Twenty-four companies on the PERE 100, which ranks the world's largest property management companies by capital raised, also appear on the Real Estate Debt 50 list, which lists the largest fundraisers of real estate debt. Other companies on the top 100 list also own real estate debt platforms of various sizes.
In most cases, these managers entered the real estate lending space either organically, by making a major hire and building their team over time, or by acquiring an existing real estate lending platform that already had a team in place.
Blue Owl, ranked 15th on the PERE 100, has decided to do both by entering the real estate lending industry.
This week, the New York-based alternative asset manager made a two-part announcement. The first was the launch of its real estate finance strategy with an inorganic entry point: the acquisition of Prima Capital Advisors, a real estate lender specializing in commercial mortgage-backed securities, for $170 million. Based in Scarsdale, New York, Prima manages approximately $10 billion in assets on behalf of institutional investors and select high-net-worth individuals.
The second part of the announcement marked an organic entry point: the hiring of Jesse Hom, who served as global head of real estate credit at GIC, to oversee the new business. In addition to leading the real estate finance strategy, Hom will focus on expanding Blue Owl's existing triple net lease business and identifying other strategic growth opportunities for the real estate platform.
It's unusual for a company to enter the real estate lending space with a two-pronged approach: acquiring an existing team, portfolio and track record, and then hiring an industry leading firm that previously ran the real estate credit business for one of the world's largest real estate investors. But given that Blue Owl launched its real estate finance strategy later than many of its competitors, such a tactic could be seen as a way to rapidly launch and scale its platform fairly quickly.
In some ways, the hybrid approach also tells the story of Blue Owl's real estate business, which was formed when Blue Owl acquired Chicago-based net-lease specialist Oak Street Real Estate Capital in December 2021. Oak Street co-founder and CEO Mark Saal now leads Blue Owl's real estate business, which has grown the company's assets under management to $26.9 billion as of Dec. 31, up from $12.4 billion at the time of the acquisition.
But even before the Blue Owl acquisition, Oak Street had been experiencing significant organic growth, raising a succession of large sums of capital for its net-lease strategy and hitting an all-time high in 2020, debuting at No. 20 on the PERE 100. This organic growth, bolstered by Hom, now one of Saar's right-hand men, will be further bolstered by inorganic growth from deals like the Prima acquisition.
Of course, it remains to be seen how well the two will fit together, but if Blue Owl hits the ground running, it may not be long before the company starts eyeing a RED 50 entry as well.