the one thing i would say to me it doesn't reflect anything about some market dynamic change i think it's exactly what you'd anticipate would happen in a market that is more open and active again uh but doesn't have tons of m&a so people you know end up focusing on refis as opposed to new things now eventually have run out of refi. So I will say we've obviously a lot of companies have done their refi cycle. So odds are, we'll start to see that compressed in any case.
Operator
Your next question comes from Craig Shagin-Prydler from Bank of America. Your line is now...
Mark, Alan, good morning. Hope everyone's doing well. So my question is on organic growth. Good morning. So you ended the year with strength on the fundraising front, almost $10 billion a record quarter. You've just recently planted seeds through four strategic acquisitions, which aren't even close to scaled yet. And now the macro backdrop is strengthening. So without stealing too much thunder from your investor date tomorrow, what does the fundraising outlook look like for 2025? And maybe you could break apart some of the bigger drivers.
Sure. Well, I honestly couldn't encapsulate it better than you did. You know, I think the overall take is we have big flagships. We have continued accelerating success in wealth, more platforms. We have some new wealth products, our alternative credit, continuously offered product, which we will be out with in 2025. I think it's going to do very well with, as you note, new acquisitions like data centers. Again, we're continuing our flagship, which has already been extremely successful, rapidly moving toward its hard cap. and then we'll be back again with digital infrastructure and continuously offered form in the not-too-distant future. And so, yeah, I think we have a lot more ways to win, frankly a more probably kind of bullish, animal-spirited environment. So, yeah, we go in on a strong foot and, well, I guess we end the year on a strong foot without all those benefits yet and then those coming into play. Maybe, Alan, I'll let you comment a little bit about direction of travel from there.
Thanks, Craig, for the question. Look, we are, as Mark said, very bullish about what we think we can do in fundraising in 25. Well, obviously, we'll hit a number of aspects of this tomorrow during Investor Day, and we'll take that out a number of years, not just 2025. but we certainly are expecting a meaningful increase from our level in 2024 when we think about equity fundraise and what we can do in 2025.
Operator
Thanks, Greg. Your next question comes from Stephen Chabok from Wolf Research. Your line is now open.
Hi, good morning, Mark. Good morning, Alan. Thanks for taking my questions.
How are you guys? So I wanted to ask a question on expense. So G&A was up 41% in 2024. I recognize merger costs, higher wealth distribution expense. It's going to impact that growth rate. How should we think about the normal growth rate for OPEX, just given plans to continue to lean into retail, but also investing to help scale some of the more nascent strategies in ABF insurance and data centers.
So let me, why don't I take a crack at sort of the qualitative inputs of that, and then Alan will comment quantitatively. So number one, and you implicitly put your finger on it, look, we invest in having the best people, we invest in having the best distribution, and one of our core pillars is excellent. So we're going to do it, we're going to do it great. And so sometimes that takes upfront investment. We've never hesitated to do it, and we've been it will yield the benefits of it. With that said, to be specific, we've made a lot of those investments in the groups you've talked about. Acquisitions are part of that, folking up those with additional team members, adding to our credit platform. So you're indeed already seeing a lot of the investments we made this year in anticipation of the kind of continued very strong growth like as we just referred to in fundraising and activity we expect in 2025 so i would actually look at when you think about a year like this it's more investing to support what's going to happen in 2025 not that we have to invest in 2025 to make what happens in 2025 occur so with that let me just turn down to give you a little more specifics on the numbers thank you mark uh steven appreciate the question um let me approach it a couple different ways one i think overall we came in a little under on expenses, light on comp, a little heavier on G&A.
Specifically for G&A, I think I would point out we're certainly to your point seeing our acquisitions being folded in. In 4Q there were a couple one-time items in the quarter not distribution cost related, but overall we were right on top of the guidance for our 59% FRE margin for 24 and then for 2025 our guidance continues to be 57 58 percent FRE margin if if you want a better feel for run rate levels and how we think about that this year and I think about it from an annual perspective for 2024 we were at about 12 percent GNA as a percent of revenue and we were at about 28 and a half percent for comp and so when I think about 25 for the year the quarters will move around a bit but for the year 2025, you could expect about the same ratio for G&A, so about 12 percent, give or take, of course, and with margins at 57, 58 percent, that puts comp at about 30, 31 percent. So I hope that was helpful.
No, very helpful. Thanks for taking the question.
Of course. Thank you, Steve.
Operator
Your next question comes from Brian McKenna from Citizens JMP. Your line is now open.
Thanks. Good morning, everyone. I had a question on your BDC. So, you just completed the OBDC, OBDE merger, and then you're obviously working on the OTF merger. Are there any updated timelines for the OTF merger getting done and when that could be uplisted? And then beyond that, you're going to have two large BDCs in the public market. So, how are you thinking about growth for both of these vehicles longer term from an equity and debt capital revenue perspective? is.
Sure. Good morning, Brian. Thank you for the question. I'll take this, and if Mark has anything to add after that. We did complete the merger of OBDE into OBDC. I think that's now the second largest publicly traded BDC out there. We are going through the merger as we speak between OTF and OTF-2. We've commented publicly that that's on track to close in early 2Q, so things are going well there and on track and you certainly could expect a listing shortly after that we'll talk a little bit more about all this tomorrow at investor day if you recall upon a listing of that software lending merge software lending BDC that's an incremental 135 million dollars of annualized management fees and so yes we would expect that we will have at some point this year, two publicly traded BDCs. Slightly different strategy, obviously. We have our diversified lending publicly traded BDC, OBDC today. And at some point this year, we would expect that we have our software lending BDC publicly traded. In terms of growing them beyond that, we could look at what some of our peers do in terms of what's called an ATM program, and at the money program for raising capital as we go. We could look at that for OBDC and certainly upon a listing of the software lending BDC, we could look at that for that as well. On the debt raise side, we continue to do all of the things that we've done historically. We've meaningfully increased our revolvers across our BDC in 2024. We had a significant capital raise in what we call SPV drop-down structures, bilateral structures secured with banks, and we continue to raise a significant amount of unsecured debt. So we have a lot of tools at our disposal to be able to continue to raise both equity and debt dollars in what will be both publicly traded BDCs.
Great. Thanks, Alan. I'm looking forward to seeing everyone tomorrow.
You too, Brian. Thank you so much.
Operator
Your next question comes from Brandon Hawken from UBS. Your line is now on.
Good morning, Mark and Alan. Thanks for taking my question.
So I know there's going to be some movement here in real assets, and there already has been, you know, with Prima and now you've got IPI closed. When we think about 4Q and the fee rate for that business, is that the right jumping off point fully reflected of Prima, or there's some noise? And then what's the best way to think about, I know you gave us the total AUM for IPI, but what's the fee-paying AUM, and how should we think about the impact to the fee rate from that acquisition closing?
Sure. Thanks, Brennan. On the first one, yes, Prima's fully loaded into our AUM, fee-paying AUM, and average fee rates. So that's reflective. When you think about the acquisition of IPI, IPI was running at about 115 basis points on fee-paying AUM. And so when we closed, we had about $14 and change billion of AUM and about almost $11 billion of fee-paying AUM for IPI. So those are those two numbers. And on a go-forward basis, you could think of IPI running maybe a little higher than the 115 level, but that's how it blends into our real assets business.
And then last quarter, Alan, you gave an expectation, I think in about 2025. And again, it's a little awkward because we're all going to get together tomorrow morning. And we'll talk about probably more than just 2025, the far longer timeframes. But, you know, the last time on the third quarter call, you had laid out an expectation of, you know, FRE growth mid to upper 20s percent. Are you still feeling like that's the right way to think about it as we're updating our models or should we revise that one way or another?
No worries at all, Brandon. And appreciate the follow on. So, yes, we're going to talk a lot more about all of that tomorrow. Very excited to get into all that. Specifically for 2025, I'm happy to talk about that now. Last quarter, to your good point, I talked about FRE revenue growth for 2025 in the upper 20% or more. Fully on track, no change to that guidance. I talked about on last quarter's earnings call, FRE growth in the mid to upper 20s percent. Fully on track, no change to that guidance. And on a per share, FRE per share, you can think of that as about 20%.
Of course. Look forward to seeing you tomorrow.
Operator
Your next question comes from Alex Blustein from Goldman Sachs. Your line is now open.
Hey, good morning, everybody. Thanks for the question. I'll keep the big picture. Hello. We'll keep the big picture stuff to tomorrow. I did want to ask about some of the near term pipelines on the deployment side you've seen. So it's a little bit of a follow up to Glenn's question from earlier. But if you look at the M&A pipelines, there hasn't been tremendous amount of announcements so far this year. So curious what you're seeing kind of underneath the surface in conversations with sponsors. And more importantly, what have been the recent spreads to which you're underwriting kind of newer loans to just trying to get a sense of the competitive nature in that market today?
So, look, we see things early, but not the earliest, right? The M&A advisors will often see the earliest views of pre-pipeline, and obviously the PE firms know what they're spending their time on on the sell side. So I think what I can say is we continue to have a good, sound level of activity. We've not observed an uptick yet, as I said. I think we're optimistic, and I don't mean that in a rose-colored glass sense, that 2025 we will see something more materially moving upward. But in terms of activity level, what I understand and hear from the M&A advisors, they objectively are seeing more activity in the pipeline, starting more processes. You know, the people feel, I don't know if it's unleashed or just, look, we're just through a lot of uncertainties from the fall and people are ready to undertake activity. So I don't have some grand insight by any measure to offer, except to say that our planning, our thinking, what Alan just talked about, is not predicated on some sort of market rally. It's not predicated on a different environment than we've been confronting in this past year. So I would view that not so much as, quote, upside to 2025 performance, but I would tell you that that sort of dam break or uptick will certainly be welcome, but it's not necessary to our thinking. So that's kind of, I'd say, contextually where we are. It does seem it, but I can't tell you. We'll get on one of these calls where we'll tell you, okay, now our IC pipelines are that much thicker, that many more things flowing through, as we've said prior quarters. That had not been the case yet. I can't say that's the case yet now, but I anticipate there will be a quarter this year where we'll be able to say that. With regard to spreads, I'd say it's now relatively stable. We go through these ebbs and flows. We've all talked about this. Things cycle up, and needless to say, it is related to amount of activity, availability of public markets. And so we went to peak spreads in 2022. We came down in 2024 to back down again, 100 basis points, probably on average across the portfolio, maybe 150 on a new originated loan. but we continue to hold on this is what's interesting when you look over time and you look at the spread to the broader marketplace you know we continue to hold on to a pretty steady couple hundred basis points all in so the product works it's a durable all-market product and you know yeah some ebbs and flows along the way but we view it as very banded so we're perfectly happy. I'm happy to take more spread. I mean, safe to say, but we're perfectly happy with the risk return we're seeing.
All right. Sounds good. Thanks for all that. See you guys tomorrow.
Thank you. Look forward to it. Thanks, Alex.
Operator
Your next question comes from Patrick David from Autonomous Research. Your line is now open.
Good morning, everyone. We might get into this tomorrow but you mentioned the new alternative credit uh retail product um but there are a few products in that asset class with with a significant head start on you getting a lot of traction so could you maybe speak a little bit about how you think your product fits in against the more established ones anything different about it you would point to and your confidence in getting placement um with several products already ahead of you thank you well i mean i'm to say ahead of us, maybe it's the eye of the beholder.
I would actually suggest that we have probably one of the most advanced capabilities in alternative credit. Remember, Analia has been at this for 20 years. Yes, it's a hot topic today. 20 years ago, it wasn't exactly a hot topic, but they've been doing it for 20 years, delivering spectacular results. Incredibly low loss rates, great arrangements. We are a provider of choice. In fact, just this morning, another forward flow agreement that we announced of $2.6 billion with Pagaya. So I would actually proffer we may be much more ahead than people understood. They just haven't focused on Adelaide now, you know, alternative credit. In terms of product launch, yes, there's a couple of other launched products in full respect, I think the infrastructure we have and the track record we have and the reception we've already received in rolling out our alternative credit platforms, or to be direct to your question, we're already out with platforms and with RIAs. And I think for good reason, once you see the results, we are getting a very strong reception. So I feel great, frankly, about where we will land i don't again i don't take anything away from the fact that there are a couple other wonderful products in the category i think that's going to be a typical structure as you know in these wealth categories there'll be a few participants that are going to be really the bulk of a given sub category given asset class i fully expect we'll be one of them in alternative credit we are one of them in direct lending we're your net leader in real estate and And I think we will be one of the key leaders in digital infrastructure. So, you know, I think it's a very interesting market. We feel very fortunate to have started at it 10 years ago, which puts us in a position where kind of interesting gap, actually, which you'll find we probably have the lowest brand recognition amongst the biggest firms. No shock there. But actually, if you look at how people view our brand, it's amongst the very best in the marketplace. That's a pretty nice gap to have. That gives us a lot of headroom.
Operator
Your next question comes from Crispin Love from Pepper Sandler. Your line is now open.
Thank you. Good morning, everyone. I appreciate you taking my question. On data centers, you've now closed IPI. There's articles about a potential Stargate investment out there. Can you discuss your views on data centers going forward, potential growth opportunities, and how you balance that in light of the recent deep-seek news out there, which could impact the industry broadly?
Absolutely. So you are correct. We have a very active and distinctive role in data centers. And you touched on two points, which I'm just going to call out. IPI, which is now Blal Digital Infrastructure, a clear pioneer. We were just talking about this yesterday. You know, the scale of this market, trillions, was certainly not that when IPI had the foresight to become a leader in the space. It was a much, much, much smaller world, but that means they have many, many more skills and relationships and lessons learned. As a result, we have built and managed 85 different data centers with a gigantic active pipeline behind it. And so we have, I guess I would dare say, a lot of insights into what's happening in that marketplace. And what we're seeing and hearing from the client base, and quite frankly, you all know this well, and people out in the public market talking. Look, DeepSeq is really, really fascinating. And we should keep in front of mind, Jevin's paradox, the idea that there's this disruptive technology, A, is to be expected, hoped for, in the world of technology evolution, and in all likelihood, accelerates adoption. So it's not clear what DeepSeq means exactly for ultimate compute, But here's what we can frame around that question. It may mean it all happens faster. It may happen broader. It may mean you need a little less compute to train a model, but then you do more inference. I think it's hard to reach a conclusion other than what it tells us is that AI is happening more, faster, broader. That's great news for our strategy. so what I guess I would what I take out from where we sit at Blue Owl in Deep Seek is a good news story which is the mega trend the overall notion of AI adoption is only happening faster and the whole reason you use our strategy, the whole reason again the DNA of our business is downside protected very attractive returns with stability and protection and income so You know, if you want to play the edges of AI, people may make great money on the cutting edge, or they may wake up and find out that someone's working on DeepSeq in China. We don't want any of those risks for our investors. So if you believe that 10 years from now, AI will be an important part of the kind of fabric of IT or the way we operate in this economy, then you'll want the picks and shovels. You want the infrastructure that goes with it. That's what we provide. So I would dare say we feel very, very good. Now let's add that to a few macro numbers and then I'll move on. The announcements coming out of the people who really know what they're planning to do and, by the way, whose credit we ultimately get paid by, they've made their positions clear. Even in the two weeks since DeepSeek, we've seen Meta come out and move their number to $65 billion. Microsoft, which when we signed our deal, I think we thought they were going to be around $50 billion. I think they've now come up with $80 billion. We're hearing $80 billion as a number around Amazon, I think. Google, $75 billion they announced yesterday. So the people that are spending the actual money have made their position clear, and that's our client base. And then they pay us for 15 years with their near-sovereign-like credit ratings. So, all that feels very good. Last thing I'll say, not because I want to pound on this, but we're all trying to get our minds around just the evolution of the market. If you look at the demand for compute and the multi-trillion dollar opportunity that we're excited about and others too, 75% of that was already anticipated to be for inference and to be for just cloud compute. so even when we get into does deep seek change the fundamental need for raw compute power for training models we're really talking about modulation around that last 25 so all that taken together if you believe in ai and you want to have a great way to make a really attractive risk return then you go with a pioneer and actually you know go to partner in building and managing these data centers. We have a thousand people inside of our operations group, more widely known as stack. They're the experts in how to make that happen. It's a huge barrier to entry. So DeepSeek's fascinating. I think it means, you know, join our strategy if you want to make sure you play the foundation of it. And then you can also, you know, do the cutting edge and that'll take technology skills that thankfully not decisions we have to make.
Thanks, Crispin. Thank you, Mark. I appreciate the answer. I look forward to seeing everyone tomorrow.
Operator
Your next question comes from Mike Brown from Wolf Fargo. Your line is now open.
Hey, good morning, Mark, Alan, and Ann. Good morning, Mike. So, lots of good questions. I just wanted to narrow in on maybe the credit results this quarter. These rose about $25 million quarter over quarter, and this would be the first full quarter with Adelaia. By my estimate, that should have added, I'd say, 20 to 22 million in the quarter. So, I guess, one, is that about right? And then, two, can you just help us understand some of the other drivers beneath the service and maybe why the fees ex-Adelaia didn't increase as much quarter over quarter? And then, you know, finally, sorry, just maybe also any color on an incremental increase into 1Q as we think about the go forward. Thank you.
Sure. Thanks, Mike. I think your numbers are directionally correct on the Adalaya ad. We certainly saw increases across all of our products in terms of management fees quarter over quarter. So we had a strong growth quarter in management fees across credit. We also raised capital during the quarter at higher fees. so you'll see an increase in that management fees from AUM not yet earning fees and you'll see a little drop down in part one fees. Effectively flat but I think it was down about two million dollars quarter over quarter. As we think about part one fees you know what I mentioned on last quarter's call is you can think of you know 3Q, 4Q as kind of a jumping off point as a run rate level, if you will. It'll move up a little or down a little quarter over quarter, and then you'll see a step function upon a listing of the software lending BDC.
Okay, great. Thank you. Look forward to seeing you all tomorrow. You as well, Mike. Thank you.
Operator
Your next question comes from Kenneth Riffington from JP Morgan. Your line is now open.
Hi, both. Good morning. This is Alex Bernstein on for Ken. Thanks for taking our questions. At the risk of double-clicking on the same topic again, just wanted to hopefully get a different flavor out of the delta between gross to net. You spoke about incumbency, which is definitely a key point. And maybe to help us better understand the power of that, as we look at what is actually net, which includes refi, as I understand it, that you're doing yourself for your own products. What's the difference between what is staying in the system and what might be exiting the system, and specifically what's happening with the broadly syndicated market and with bank competition? When we saw this topic first come up earlier in the year, so say Q1 really when it sort of hit most people's attention spans, it made sense that there was more refi from the BSL in the context of that market being closed and then rates moving down over the course of that period while that market was closed and when it opened. We don't have that same dynamic today, so I wanted to understand why that number was, as a percentage, the conversion was lower in Q4 than it was for the whole year. Thanks so much.
Yeah, sure. So a couple of dynamics to unpack. Again, I'll reinforce, look, net-net, it's ultimately a pretty healthy dynamic in the portfolio or an expected and healthy dynamic. It also, not to be lost, it does accelerate OID, comes with prepayment benefits, so there's also not to be lost in this other benefits that come from these types of refinancings. With that said, you put your finger on a good point about sort of the, might call it the rush of refinancings in the first part of the year, which was indeed impacted partly by the reopening of the BSL market. I think a lot of, and I won't be able to give you an exact number on this, but I would say directionally, a lot of what we're seeing are companies that are doing well, coming back, have grown, have de-levered, and saying, look, the world's different from where it was a few years ago when I did my financing, and so I'd like to redo it. that does include redoing spread often includes redoing and resetting the right size of the cap stack so it's not been a a drawdown or a draw away by the bsl market we'll always have some you know some things that move from us to the bsl market from the bsl market to us i actually would characterize qualitatively the refi now as you said as more about people just redoing cap stacks in a healthier environment, those who have healthy, you know, more delevered businesses than it is about, you know, the surge into BSL is back. And so people that were kind of waiting out their time shifted. So the BSL market, I guess I'd say the effect of having a very full bore available BSL market, that's already, that's fully in the system. So as we enter 2025, you know, that we've already experienced, we've already experienced all that. And there'll always be, again, loans that move back and forth. I think at the end of the day for us now, a lot of refinancing has occurred. There'll always be some, thankfully, because we have healthy companies that are doing really well. And rightfully so. They have a chance to refinance, and they come to us because they like working with us, and they do it again.
Very helpful. Appreciate the answer, as always. And I know Ken's excited to see you all tomorrow. Thank you. do.
Operator
Your final question comes from Bradley Hayes. From TD Cohen, your line is now open.
Hi, good morning. Bradley Hayes on for Bill Katz. Good morning, Bradley. You've reached about $300 million in management fees from deploying AUM not-yet-paying fees. How should we be thinking about the cadence of deployment? Any color on the opportunity to deploy some of this dry powder into 25?
Sure. I'll take that, Bradley. So when we think about that AUM not yet earning fees, it's a little over 300 million dollars of management fees. That, by the way, combines with 135 million of annualized management fee increase from a software lending BDC increase. It's almost 450 million dollars. Those two items alone would represent over a 20 percent increase from our 2024 management fee level. Kind of time frame, obviously hard to tell. Generally speaking, most of that I would expect can get deployed within the next year. And so, you know, maybe some of that tells into 2026, but we think we can deploy that roughly in about a year. And we're expecting deployment opportunities to be able to put that capital to work.
Okay, great. Thank you very much.
Operator
Thank you. I'd now like to hand the call over back to Mark Lipschultz for the remark.
Terrific. Well, look, thank you all. I guess I'll make just a couple of final comments. It was a great quarter. And it was a great quarter measured in absolute terms, in terms of results. But I also want to come back to a great quarter measured in durability of the model and of our growth. This has been a volatile world the last year, the last several years. and we're going to talk about this more tomorrow, we have continued and will continue a strong up and to the right march. And I think that durability really showed, again, in this quarter. We, you know, for all that's happened in the world, here we are plowing forward at rates of growth that have materially eclipsed the market, the peer set. And we're going to talk more about how we continue that path forward and continue to win uh as we as we look into the next five years so also i'll say we do indeed after you know the zap size will look forward to the main course if you will tomorrow uh and we have all we have a lot we're excited to share with you as how we pull all these pieces together doug is going to talk about the chess board that he sees uh and i think you'll all share this exciting vision for that chess board uh we saw it before And if that's what got us to where we are now, we see the chessboard from here forward again. So we look forward to really having a chance to talk with you all about that and answer further questions. And last, let's say thank you. Really, we do appreciate the time, the thought, and the support. And we will keep working very, very hard to keep delivering on all these opportunities for you. Have a great day.
Operator
Thank you for attending today's conference call. You may now disconnect. Have a wonderful day, everybody.
