Blue Owl Capital Inc., a prominent player in the alternative asset management space, has made waves in the real estate finance market with its recent acquisition of Prima Capital Advisors for a hefty sum of $170 million. This strategic move signifies Blue Owl's intent to capitalize on the burgeoning opportunities within the property market, leveraging Prima's expertise and assets to further bolster its investment portfolio.
Prima Capital Advisors, founded in 1992 by Gregory White, has carved a niche for itself as a leading real estate lender, primarily focusing on investments in commercial mortgage-backed securities (CMBS). With approximately $10 billion in assets under management, Prima boasts a robust track record of success, making it an attractive prospect for Blue Owl's expansion into the real estate finance sector.
The acquisition of Prima represents a significant milestone for Blue Owl, marking the creation of its Real Estate Finance strategy. By incorporating Prima's capabilities into its ecosystem, Blue Owl aims to address the growing demand for capital solutions in the real estate industry while diversifying its investment offerings.
Commenting on the acquisition, Blue Owl's Co-CEOs Doug Ostrover and Marc Lipschultz emphasized the strategic importance of the move, stating, "This acquisition of Prima represents a further expansion of Blue Owl's suite of capital solutions, adding a differentiated and high-quality real estate lending capability and further diversifying our real estate platform."
The real estate market in the United States has been undergoing significant shifts, with higher borrowing costs exerting pressure on valuations and making it more challenging for property owners to secure loans and refinance existing debt. Against this backdrop, Blue Owl sees an opportune moment to enter the market, as traditional lenders slow down and interest rates and spreads increase.
Marc Zahr, Co-President of Blue Owl and Head of Real Estate, highlighted the favorable conditions for lenders entering the real estate finance space, stating, "As rates creep up, especially with the combination of higher rates, less credit availability and spreads increasing as well, when you take that combination, it makes it harder for groups to transact, which makes it a better buying opportunity."
The acquisition of Prima is expected to enhance Blue Owl's position in the real estate finance market, providing the company with access to a broader range of investment opportunities and enabling it to capitalize on evolving market dynamics. Additionally, the addition of Prima's seasoned team of professionals is poised to strengthen Blue Owl's capabilities in the real estate sector, further solidifying its competitive advantage.
As part of the acquisition, Jesse Hom, former Global Head of Real Estate Credit at GIC, will join Blue Owl to lead the newly created Real Estate Finance strategy. Hom brings with him a wealth of experience and expertise in real estate credit investing, positioning Blue Owl for success in its expansion into the real estate finance market.
Jesse Hom expressed enthusiasm about the opportunity to build on the success of both Blue Owl and Prima, stating, "The opportunity to build on the tremendous success of both Blue Owl and Prima to create a dedicated real estate finance strategy is a unique and exciting prospect."
The acquisition of Prima underscores Blue Owl's commitment to strategic growth and diversification, as it continues to expand its presence in key markets and capitalize on emerging investment opportunities. With Prima's strong track record and Blue Owl's robust ecosystem, the combined entity is well-positioned to navigate the complexities of the real estate finance landscape and deliver value to its investors.
