By Jack Rogers
April 15, 2024 5:40 AM
Acquired Prima to enter the real estate finance market as traditional lenders retreated.
Blue Owl Capital, an alternative asset manager with an estimated $165 billion in assets under management, is acquiring CMBS-only lender Prima Capital Advisors for $170 million, aiming to become a major player in real estate lending.
New York-based Blue Owl announced last week that it would acquire Prima, which is majority-owned by Greenwich, Conn.-based Stone Point Capital. The deal will be funded with a combination of $157 million in stock and $13 million in cash.
In a statement, Blue Owl described the acquisition as the start of its real estate finance strategy. The firm also announced that it had hired Jesse Hom, formerly global head of real estate credit at Singapore sovereign wealth fund GIC, as chief investment officer to lead its real estate finance efforts.
An estimated $2 trillion in CMBS loans secured by commercial real estate are coming due between now and the end of 2026. Most of these loans predated the Fed's rate hike campaign, meaning property owners are facing rising borrowing costs and plummeting CRE valuations as loans come due and traditional lenders exit the market.
The abysmal conditions in the CRE debt market have created significant opportunities for other sources of financing, including private equity players.
“There is a significant capital shortage in the real estate sector right now,” Blue Owl co-CEOs Doug Ostrover and Mark Lipschultz said in a statement. “We believe Prima's strong underwriting capabilities and track record, along with the scale of the Blue Owl ecosystem, can help meet this need and create attractive risk/return opportunities for investors.”
Blue Owl co-president Mark Saar said in an interview on Bloomberg Television that the real estate lending market is a $5 trillion opportunity and that Prima is a “phenomenal entry point” into that market.
“With traditional lender activity slowing and interest rates and spreads rising, we believe it's the perfect time to enter this market,” Zahr said.
“As interest rates creep up, especially with the combination of rising interest rates, reduced credit availability and wider spreads, it becomes harder for groups to trade and it creates better buying opportunities,” he said in a television interview.
Blue Owl Capital was formed through the merger of Owl Rock and Dyal Capital in 2021. Later that year, the firm acquired Oak Street Real Estate Capital.
Earlier this month, Blue Owl acquired insurance and reinsurance specialist Kuvare Asset Management for $750 million.