Blue Owl to Acquire Sale-Leaseback Specialist for $950M

Marc Lipschultz, Co-Founder & Co-President, Blue Owl Capital. Image courtesy of Blue Owl Capital

Alternative asset manager Blue Owl Capital Inc. has agreed to acquire Oak Street Real Estate Capital LLC, of Chicago, and its investment advisory business for $950 million.

The deal is expected to close in the fourth quarter, subject to customary closing conditions.

Founded in 2009, Oak Street focuses on two primary strategies: structuring sale-leasebacks, which includes triple-net leases, and as well as providing seed and strategic capital.

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The closing purchase price of $950 million will be funded through a combination of cash and Blue Owl common units. In addition, on the achievement of certain performance thresholds, Oak Street equity holders will be entitled to earnouts up to a total of approximately $650 million, payable in cash or in Blue Owl common units.

In a prepared statement, Marc Lipschultz, co-founder & co-president of Blue Owl, acknowledged Oak Street’s market-leading platform in the net-lease sector, adding, “We believe their focus on flexible real estate related financing solutions will be very complementary to our existing direct lending and GP solutions capabilities.”

Michael Rees, Co-Founder & Co-President, Blue Owl Capital. Image courtesy of Blue Owl Capital

Michael Rees, co-founder & co-president of Blue Owl, added, “One of the many key synergies with Oak Street is that the firm provides leading products to the high-net-worth and retail channels, a critical part of Blue Owl’s business strategy.”

On the merger’s closing, certain members of the Oak Street leadership team will remain in place, and Oak Street’s Chicago office will become a Blue Owl office. In addition, Oak Street CEO & Co-founder Marc Zahr will join Blue Owl’s board of directors and executive committee.

Kirkland & Ellis LLP was legal counsel to Blue Owl. Berkshire Global Advisors was Oak Street’s financial advisor and Willkie Farr & Gallagher LLP its legal counsel.

Net-lease experts

Oak Street’s net-lease platform focuses primarily on single-tenant properties, net-leased to investment-grade and creditworthy tenants, under long-duration leases.

In January of last year, Oak Street acquired about 2.1 million square feet of space from Bed Bath & Beyond Inc., including not only retail stores and a distribution facility, but the retailer’s headquarters in Union, N.J., too. The sale-leaseback deal was valued at $250 million.

In April 2020, Big Lots Inc. announced that it would sell four distribution centers to Oak Street under a $725 million sale-leaseback. The buildings, in Columbus, Ohio; Montgomery, Ala.; Tremont, Pa.; and Durant, Okla., total about 7.5 million square feet.