Blue Owl Capital Inc

NYSE:OWL

Earnings Call Analysis

Solid Growth and Dividend Increases

The company has sustained growth with its 10th consecutive quarter of rising management fees and fee-related earnings (FRE), boasting a 42% compound annual growth rate (CAGR) for management fees since going public. Management fees increased by 32%, FRE by 26%, and distributable earnings (DE) by 28% year-over-year. Notably, 93% of management fees are derived from stable permanent capital vehicles. Over $14.5 billion was raised in the last 12 months, with a significant portion from credit strategies. The company maintains high-quality earnings, with an additional $175 million in annual management fees expected from $12.6 billion in assets under management (AUM) not yet paying fees. Furthermore, the company's dividend grew by 22% this year and has a 28% CAGR since going public, outperforming its peers in the sector.

Consistent Growth and Stability

In a challenging economic landscape, the company has celebrated its 10th consecutive quarter of management fee and fee-related earnings (FRE) sequential growth, a unique achievement among its peers. Management fees grew at a 42% compound annual growth rate (CAGR) since going public, reflecting resilience and consistency even in a volatile market. Current long-term management fee growth stands at an impressive 32% compared to the previous year, with an FRE margin right on target at 60%. The company's dividend growth paints a picture of expansion and strong financial health, marking a substantial 22% growth this year and a 28% CAGR since its public inception, both leading figures in the industry.

Capital Fundraising and Deployment

Fundraising has remained robust with $2.9 billion raised in Q3 and $14.5 billion over the past year. This continued trend bodes well for Q4, which is forecasted to be a strong quarter in terms of fundraising across both wealth and institutional channels. The company benefits from high-quality, fee-paying assets, exemplified by their significant capital retention rate where they retain $4 for every $5 raised, outperforming their peers. Additionally, a large amount of assets not yet paying fees offer future revenue potential with an expected increase in annual management fees totaling over $175 million once these funds are deployed. Their focus on quality over quantity in terms of fundraising sets them apart from their competitors, ensuring that the growth is in service of financial results and leadership rather than just accumulating assets.

Strategic Positioning and Product Focus

The company has made clear that its priority is not to proliferate products merely for the sake of gathering assets. With the industry's highest fee rate, they strive to deliver superior risk-adjusted returns and establish true market leadership rather than expanding their product numbers. They are investing in strategic areas like healthcare and equity products, aiming for organic product launches that leverage their industry-leading position in existing sectors while exploring new opportunities such as European direct lending, but only if it aligns with their standards of excellence.

Guidance on Dividend and Financial Strategy

While acknowledging the increased market volatility, the company remains focused on a sustainable $1 per share dividend target. The model's strength lies in its durability, fueled by permanent capital vehicles and predictable fee rates, which means that even amid uncertainty, the variance around their targets remains minimal. The company leaders also highlighted their rigorous approach in real estate, successfully posting attractive returns and leveraging their strategic position to navigate through the choppy real estate market, selling properties at rates significantly higher than the purchase rates.

Earnings Call Transcript 2023-Q3

[Operator]

Ladies and gentlemen, thank you for standing by. My name is Bob and I'll be your conference operator today. At this time, I would like to welcome everyone to the Blue Owl Q3 2023 conference call. [Operator Instructions] I would now like to hand the call over to Ann Dai of Investor Relations. You may begin your conference.

[Ann Dai, executive]

Thanks, operator, and good morning to everyone. Joining me today are Douglas Ostrover and Marc Lipschultz, Co-Chief Executive Officer; and Alan Kirshenbaum, 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 derived from time to time in Blue Owl Capital 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 refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our earnings presentation available on the Investor Resources 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 [indiscernible] fund.

This morning, we issued our financial results for the third quarter of 2023, recording fee-related earnings, or FRE of $0.17 per share and distributable earnings or DE of $0.16 per share. We declared a dividend of $0.14 per share for the third quarter, payable on November 30 to holders of record as of November 20.

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 Doug.

[Douglas Ostrover, executive]

Thank you, Ann, and good morning, everyone. I want to thank all of you for joining us today. It's been a pleasure to spend the last few years on these earnings calls with our shareholders and analysts. As we move through the transition of the co-CEO structure that we announced earlier this year, we've decided to take a divide and conquer approach to allow each member of the management team to leverage their time more efficiently. And so going forward, you'll be hearing from Mark and Allen on our quarterly earnings calls, while Michael and I will be taking a step back from this aspect of the business.

To be clear, I'm not going anywhere. I'll continue to be very available and accessible and I look forward to seeing many of you at upcoming conferences and meetings. That said, given the rapid growth that we've had at Blue Owl and what now feels like a pretty well-oiled earnings process, it feels like the right time for me to focus my attention more fully on the many strategic growth initiatives we have in the works right now. So with that, let me hand things over to Marc.

[Marc S. Lipschultz, executive]

Thanks so much, Doug. Today, we again demonstrated the steady and resilient growth that we believe sets Blue Owl apart in the alternative asset management space. With our temp straight quarter as a public company also begin our temp straight quarter of generating FRE growth. When we think about what happened in the world over that time frame. The time in 2021, 10-year treasuries were around 1.5%. And a year ago, they just crossed 4%. With the expectation by the end of 2023, we'll be talking about rate costs. Obviously, those expectations have shifted meaningfully over the past year. .

In the first three quarters of 2022, the S&P 500 corrected 25% as interest rates march upwards, only to reverse and rallied 20% over the next year despite elevated rates and ongoing geopolitical risks. The capital markets and M&A have been stalled for the better part of the year. And in March, we witnessed a handful of bank failures that took the markets completely on [indiscernible].

All of this is to say, the only thing that's been clear over the past couple of years is the lack of clarity into the short-term path of rates, the longer-term impact of those rates on economic growth and how liquid markets will react to the information we have on hand. In contrast, we've been able to demonstrate our Blue Owl on permanent capital at FRE-centric model by design, creates a differentiated and more predictable earnings profile. And on a last 12-month basis, we have grown DE by 28% and FRE by 26% in spite of these market headwinds. Since we've been public, management fee growth has been over 40% per year. That's not to say that this growth is [indiscernible]. But one advantage we have structural is that very few assets leave our system because our AUM is mostly permanent capital. So the capital we're raising is generally additive instead of replacing assets that are being returned to investors.

On top of that, our business is positively levered to many of the ongoing secular tailwinds within alternatives, including the continued growth of direct lending larger managers benefiting from ongoing consolidation across alts and private wells incremental adoption of alternatives as a core component of an investor portfolio. For these reasons, we feel confident that Blue Owl will remain a differentiated story with a differentiated growth trajectory.

As it relates to the fundraising landscape, we continue to see very positive indications for demand across our strategies, which are generally into oriented and downside protection focused. Across our perpetually offered products as well. We raised $1.5 billion in the third quarter and nearly 20% step-up from the prior work. Over the last 12 months, we have been the top fund raiser in the industry, both credit and real estate when looking at net flows. And on a gross basis, we have been the second best 1 raiser over that period. Both of these are extraordinary statistics, and I think testaments to the many years that we've been building our platform and relationships in the states. A lot of firms are trying to catch up to where we are and given the size of the opportunity. This is not a zero-sum game. We and others can do well at the same time. And there will be a lot of growth has across the industry. But I wanted to take a moment to recognize what we've been able to accomplish so far. I think we are exceeding expectations in the face of headwinds and I'm very enthused about what lies ahead for this business.

On the institutional side of our business, we announced a $1 billion mandate and a leading some wealth, reflecting continued progress in the strategic and geographic expansion of our LP base. We have improved visibility into the end of year flows as we launched fundraising for a handful of strategies, including GTV, for which we anticipate a small close for our [indiscernible] fund before the end of this year. We are very excited about the potential for cross-sell for this fund with our credit and real estate investors, and we've seen strong demand to bring the GP stake strategy to a number of new wealth platforms as well.

In real estate, we remain very well positioned despite the substantial headwinds in this space, having already reached our $4 billion target for this latest vintage of our flagship fund, getting to the $5 billion hard cap, which we expect to hit will represent a doubling in the size from the prior vintage, but challenging even in strong markets and reflective of the distinctive and attractive attributes of our net lease strategy. And as I mentioned earlier, in the wealth channel, we are outselling competitors by a wide margin, and we continue to build out that [indiscernible]. And we are engaged in a number of institutional investor dialogue regarding separate accounts and I'll probably launches, some of which may close during the fourth quarter.

Moving on to the business performance. In credit, we saw improving trends in deployment with Blue Owl taking a lead role in some of the largest deals and refinancing announced or closed across the market including Finastra and [indiscernible]. Repayments during the quarter elevated relative to levels earlier in the year, providing additional opportunities to redeploy capital at even more attractive levels. Overall, we continue to see our direct lending

business expand as we meet the capital needs of an Evolving marketplace. And the risk reward opportunity presented by private credit today remains one of the best we've seen in our tenures as investment professionals, a sentiment we often hear echo back by our investors.

In our GP State business, we continue to witness the resilience of larger cap GPs with these managers being the beneficiaries of market share gains during more challenging fundraising environment.

In real estate, we've been active in deploying capital at attractive cap rates with [indiscernible] about 20% committed to deploy and continue to monetize and meaningful spreads for our tons.

Bringing all this together, we think of our business in an alternative asset manager 3.0, meaning our business offers a steady stream of management fee-driven earnings that investors have been asking for in conjunction with the robust growth that they expect. And we have a greater ability to keep assets in our system due to our permanent capital. Our financial profile is very simple in term, and it doesn't depend on realizations or capital market fees to drive earnings growth. As our premier solutions provider to a large and growing market. We think we offer a very attractive proposition of strong earnings and dividend growth underpinned by a core asset base that is exceptionally stable, and we look forward to continuing to prove this model out to all types of market conditions at. With that, let me turn it Alan to discuss our financial results.

[Alan Kirshenbaum, executive]

Thank you, Mark. Good morning, everyone. Thanks for joining us today. To start off, we are pleased with our third quarter and LTM results. Mark mentioned this, but I want to reiterate that this is our tenth consecutive quarter. It's actually been every quarter since becoming a public company of both management fee and FRE sequential growth. the only alternative asset manager that has demonstrated this over the past 2.5 years.

And as Mark also referred to earlier, as you can see on Slide 5, our management fees have grown at a 42% CAGR since we became a public company. We're talking not just very good growth, but steady, consistent, resilient growth. through what has obviously been a very challenging and volatile market environment. So let's go through some of the key highlights of our LTM results through September 30. Management fees are up 32% for the LTM period versus a year ago and 93% of these management fees are from permanent capital vehicles. FRE is up 26% for the LTM period versus a year ago, and our FRE margin is right on top of our 60% target, which we continue to expect to be the target for the next few years, and GE is up 28% for the LTM period versus a year ago.

Now I'd like to spend a moment on our fundraising efforts. As you can see on Slide 12, we raised $2.9 billion in the third quarter. And over the last 12 months, we raised $14.5 billion. I'll break down the third quarter numbers across our strategies and products. In credit, we raised over $2.1 billion $I.2 billion was raised in our diversified and first lien lending strategies, including over $900 million raised in our well-distributed credit income BDC, OCIC, returning to a pace we haven't seen since the first half of 2022. And approximately $1 billion was raised in our tech lending strategies, including approximately $300 million raised in our well-distributed tech lending BDC TIC. In VP Strategic Capital, we raised approximately $100 million during the third quarter. And in October, we closed on approximately $400 million for a GPS co-investment vehicle with a long-standing value partner, which will invest side by side with our fifth and sixth GP Stakes funds.

In real estate, we raised approximately $700 million, approximately half of that in our sixth vintage of our real estate strategy and the other half in our well distributed nontraded REITs. We have now raised over $2 billion of equity in ORAN since its launch a year ago, primarily through just one wire house. during what has been an exceptionally challenging environment for real estate. So we're pleased with those results. And since May, we have launched ORAN on a few additional platforms and have some meaningful launches ahead for the fourth quarter and into 2024.

As Mark alluded to earlier, we continue to see strong institutional interest in our products. and we are expecting a strong finish to the year in the institutional channel. As we have discussed throughout the year overall, as we head into the end of 2023, we continue to see fundraising tilting institutional for the year.

In the wealth channel, we have continued to see solid interest in our strategies with steady increases again in our fundraising levels quarter-over-quarter. We believe that will continue to build on itself through the end of this year and into next year. We are very excited about where we can be next year. All in all, we've raised over $36 billion of fee-paying AUM in January 1, 2022. When I think about fundraising overall, we've always talked about how permanent capital differentiates us because assets not leading the system means that we have higher growth for the same amount of fundraising. Said another way, we keep more of the capital we raise than our peers, putting some numbers around that for approximately every $5 of fee-paying AUM inflows we bring in, we see just $1 going out in the form of distributions or redemptions. For our peers, on average, every $2 raised is met with $1 leaving their system, meaning half of their fundraising covers assets that are being paid out to investors in one form or another. That's a huge difference. It's a big advantage for us.

In addition to the staying power of existing AUM and the benefit of ongoing fundraising, we have substantial embedded earnings that we will unlock over time. AUM not yet paying fees, was $12.6 billion at September 30. This AUM corresponds to an expected increase in annual management fees totaling over $175 million once deployed. And as many of you will recall, we have over $200 million of management fees in aggregate that will turn on upon the listing of our private BDCs over time. We believe, in part because of these things, and in part because of our permanent capital, we have a higher quality of earnings.

Moving on to our credit platform. We had gross originations of $4.4 billion for the quarter and net funded deployment of $2.1 billion. This brings our gross originations for the last 12 months to $13 billion with $7.4 billion of net funded deployment. So as it relates to the $9.3 billion of AUM not yet paying fees and credit, it would take us a little over 1 year to fully deploy this capital based on our average net funded deployment pace over the last 12 months.

With that said, as Mark commented earlier, we have been seeing a considerable uptick in pipeline activity in our direct lending platform and believe the fourth quarter could be a much bigger quarter for deployment than previous quarters this year. Although the impact of management fees in 2023 will be nominal, it's a great place to start 2024.

Our credit portfolio returned 4.1% in the third quarter and 17.4% over the LTM, while annualized realized losses remain approximately 6 basis points on a gross basis and have been fully offset by realized dates. Weighted average LTVs remain in the low 40s across direct lending and in the low 30s specifically in our tech lending portfolio. By our TP strategic capital platform, total investment commitments for our fifth 26 funds, including agreements in principle for approximately $11 billion of capital with line of sight into about $2 billion of opportunities, which if all times will bring us through the remaining capital available in Fund V. and performance across these funds remained strong with a net IRR of 23% for Fund III, 46% for Fund IV and 21% for Fund V, all of which compare favorably to the median returns for private equity funds of the same vintages.

And in our real estate platform, deployment activity remains robust. With over $1 billion deployed during the quarter, and our pipeline of opportunities remain strong with over $4 billion of transaction volume under letter of intent or contract to close. With regard to performance, we achieved gross returns across our real estate portfolio of 2.4% for the third quarter and 13.8% for the last 12 months.

Okay. Let's wrap up here with one closing thought. Dividend growth. This year, we will have posted a dividend growth of 22% over last year and since becoming a public company, we have achieved a 28% CAGR for our dividend, the highest in the public alternative asset manager space, and we feel this is truly reflective of how we have grown our business. Dividend growth is our north star. It reflects our pace of growth, but also informs about the quality of the earnings underlying that growth and the confidence we have in the staying power of those earnings. It's the metric that captures all aspects of our business, including fundraising, deployment, revenue growth, embedded future earnings and so on. And for that reason, it's one of the metrics that we think investors should be most focused on for us. Thank you again to everyone who has joined us on the call today. With that, operator, can we please open the line for questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Craig Siegenthaler from Bank of America.

[Craig Siegenthaler, analyst]

And hope everyone is doing well. Following Alan's comments around a strong finish to 2023 in institutional channel, we want to get your perspective on the quarterly inflow of $1 billion and how we should think about the level of institutional fundraising over the next few quarters to actually especially what they first closed in GPV by December 31 expected.

[Marc S. Lipschultz, executive]

Craig, this is Marc. Thank you for the question. Look, this quarter is -- quarter 4 is expected to be a strong one from a fundraising point of view across wealth and institutional. We're seeing terrific strength in wealth, continue to grow there. As you know, we've been the #1 that fundraiser in the market. and we continue to see substantial growth as we head into this month and this quarter. And then institutional as well, we have GPV, we do expect to do our first close in the fourth quarter.

And so I guess it leads probably to a broader point, which is to call it what it is, look, what we expect fourth quarter to be very strong. This quarter, the timing between when things close for us is a little less predictable. We just don't run as many funds. So we don't like to be either overexcited about a particularly strong quarter or under -- really concerned about a quarter that's a little bit later. We look forward long-term strong predictable dividend growth. We just don't run as many funds as you know. And we don't what we will.

Today, we have the highest fee rate in the industry. We run products where we are going to deliver superior risk returns. And where we can build true scale, as you know, and really just about everything we do, we're a market leader on not the singular market leader, and that's going to continue to be our center of gravity. What we want to do is grow FRE and grow dividends. And of course, to that again this quarter, and we plan to do it again next quarter and keep on keeping on in that regard. So between wealth institutional and having a flagship product back in the market in Q4, we do anticipate it being strong.

[Craig Siegenthaler, analyst]

We were looking for an update on Oak Trust's fundraising trajectory. So I was wondering if you could share how many large retail platforms is on today and if you have line of sight into more platform additions over the near term, and any other comments around its network potential will be helpful too.

[Alan Kirshenbaum, executive]

Sure. Thanks, Greg. We are currently live on three platforms, three large platforms. We added one currently in the fourth quarter, and we anticipate coming on one or more additional large platforms in the trajectory continues to look strong, again, in the face of incredible headwinds in the world of real estate. And certainly, relatively speaking, very, very strong flows that we've seen to date. If you recall, we've raised about $2 billion, primarily from really one wirehouse platform in the face of a number of things that have happened over this past year and in the face of showing headwinds, as I said, in real estate at large. So we continue to be cautiously very optimistic about continued trends up into the right in what we can do with our ORAN product in particular in 2024 and forward.

[Marc S. Lipschultz, executive]

I'll just add something to that. And looking kind of the two comments, my comments on Alan's comment, together. ORAN is a great example of a truly distinctive product in the real estate space and one where we see really substantial long-term potential and growth. It is a far more durable product. We continue to generate extremely attractive positive returns in during where people are maybe a little less discerning about risks, those distinctions don't appear significant, then you get into a world of uncertainty products that are really built for durability, which is a hallmark of what we do at Blue Owl really same. And that is in small part why the ORAN is by far the #1 net fundraiser in the market. And we are continuing to grow at a time when the world of real estate is out of favor that's exactly what makes the opportunity for ORAN and for us, so substantial because we're delivering excellent returns to that market and frankly, originating at a really attractive cap rates with outstanding counterparties.

So that is an area where I think you'll continue to see also. We look forward. We think it's one of the most exciting areas we have. We see it on the institutional side, frankly, as well. We have already closed $4 billion for Fund VI. Which was our target, we'll hit our hard cap of $5 billion, and that will be double the size of our last fund and a market again where everyone else in really is going the other way. That's that kind of durability, predictability and product differentiation that's going to continue to be our hallmark. And I do think rents in particular, will be an extraordinarily attractive growth engine for us. It produces a great deal with great predictability and stability.

[Operator]

Our next question comes from the line of Alex Blostein from Goldman Sachs.

[Alexander Blostein, analyst]

Actually, a question for Doug, maybe going back to the first point you made in the beginning of the call. around some of the changes in sort of leadership priorities on how you guys may be spending your time. So maybe help us frame kind of what your strategic growth initiatives are that you expect to focus on over the near term? And really, which one of these are you expecting the demo sort of needle moving in terms of revenue growth into 2024.

[Douglas Ostrover, executive]

Sure. I'm so happy I got a question. I was sitting here dying to speak First of all, let me just say, I'm not going anywhere, and I for better or worse, you're going to be stuck with me for a long time. I'm incredibly proud of what we've built. And I think we're in the early innings of taking this business to a whole another level. And we've always wanted to create and I think we're executing on becoming like one of the most unique alternative asset managers. And just for everybody listening, I really plan on just spending as much time as possible with our stakeholders, our LPs and shareholders. Look, we have a number of initiatives, and I'm happy off-line to go into a lot of them.

But let me just give you one that I think will resonate. About 6.5 years ago, we saw a really interesting opportunity in the software space. It was a growing sector. There were no dedicated pools of capital there. We launched our first dedicated software lending product. And today, we have about $20 billion of capital focused on that sector. If you look at what we've done in health care today, we've spent a lot of time working with buyout firms. We've done, I think, almost $14 billion of deals in the space and have a great track record. We've added expertise in royalty [indiscernible]. We've now -- we just made a small acquisition to have life sciences expertise. And we're spending a lot of time thinking about could a dedicated health care product be comparable or the TAM is certainly bigger than the software space. So that's the kind of thing we're working on and where I plan to spend the bulk of my time.

[Alexander Blostein, analyst]

We definitely look forward to still speak with me. So my second question, maybe less strategic and a little bit more macro. So I think this one is for you. I think in your prepared remarks, you suggested that margins will hover around 60% for the next several years. I guess I'm just better trying to understand why isn't there more operating leverage in the business that's growing revenues at a pace that you guys have been able to put up and are likely continue to probe the next years.

[Alan Kirshenbaum, executive]

Sure. Thanks, Alex. So we've talked about FRE margins. We think operating at 60% FRE margins, very strong margins, obviously, among the best or the best in the industry. And as we continue to grow, or just talked about some new product launches. As we continue to grow our business, we're going to continue to invest in that business, whether it's people, whether it's real estate, whether it's placement costs, whether it comes. And so I would expect a high growth rate for our expense line, no different than our revenue line. Obviously, ideally, our revenue line outpaces the expenses. But as we continue to reinvest in the business, I continue to think a 60% FRE margin is the right place for our business to operate for the next few years.

[Marc S. Lipschultz, executive]

Alex, look, there is -- would be natural scale economies to your point. But we continue to be very focused, not just measured in quarters or even a couple of years, but many, many years, not continuing to deliver really strong and dividend growth. And so we do want to continue to put some capital and some of our available revenue into starting new products. We've done a lot very successfully organically, and we continue to want to do that. We want to continue to invest in building the infrastructure, world-class infrastructure in our organization to be the best in the areas we're in. I think already the highest margin in the industry, it's not particularly a priority to see how to make that relative to making sure we continue to grow revenue at an extremely attractive rate and therefore, convert that into FRE and in dividends.

[Alan Kirshenbaum, executive]

When you think about what we're investing in, Alex, we think about health care, as Doug just mentioned, in terms of organic product launches, Think about our strategic equity products that we're in the process of launching these are all organic that we're building from scratch internally here or that we've been building from scratch. Think about continued investment in our institutional fundraising platform, continued investment in our wealth fundraising platform. These are all things that are critical to that revenue growth that we continue to talk about. And we pull the lens back and you think about how simple our business is we take an RV revenue growth number to 60% FRE margin, that's our FRE growth, and that translates to very high continued dividend growth year after year.

[Operator]

Our next question comes from the line of Patrick Davitt from Autonomous Research.

[M. Davitt, analyst]

My first one is on deployment. [ Craek packer ] was super bullish on the point on your most recent update call. And indeed, the gross net originations were up 30% sequentially, but both FDA and inflow and transaction fees were down sequentially. So could you help us better frame how to model the ins and outs of the movement of those line items against ecom levels, which were obviously much better.

[Alan Kirshenbaum, executive]

Sure. Why don't I...

[Marc S. Lipschultz, executive]

I'm going to through this. Let me start on kind of what we're seeing in total in the marketplace originations. We obviously driven from that, and then Alan will connect in with some kind of specific questions model it, so to speak. So your observation of course at least not on the originations were up and measured in percentage terms, up quite substantially at 30%. That's pretty meaningful in the context of our business. That said, we're still at levels obviously below originations where they were a year ago. when times were much more active in the M&A market.

So a couple of observations that remain true today. First and foremost, the direct lending role in the financing markets remains extremely substantial. And I don't know if you like to use the word market share. I'm not a big fan of the word market share because it suggests that we and the banks are competing for the same financings were really not we're offering completely different value proposition, and we're kind of holder, not an intermediary of debt. But in any case, the us that work for a moment as a shorthand, share of direct line is extremely high, and Blue Owl's role remains leading.

We continue to be absolutely a key driving force in many of the very biggest financings for the very best companies and big sponsors. So all of that is very positive and part reflected in the 30% growth.

On the other hand, it is a statement of the obvious that M&A remains low in total. And we can only have -- we can have a shares we all lie want unless there's M&A activity can translate into so many dollars. And sitting here today, we continue to see good activity levels in terms of inflows, certainly seems to be more convergence between buyers and sellers in conversion prices quality of assets is excellent, the things we are seeing, the things we are originating, the quality is outstanding. Now that may reflect our own origination and our own very, very selective financing choices. We've looked at 8,400 loans to make the 500 or so we have. But I think it also reflects the reality of the marketplace today, which is higher quality companies or what can be sold. And higher quality companies are ones that can be financed certainly by us, we focus on very high quality companies. And so I think in total, what we're seeing is a very, very strong position in a kind of a M&A market, it will return. One might have thought a few weeks ago, return sitting here now with the geopolitical world we're in. I don't know you all have as good a purchase any, but we have had a -- continue to have a very nice pipeline of certainly a very high-quality product. And with that in terms of how to think about the flow and out, we going to turn to Alan a little bit on that one.

[Alan Kirshenbaum, executive]

Great. Thank you, Mark. So Patrick, when we think about -- there's a number of different factors that all drive through what you're referring to what your question is, when we have fundraise, obviously, fundraise raises our AUM and fee-paying AUM generally speaking, we'll have some fee-free capital that we'll raise from time to time. like what we closed a little bit of in 3Q that goes to AUM, but obviously doesn't accrete to fee-paying AUM. We'll have AUM going up for fair value increases. That also doesn't decrease the fee paying AUM gross deployment will, sometimes we'll have paydowns during the quarter on loans that we originate that are pay back. It doesn't leave the system, that just needs to sit until it gets redeployed. So you have different things in different of those ratios up and down. And then you also have debt. So for us, there's a number of our products where we earn a management fee on debt on total assets, so equity plus leverage. And when we raised that in the product, that goes to fee paying AUM. So the they won't always move in sync. But generally speaking, you should see all of them increase over time.

[M. Davitt, analyst]

Okay. And any update on thoughts about expanding into more kind of closed-end fund wrappers with some of the other large drag winning players do.

[Marc S. Lipschultz, executive]

I mean other closed-end fund wrappers meaning?

[Alexander Blostein, analyst]

Like a more institutional kind of drawdown type fund structure.

[Marc S. Lipschultz, executive]

Got you. We -- yes, we have a strategy of being, as you know, the market leader in large-cap, high-quality financing solutions. We have a model that's distinctive, which is anything we originate and get shared between the handful of funds that we manage. We have a much, much simpler business, both understand to manage infrastructure, as you know, our peers and fewer different vehicles, as noted. However, the answer to your question, yes, we continue to look at ways to meet the market where they want it is to say, to meet structures that serve different constituents needs.

So yes, we have continued to expand the types of offerings we have to your point about other types of closed-end funds that may look like more traditional funds, absolutely. We're pursuing -- putting those in place as well. we're all about creating the on-ramps that meet the needs of our investors. So that's designed for them and then delivering to all of them a common high-quality experience by being able to share in every loan that we make that's appropriate to a strategy. So that itself, as you know, is pretty distinctive. So we will continue to add those on ramps into our product suites. Yes.

[Alan Kirshenbaum, executive]

I think I would just add here, Patrick. Generally speaking, we have a wrapper for each type of distribution channel for each of our strategies. A lot of those wrappers will take both institutional and clients and investors, but we do have PLP structures that meet the needs for each of our strategies. Some of them are just not as scale as let's say, our PDC platform. And so they don't drive the numbers as much, so you don't hear about them as much on these earnings calls, but we do have products that suit those needs.

[Marc S. Lipschultz, executive]

And I realize this isn't the question that you asked exactly but I just want to add one other thought. But look, it is not our intention, though, to proliferate products so that we can just gather assets. We said this before, we are keenly interested in growing FRE and dividends. We are not keenly interested in growing AUM for the sake and growing you, there's a lot of very low margin AUM that's available, right? And so gathering assets launching vehicles, and we're just not going to pursue having dozens and dozens of vehicles just so we can get a dollar. We want to just get very high-quality dollars. Our fee rate is the highest in the industry. And that reflects the quality of what we deliver to investors and as fast as we raised. And that I think will continue to be very important to us. We're not in the AUM gathering business. We're in the outstanding results and market leadership business.

[Operator]

Our next question comes from the line of Steven Chubak from Wolfe Research.

[Steven Chubak, analyst]

I wanted to start off with a question just on your European expansion plans. There's been some press articles suggesting you're exploring a deal for a direct lender in Europe. I don't expect you to comment on that specific deal. Maybe just speak to your broader preference to build versus buy to expand your footprint in the region and that the recent speculation that peers are looking to launch no carry credit funds in Europe informed your appetite to grow.

[Marc S. Lipschultz, executive]

So as noted, and I appreciate it, obviously, we haven't comment on any particular speculation in terms of M&A. But to say this. Look, we have a firm, I would put in order three kind of priorities when we think about how we grow our business. well, all of course, is delivering outstanding risk-adjusted returns at all moments, right? Our LP experience is monumentally important ultimately to us. it actually doesn't impact our financials at all because we are a fee-based business. So our business is distinctively predictable, we don't have performance fees. But to us, delivering outstanding results will always be the lifeline from our point of view.

Now with that said, there's three ways for us to grow the business, all three of which we have done and we'll continue to look at. But in order it is organic growth of our base product business -- base products. Again, we have market-leading positions, decided the market leading position in triple net lease for high-quality, high credit quality counterparties decidedly the market leading position in GP strategic capital. And one of overstated, one of the market leading positions in direct lending and continuing to lead those markets focus on to have scaled products, which lead to very strong margins and strong fee rates because we have a great value proposition for those investors is going to continue to be where we will focus first and foremost.

And remember, because our capital is permanent. 93% of our revenues are based on permanent capital. So that growth every time we bring in a dollar we're keeping those dollars. We're layer cake, not the spinning wheel. And as you've heard us say, we'll take it for every dollar for every $1 that leaves our system by virtual say, realization or return. We have $5 coming in. Our average competitor has $2, that is a huge difference in growth impact in that organic phase. So that's the priority one.

Priority two is add in products where we can ultimately become the market leader, a market leader, the most important need to deliver a really strong experience. Take our Blue Owl strategic equity product, GP-led secondaries. Huge opportunity. That's a place where we will do our first close in Q4. We have a really distinct solution. We think that could be a very large addressable market. And we have a capability to originate underwrite make investment decisions that is truly distinctive and we think will allow us to deliver outstanding results. So part two, build new organic products. Doug has talked about health care. We can do in health care, what we've done in software and technology. We have the capabilities. We've built out, you saw our acquisition of the Cowen Health business. rounding out extremely deep intellectual capital and relationships to do that.

Three is acquisitions. When we can find a business as fantastic as Oak Street, we're going to want to buy it and add it because it's incredibly accretive and additive and every marker is a brilliant investor and senior leader for this firm. And so that's an addition along with obviously toric growth. It's been our highest growth business. So when you find that cultural strategic, we're going to do it. So I appreciate that was all a lot, but I do want to really talk about how we build our business going forward as for therefore, say, European direct line.

Look, strategically, it's a really coherent place for us to be, right? We are the market leader in U.S. direct lending. Now we like the U.S. market a lot. The risk return is very compelling in the U.S. market. In the European direct line, makes perfect sense.

Is it necessary? No, it's not necessary. If we can find the right platform, whether that would be organic inorganic, I'd say in Europe, it's more logically inorganic acquired, given the scale and complexity of the marketplace. But could be either over time. We'll look at both. And getting that market is something that would be very logical and certainly something we're serious about. But we don't have to do it. We're only going to do it if we can do it really, really well. And when we do, we're going to deliver great results doing so and we're going to be disciplined about it. So that's kind of the framework when we think about European direct lending, good business, good business for us to be on the right basis. It doesn't make our U.S. business better. It doesn't make Blue Owl better unless we can be a market leader and that's what we're focused on.

With that ad and last question you raised about people kind of fee structure in Europe our fare the highest fee rate in the industry for a reason because we deliver great returns, and people are willing to and should be willing to pay for that. It's a net result that will matter for our investors. I get comments anybody else's specific strategy. But look, when you're trying to get into a market like direct lending where we're a leader, sometimes people can try to attack it on price. I don't -- it's not part of the way we see the world, it's not part of the way we operate, but look in every market where someone wants to get in or is trying to catch up. Sometimes you may try price as level.

[Steven Chubak, analyst]

Maybe just for my follow-up on credit performance. The credit backdrop has been benign for the last decade plus. We're starting to see some evidence of defaults rising with higher for longer rates, not a surprising development, but one variable that we've been paying close attention to is recovery rates. That's steadilly declining for two decades plus my you. I know you spoke about LTVs in the low 40s, provide significant loss cushion. I just want to get thoughts on what recovery rates could settle out this cycle, especially given your heavier exposure to growth of your sectors at just software and health care.

[Marc S. Lipschultz, executive]

Well, let's start with -- I would say how many years has it been that people said, "Oh, the credit problems are coming. The credit problems are coming just don't know in direct lending these sort of very morphine you're kind of a more of a spooky sounding question, which you are I think you can guess sometimes with people are that advocate that story.

Let's just start with a few facts. The fact of the matter is we haven't seen any uptick in defaults. Any uptick in losses in point of fact, we're still running at a 6 basis point annualized loss rate since inception, all of which has been offset by realized gains and a bit more than that. Now I appreciate and agree. It's been a general benign environment. We did had a pandemic, we have had or Ukraine, we have had rates rise dramatically, and we've had many peers experienced a lot more credit problems than we have. I'm not saying that with complacency or arrogant or anything like it. But at the end of the day, there are differences in the way we operate the credits we pick, how we pick up. You noted the most important part from our point of view, which is loan to value, having lots of cushions both in percentage and absolute terms. Remember, when we're lucky enough to partner with [ Tomo Bravo ] and lead a financing for Saint Ana plan, not only is it a 70% equity check, it's a $7 billion equity check. Both of those matter in the percentage and scale, and that's why we focus where we do.

So with regard to default rates, let me just observe that the signs that will presage that will come ahead of a meaningful change in default rates. Those are not in any manner flash and yellow, yes, that's not to suggest that there can't won't be a recession at some point, in fact, there's credit people to be crazy for us not to contemplate and plan for that. But today, our portfolio right now, revenue and EBITDA on average across the portfolio grew 10%. Quarter-over-quarter. I mean that's pretty robust. So that's partly the favorable selection of the kind of business we underwrite. But pretty favorable, we aren't seeing any meaningful change in requests for all the ordinary course cement. We aren't seeing any meaningful change in Quest for pick. We aren't seeing meaningful changes in running out of liquidity. So say all of that to say that we don't see any of those not just warning time, they sort of are checkpoints that have to happen before you get to meaningful defaults.

Many get recoveries to your point, which we could agree more, in some regards, a credit line. because it defaults in itself is a problem. Now a better opt to avoid them and we can count the number to plus we've had literally on things like fingers. So kicking deposit really low remains the most important thing we can do and will do. But when we've taken companies, our recoveries have been extremely strong. And keeping loan-to-value is the way to ensure that. And you're running at 40% of a purchase price in a loan, a fire sale still get to your money back. And that is really important. That's why we like these big durable strategic assets. We said this from inception. Lots of questions on the way as we led the market to a distraction of lender of first choice going to the big crisis, why a lot to talk about there's more opportunities in the small market. There's not the opportunity is to be in the where you have that durability because they're strategic assets that someone will buy even if they stumble, even if they get in trouble. And that to your point, which we couldn't be more is all about maximizing recoveries.

The last part you said was in the growth of your business and software businesses. Actually, the reason we like those businesses is because the recoveries will actually be the highest in our view. Those businesses if and when they have a problem, they still have enormous amounts of gross margin, right? These companies, the ones we finance and the ones that are bought have extremely high -- lessen the growth rate assumes that all has to get tempered if we're going to have these problems that you're talking about. But these are still businesses that have hundreds of millions of dollars of customers that are really -- or on time to purpose a dependent on the use of a piece of SaaS software, we have 80% to 90% gross margins. taking that and consolidating it with another strategic owner of software business is exactly the kind of way out that we're talking about. Someone wants that business. That is a valuable cash flow stream, unlike a traditional industrial business. We let poor in a deep cycle, and nobody wants the capacity. Who wants a factory that doesn't have any use for its capacity. That's just not what you have in the software businesses. So exactly why we like it. Its why [indiscernible] fact, we have still not ever have a default. Software business let alone the all problem with the recovery.

[Operator]

Our next question comes from the line of Brian McKenna from JMP Securities.

[Brian Mckenna, analyst]

So you've been clear about your expectations for growth in 2023 and then also have a dollar dividend target out there for 2025. So first, are you still comfortable with the dollar dividend target at this point? And then how should we think about the underlying trajectory of growth in 2024. This year, FRE growth will total in the low to mid-20s. So that good starting point for next year.

[Alan Kirshenbaum, executive]

Thanks. I'll take the last part of that question. When you do go out to the dollar share dividend based on our Investor Day, you could certainly see both revenue growth and FRE growth for the next 2 years in the approaching 30 or 30-plus percent range. I'll leave it to Marc to touch on the dollar share dividend and how we feel about that goal.

[Marc S. Lipschultz, executive]

Look, $1 a share dividend remains our north star. I just talked about those new times. We are about durability, predictability, FRE growth and dividend growth. And the dollar remains our target.

There's no doubt to be certainly not observed. We're in a more volatile world. We have been during the course of this year. And now in the last few weeks, it's going to be kind of wireline not to say we're in an ever more volatile world given what's happening geopolitically. So does that create incremental risk to that dollar? Sure, it creates some incremental risk of incremental variability. But remember, because we're a permanent capital business. And because we have very predictable fee rates. And because we have all this capital that's already in the system that's being deployed, our model is extremely durable. So the band around, say, the dollar is a tight band. We don't have performance is on things that are going to drive meaningful variations. So is there a little more risk to it Sure. There's a little more risk to it. But that risk is very banded and it continues to be our north star is driving our way to that dollar.

[Brian Mckenna, analyst]

Helpful. And then, Alan, I believe you noted that Real Estate Fund VI is 20% funded or committed Clearly, the deployment environment is very constructive right now. You noted a healthy pipeline of potential deals. So how should we think about the quarterly pace of deployment for this fund kind of moving into next year? And then can you remind us at what level of funded or committed you typically start raising for the [indiscernible] .

[Marc S. Lipschultz, executive]

So on the real estate front, we're very active. This is a good time for the triple net lease real estate business. for a couple of reasons. One is, look in a world with much less functional capital markets, the use of a real estate asset as part of the financing plan more interesting to every kind of user. Remember, our partners in that business are people like Amazon and Walgreens and Starbucks is not so these are people that have financial challenges, but using real estate versus where the world was a couple of years ago, were issuing nearly three IG borrowings, that's changed, right? So it creates more interest in these types of novel solutions.

We are originating today at incredibly compelling cap rates close to 8% kind of cap rates for IG counterparties. So we love what we're getting. The pipeline is very, very active as a result. We've already now deployed about 20% of Fund VI. As I said, we're doing great on fundraising for Fund V, perhaps no surprise given that we've been able to continue to generate really outstanding returns in an asset class that many people have found they struggle with now. So in terms of exactly the deployment, again, like anything, it will vary quarter-to-quarter, but I would call our pipeline in real estate extremely strong. So we that continue to be a pretty robust deployment of arena for us.

[Alan Kirshenbaum, executive]

And we'll typically look to the industry level, 75% to start thinking about the next follow-on funds.

[Operator]

Our next question comes to the line of Brennan Hawken from UBS.

[Brennan Hawken, analyst]

You guys had an acquisition here this quarter, a small one with Fund IV. Could you let us know what the impact was for revenue from that deal, what we should expect in the fourth quarter? And then more broadly, this is not the first CLO manager you bought. Should we continue to expect you to roll up some of the CLO managers and build out the business and the scale in that business for yourself?

[Marc S. Lipschultz, executive]

So with regard to Fund IV and then the more general question, I would -- or the framework I described look, we'll always look at acquisitions where they are additive and or strategic, if you want to use that term. And PARP's a really great example of this build versus buy organic. And I also think maybe gets -- sometimes not lost, but I think it's worth calling back out in the context of things like growth and fundraising versus AUM, at the end of the day, we can launch CLOs and we can like every other firm use a bit of capital to do that or maybe even in some cases forms a lot of capital, to do that, and that would lead to raising $1.6 billion that would show up on our fundraising column. But instead, we say, look, we can for what turned out to be really de minimis consideration, acquire these contracts and instead of building them in that case buy them, that actually is another $1.6 billion. If you pay AUM join our system. Again, I don't want to get overfocused on AUM. But I do want to point out that in our system, we're constantly going to look at what is the best way to get those assets most effective way to do it that is accretive for the continued growth and dividends of our business.

So Fund IV is a great example of substituting I would say, an acquisition for very little investment place of an organic build of the very same CLOs that we could have undertaken. So that's the well we continue to add to that. Sure, opportunistically, we're happy to add to it. CLOs are a much lower-margin business. Our specialty testing is in the world of private capital solutions. So you should not expect us to become a large liquid manager. That's a very different lower-margin business. Our products are much more distinctive in the world of private. So we stay focused on what we're really, really good at. So it's an area we can continue to add Two, it's not an imperative for us to become particularly large in CLO.

[Brennan Hawken, analyst]

And the impact of revenue for the quarter, what we should expect for 4Q?

[Alan Kirshenbaum, executive]

Brennan, we haven't disclosed that. .

[Brennan Hawken, analyst]

Okay. Then one last one, more of a sort of housekeeping item. Now that member senior management are going to be paid in all stock. Should we expect that adjustment, the equity-based comp adjustment to sort of ramp a little bit here from here? What kind of impact should we expect there?

[Alan Kirshenbaum, executive]

Sure. So all of our senior members of the management team, Doug Mark, Michael, Marc, others have been taking stock comp entirely for the last 2-plus years, almost since we've been a public company. So that continues a tremendous alignment with our shareholders, and you shouldn't expect a meaningful increase due to that. .

[Operator]

Our next question comes from line with Kenneth Covington from JPMorgan.

[Brian Bedell, analyst]

This is Alex on for Ken. Two questions, please. The first one, can you double click on the Real Estate segment again? You posted positive returns, which is definitely a nice difference versus what we've seen in some other parts of the market. Can you please speak about what's sort of driving that and maybe some the differentiation that you're seeing relative to other players? And then the second question is, I noticed that just about the Cowen Healthcare acquisition, if you can talk about that as well, that would be great.

[Marc S. Lipschultz, executive]

Great. Yes. I'm happy to comment on. Let me start with the Cowen health care question. So Cowen Health care, another great example of being able by Blue Owl platform to grow both capability and add to our earnings simultaneously. As Doug commented, Healthcare has been a very, very significant focus for us we've deployed significant capital in health care lending, royalties, structured solutions. And now by virtue adding the Cowen business are adding an even greater depth on the pharma side. And in the pharma side of the business, of course, there's technical skills involved their knowledge that the Cowen health care team has in spades. This is -- they made investments in 60 different companies over time, pharma-centric companies.

So by adding that capability, we now have added to a full spectrum ability is within health care that will allow us to really take that business forward in life sciences over the next 20 years in our humble view is going to be an area of enormous opportunity, much like infoservices well in the last 20 years, probably not a coincidence. So we've been able to build the market-leading position in software lending and looking ahead and see an opportunity in health care. Some similarities. So that is kind of on a pace of strategic reasons. But done the way we have by adding Blue Owl and make a Blue Owl platform that people want to join, we have team to say, "Look, this where we want to bring our platform". the consideration was very, very minor for that business because it was really about the team coming and finding a home. So what we have managed to do in that case is add to our capabilities, terrific people and add $1 billion of assets and add earnings as a result. So it wasn't ore. We didn't have to go pace on huge price in order to get admission. Quite the opposite. We have a great team join us, get a team and assets and earnings. So that was really what's behind the Cowen business, very excited about Cowen and his team.

With regard to real estate. So on the real estate side, we've been able to continue to post attractive returns we have a very, very distinctive proposition. We don't do in real estate what other people do. We don't own things that have to be released. We don't own things that have vacancies. We don't own things were this inflationary environment and the expenses flow through to save a vacancy now you also have the expenses. We have triple net leases, the expenses, inflation that is obviously going to curing in the world. That's the responsibility of our tenants. Our tenants sign up with us for 20 years at a time. If you look at, for example, in Q3, just to give you a sense of the power of this model and because again, we have a value proposition to our investors. We partner Walgreens of world. We're not just out in the market buying for brokers. I have heard before. I can recall being in the siding we're one of the leaders -- one of the biggest brokers in the country, we never sell anything to Blue Owl because they originate that rates way higher waver tractive than we sell that. And you can see that in our practice.

So if you look to [indiscernible] two for example, we purchased 71 different properties for over $1 billion. At an average cap rate of 7.9% with a 16-year average lease. I don't mean to dispute numbers, but just think about that. I mean roughly 8% cap rate, 16 per year average lease triple net. So we are not taking risk. In fact, we made basically the equivalent of loans to mostly IG companies and on real estate as a backup in the case that we need it. At the same time, during the same period, we sold 16 properties for over $0.25 billion, $267 million to be precise at an average cap rate of 5.4%. So we're buying the date, we're selling to 5.4%, generating on average of 31% net IRR and a nearly 2x net equity multiple.

So why do I say that? What I'm saying is our business and the role we play as a strategic partner to large corporates, allows them to conduct what amount for wholesale transactions get dollars that matter to them. They're not going to tell me store. It doesn't do any. It's on like all warehouse. It has a limited impact, having a true partnership with someone that has billions of dollars to offer them, that has value, so we can buy wholesale. And then at times, we will go ahead and sell those properties and we consistently out at price is meaningfully better than the prices we acquire.

So here, even in a very disruptive market, rising rates, real estate is disrupted. I mean not this hard to describe a worse environment for real say, but there's a pretty copy one, we were buying it at AUM selling at 5.4%.

[Operator]

Our next question comes from the line of Mike Brown from KBW.

[Michael Brown, analyst]

Okay. On the fundraising front, it looks like take all 3 business segments could see a better year 2024 versus the kind of calendar 2023. Can you just maybe help me summarize the building blocks for next year to GP solutions Dyal Fund VI and direct lending grow from PTC, SMAs and perhaps CLOs. And then in the real estate side, Fund VI should be done, so I guess most of the contributions would actually be from ORAN. Is that correct? I'm summarizing those pieces correctly? I guess if you just some all up would be kind of the most important raising campaigns.

[Alan Kirshenbaum, executive]

Yes. You summed it up correctly, Mike. BDC's SMAs on the credit side, CLOs, GP stakes, Fund VI and ORAN, and you're right, Fund VI will be largely wrapped up by then. There are new product launches that we talked about earlier that Doug and Marc hit on whether it's health care, we have an interesting new real estate product or products coming out to the market in 2024 that we think we can raise some good dollars on and some other strategies we haven't talked about the day that we think could be interesting in 2024.

[Michael Brown, analyst]

Okay. Great. So I guess more comment on those. And then maybe just quick follow-up on the dollar dividend commentary. You've really delivered exceptional growth on the dividend thus far and your payout has consistently been in that kind of to high 80% range relative to GP. Is that payout still the right way to think about that dollar dividend as well in 2025? Or is there kind of like an evolution in the business or a change in the balance sheet that would allow you to maybe increase that pay out closer to 100%. Or even if you were to do so somewhat temporarily.

[Alan Kirshenbaum, executive]

Yes, I don't think -- it's a great question, Mike. I don't think there's an evolution in the business. I have commented on previous calls that, that number can go up and down. We've seen it as low as mid-80%. I think this quarter was about 88%. You can see that certainly rise in some quarters and some years, I think I framed it as it could be as low as an 80-ish percent, maybe a little lower to be as high as 90%, 95%. So we're going to continue to focus on dividend growth. We've got a 28% CAGR on our dividend growth since becoming a public company. It's the highest out there. And we're all very line. We own 25% of the outstanding shares. So we sit right there with our shareholders. and we'll continue to focus on strong FRE management fee growth, FRE growth and without a doubt, of course, dividend growth.

[Operator]

Our final question today comes from Patrick Davitt from Autonomous Research.

[M. Davitt, analyst]

I'm going to take a flyer on this one. Would you be willing to give an early read on the November 1 close for the 3 flagship [indiscernible]?

[Alan Kirshenbaum, executive]

I think, Patrick, we may have to decline commenting those are SEC registrants and they have not filed yet. I think you heard earlier in the call, we feel like we have very good momentum in the wealth channel quarter-over-quarter increasing. And we think we have very good prospects, if not very strong prospects for what we're going to see in the wealth channel.

[Marc S. Lipschultz, executive]

Well, thank you all very much. We really appreciate the time, and we're going to continue to focus on strong, predictable, high growth and delivering those dividends to all of you.

[Alan Kirshenbaum, executive]

Thank you, everyone. Have a good day.

[Operator]

Thank you, ladies and gentlemen. That does conclude today's conference call. Thank you for participating. You may now disconnect.