Good morning. My name is Joseph, and I will be your conference operator today. At this time, I would like to welcome everyone to the Blue Owl First Quarter 2022 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, press star one. Thank you. Ann Dai, Director of Investor Relations, you may begin your conference.
Thanks, operator, and good morning, everyone. Joining me today are Doug Ostrover, our Chief Executive Officer; Marc Lipschultz and Michael Rees, our Co-Presidents; 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.
We reported another quarter of strong results for Blue Owl, with AUM up 76%, private wealth fundraising up 172%, management fees up 51%, and FRE up 56% on a year-over-year basis. Pro forma for the Wellfleet acquisition, which closed on April 1, AUM would have been approximately $109 billion. Our business keeps 5% of our management fees and an earnings stream consisting of stable and growing fee-related earnings. Blue Owl's financial profile stood out. More importantly, as we look ahead, there are some meaningful fundraising initiatives starting to bear fruit, which I will highlight in more detail in a few minutes. First, let me start with some commentary on the broader market environment, which has been top of mind for shareholders.
Over the past quarter, we have witnessed volatility and dispersion in the public markets resulting from high and persistent inflation, a shifting interest rate environment, geopolitical events, and ongoing impact from COVID globally. These factors, unsurprisingly, created some near-term headwinds to industry-wide M&A and capital markets activity as investors paused to react to updated information, market expectations, and a changing investment landscape. Given our scale and patient permanent capital, Blue Owl has been a beneficiary of this market volatility as an increasing number of sponsors and private companies have looked to direct lending for flexible and dependable financing.
We are having dialogues on larger deals than we've ever seen, and in particular, this has been a very robust environment for our tech lending strategy, and the increasing number of public to private transactions have driven incremental market share towards direct lenders who can offer certainty of execution through what can be a lengthy process. For our GP Solutions business, the pipeline for investment has only strengthened as alternative asset managers evaluate the options they have for liquidity and growth capital in today's market. The opportunity for alternative asset managers to put dry powder to work has improved, pulling forward deployment activity and setting firms up for the next round of fundraising. For real estate, rising corporate borrowing costs should drive incremental demand for our net lease solutions.
In aggregate, we're seeing positive impacts to the investment landscape across Blue Owl as a result of the current market environment. With regards to the rising interest rate environment, as we discussed last quarter, we anticipate a net positive impact across the platform. We expect direct lending to be a beneficiary of rising rates as investor demand increases for senior secured floating rate assets focused on downside protection. Over time, the effect of rising rates would be positive for the net interest income of our loan portfolios, which Alan will touch on shortly. For GP Solutions, market volatility should drive demand for products managed by large, diversified managers benefiting the types of firms Dyal has typically taken stakes in.
With respect to our real estate business, we believe there will continue to be strong demand for real estate strategies with long-term contractual income that are positively correlated to inflation and backed by investment-grade tenants. Moving on to our first quarter results. We continue to demonstrate steady, robust growth, hallmarks of the Blue Owl business model as a result of our permanent capital and FRE-centric earnings. Since we don't have the volatility of carried interest running through our revenue, we just continue to add to the layer cake of earnings through new capital raised and deployed. Fundraising for the quarter was well-diversified with nearly $4 billion of equity capital raised, primarily from our diversified lending, technology lending, and GP minority stake strategies, bringing our last twelve-month equity capital raise to $11.3 billion.
For the second quarter to date, we're off to a great start, raising $2.8 billion across the platform. In direct lending, we have raised an additional $2.2 billion subsequent to quarter end across institutional and wealth channels. As we have spoken about in prior quarters, we anticipate that tech lending will be one of the fastest-growing parts of our business over the next few years as our strong performance and exceptional credit quality in that strategy resonates with a wide spectrum of investors. As it relates to our growing private wealth distribution, which we've also spoken about frequently as an important focus for Blue Owl, we continue to make very good progress in expanding our platform across products and geographies. $2.2 billion of the capital we raised in the first quarter, or over half of the total, was driven by private wealth.
This is over 4 times the amount we raised through wealth in the second quarter of 2021, less than a year ago. We are generating over 9% annualized organic growth just from our current private wealth flows, which are permanent capital and which we think we can grow meaningfully over time. This doesn't take into account any institutional fundraising, new products that we plan to introduce to the market or continued expansion of our wealth distribution platform globally. As of May 2, we raised a further $2.1 billion from private wealth across direct lending, GP Solutions, and real estate in the second quarter. As you've heard from us before, and will continue to hear going forward, we are very excited about the opportunity ahead in private wealth and look forward to sharing more developments at Investor Day on May 20.
Looking forward, as I think about the key elements of our growth over the next few years, I truly believe that each of our businesses has significant growth ahead. We see meaningful runway to raise capital across institutional and wealth channels as investors look for income, inflation hedge solutions, and downside protection in an uncertain market environment. Each of our businesses has generated scale and offers real competitive advantages that translate into differentiated investment performance, and the returns have resonated with our investors. Today, we have multiple products raising capital on various platforms globally in private wealth. Dyal five fundraising continues, and we are well on our way to fully deploying that fund and being back in the market for fund six. We also have, and will have a number of funds raising capital from institutional investors across direct lending and real estate over the course of the year.
Later this month at our Investor Day, we plan to lay out some key growth goals and get into greater detail on the investment and fundraising landscape that we see for each of our businesses. We hope to see all of you there in person or on the webcast and look forward to spending some time highlighting our strategic vision and the substantial growth we see ahead. With that, I'd like to turn the call over to Marc Lipschultz to give you an update on our direct lending and real estate businesses. Marc Lipschultz?
Thanks, Doug. As you can see on slide 16, we continue to expand our direct lending business with gross originations of $4.9 billion, more than double what we originated in the first quarter of 2021. Industry-wide, the first quarter was a seasonally lighter quarter for M&A and was also affected by market volatility. As Doug alluded to in his remarks, we continue to expand our market share driven by the predictability, privacy, and partnership that we offer to borrowers. We're also seeing larger deals come to the direct lending space, which we are very well-positioned to address given the scale of Blue Owl's platform and capital base. For context, last year, we evaluated over 40 investments with facility sizes in excess of $1 billion and signed or closed on roughly half of them.
Just in the first quarter of 2022, we sourced over 20 investments with facility sizes in excess of $1 billion and committed to roughly half of them. Of those greater than 20 opportunities, five had facility sizes in excess of $2.5 billion. We expect some of these to close during the second quarter. For the last twelve months, gross originations in direct lending have been $26.4 billion, or 3 times what we originated in the prior twelve-month period. We continue to see an extremely active pipeline setting ourselves up for a robust quarter in 2Q. Performance remains strong with gross and net appreciation of the direct lending products of approximately 1% and 0.2% for the first quarter, respectively, and 14.1% and 9.7%, respectively, for the last twelve months.
We've continued to focus on downside protection with a weighted average loan-to-value in the low 40s across direct lending portfolios. Credit quality remains very robust, with annualized net realized losses of approximately 5 basis points since inception. We raised $1.9 billion in direct lending strategies during the first quarter, of which retail constituted $1.4 billion, primarily for our core income fund, one of our diversified lending BDCs. Also contributing to the fundraising during the first quarter were closes in tech lending. As of May 2, we raised a further $2.2 billion across direct lending in the second quarter so far. Also on April 1, we announced the closing of our Wellfleet acquisition, which will add almost $7 billion of AUM to our second quarter numbers.
Our direct lending business continues to broaden in size and scope, and we remain optimistic about the growth opportunities we see ahead, supported by robust demand from both retail and institutional investors. Now, moving on to our real estate business. We continue to see a robust opportunity set with roughly $2 billion of transaction volume under letter of intent or contract to close and a near-term pipeline of more than $20 billion of potential volume. As of today, we've invested over half of the equity in our fifth closed-end fund, bringing us closer to launching our real estate fund six. As Doug mentioned in his remarks, our real estate strategy should benefit from investor demand for inflation-protected cash flows backed by investment-grade and creditworthy tenants. Our investment opportunity set continues to improve as corporate borrowing costs increase.
Contractual rent escalations are structured into all of our triple net leases, and 100% of all operating expenses, including cost increases, are borne by the tenant, which further limits the strategies from any adverse effects of inflation. Since inception, we have never had a tenant miss a rent payment, go bankrupt, or default on a lease, and we've generated a net IRR of 26% on average across our fully realized closed-end funds. Gross and net appreciation across our real estate portfolio of 5.7% and 5% respectively for the first quarter, and 36% and 32.1% respectively for the last twelve months. These are remarkable risk-adjusted returns for the underlying credit profile of these portfolios.
As we look ahead, we expect to launch our sixth real estate closed-end fund in the latter half of the year and continue to accept capital into our open-end fund, Net Lease Property Fund. We're also in the process of working on new products that we will look to discuss in greater detail at Investor Day. With that, let me turn it to Michael to discuss GP Solutions.
Thank you, Marc. Our GP Capital Solutions business has continued to benefit from the secular tailwinds across the alternative asset management space as more firms enter our investable opportunity set and as these managers' needs for capital continues to expand. Across our partner managers, we continue to see robust fundraising and deployment, particularly as the market sell-off created new and interesting investment opportunities. As of today, we have invested, committed, or have an agreement in principle to commit approximately two-thirds of what we expect to raise for Dyal Fund Five, and the pipeline remains strong. Performance remains similarly strong, with a gross and net IRR of 32% and 24% respectively for Fund Three and 127% and 81% respectively for Fund Four.
In addition to the $1 billion raised for Fund Five during the first quarter, we have closed on a subsequent $400 million of capital in April, bringing us to $7.2 billion raised for the fund. We remain confident in our prior capital raising expectations for this strategy. Further, we look forward to launching a follow-on vehicle sometime in 2023 as we become more fully committed in this current fund. As we look ahead, we're very optimistic about what the next year holds for the GP Capital Solutions business, given the constructive trends for growth and the demand we're experiencing for our strategies. Market volatility and shifts to the status quo will continue to create interesting fundraising and investment opportunities, and we will benefit from that environment as the premier capital solutions provider to these managers.
With that, I will turn things over to Alan to discuss our financial results.
Thank you, Michael. Good morning, everyone. I'm going to start off by walking through the numbers for this quarter, and then I'll touch on a few other items I want to cover today. I'll be making references to pages in our earnings presentation, as Anne mentioned, so please feel free to have that available to follow along. Okay, let's start off by covering our quarterly results. We closed our acquisition of Wellfleet on April first, so you won't see those numbers in our results until the second quarter. Our first quarter was another quarter of strong growth for our business. Management fees are up $41.1 million or 19% from last quarter and up over 50% from the first quarter a year ago when you adjust out catch-up fees for Dyal Fund Five.
Broken down by divisions, direct lending management fees are up $12.8 million or 11% from last quarter and up 41% from the first quarter a year ago. GP Capital Solutions management fees are up $11.1 million or 12% from last quarter and up 42% from the first quarter a year ago. Again, when you adjust out catch-up fees in Dyal Fund Five. Real estate management fees, which began contributing to our results on January 1 of this year, were $17.2 million. FRE is up 4% from last quarter and up 56% from the first quarter a year ago. FRE margins are up a little from last quarter as well. Our ratio of compensation as a percentage of revenue came down a little this quarter to 27.5%.
I expect for 2022, we will be in the lower half of the range that we've previously guided to, which was 25%-30%. We announced a dividend of $0.10 per share for the first quarter. All of this is in line with our expectations and what I noted on our earnings call last quarter. We have started off the year making good progress towards reaching $1.3 billion of revenues for 2022, which would be a 45% growth rate year-over-year, and an FRE margin of 60+% for 2022. As it relates to our AUM metrics, on slide 13, we reported AUM of $102 billion, fee-paying AUM of $65.6 billion, and total permanent capital of $85.6 billion. AUM not yet paying fees was $7.7 billion as of March 31.
As Doug mentioned, inclusive of the Wellfleet acquisition, our AUM would be approximately $109 billion. AUM grew $7.5 billion to $102 billion, an 8% increase from last quarter and a 76% increase from the first quarter a year ago, driven primarily by deployment of capital and debt raised in direct lending, the addition of our real estate division, and capital raising across the firm. Fee paying AUM grew $4.1 billion to $65.6 billion, a 7% increase from last quarter and a 64% increase from the first quarter a year ago, driven primarily by deployment in direct lending, the addition of our real estate division, and capital raising across the firm.
Permanent capital grew $6.8 billion to $85.6 billion, a 9% increase from last quarter and a 61% increase from the first quarter a year ago, driven primarily by deployment in direct lending, the addition of our real estate division, and capital raising across the firm. AUM not yet paying fees was $7.7 billion, including $5.4 billion in direct lending, $0.7 billion in GP Capital Solutions, and $1.6 billion in real estate. This AUM corresponds to an expected increase in annual management fees totaling approximately $105 million, primarily upon deployment for direct lending and real estate. As I've mentioned in the past, if our tech BDC were to go public, we expect that could be another incremental $65 million of annual management fees due to the fee step-ups.
With the launch of our new tech lending BDC, ORTF II, and combined with ORCC III, upon the listing of all three of these BDCs, we expect that could be a total incremental $185 million of annual management fees. I plan to get into this more on Investor Day, so please stay tuned for that. As Marc highlighted earlier, we had another strong quarter of deployment in direct lending with gross originations of $4.9 billion and net funded deployment of $3.4 billion. This brings our gross originations for the last twelve months to $26.4 billion, with $14.7 billion of net funded deployment.
As it relates to the $5.4 billion of AUM not yet paying fees in direct lending, it would take us less than two quarters to fully deploy this based on our average net funded deployment pace over the last 12 months. Turning to our balance sheet, we continue to be in a strong capital position. As you can see on slide 23, we currently have almost $1 billion of liquidity with a very long-dated capital structure. On another note, as Marc touched on, we have raised a significant amount of equity in our direct lending business year to date, in particular since quarter end. There are two items here I wanted to flag for everyone on this point. The first item, as we continue to fundraise, there will be varying levels of distribution replacement costs associated with different raises for our various BDCs.
To provide more clarity here, using the example of raising $1 billion and assuming we pay out $25 million-$30 million in one-time upfront distribution replacement fee expenses on certain equity dollars raised, this will generate over time approximately $50 million of management fees, including Part I fees per year every year. It's permanent capital. Just making the point here that for our second quarter of 2022, based on what we're seeing so far, we expect to show a potentially large non-recurring expense in our G&A line related to these fundraisers and a much smaller amount of incremental management fees for that quarter due to this timing mismatch. I'll be sure to call this out in my prepared remarks when and as this happens so it's visible and transparent to everyone. The second item, more specifically as it relates to our ORCIC product.
Just a reminder here that we have a fee waiver in place for this product through October 31st of this year, so we're not earning management fees on this product for almost all of this year. Full fees start up on November 1st. Both of these items were part of the 2022 outlook that I discussed on our last earnings call in February. To wrap up here before getting to Q&A, there's a few last items I want to cover. First, at our Investor Day coming up on May 20th, we'll be talking about a number of different ways in which we believe we can drive shareholder value. One of the areas we identified was the potential to be included in the Russell Indexes. On April 11th, we announced the change to the voting power of our Class A shares, which represents our public float.
When we initially looked into this, we believed we had satisfied all of the other required criteria to be included in the Russell Indexes with this one exception. We did this to open the potential to be included in the newly reconstituted Russell Indexes at the end of next month. Next, our stock buyback program. During the first quarter, Blue Owl bought back 2 million shares of stock at an average cost of $12.09 per share. Pulling the lens back a little on this topic, starting this year, we generally expect to buy back stock that we issue in connection with stock compensation. We're not trying to get this exactly right on a quarterly basis or even annually, but over the course of time, we expect to buy back shares to offset dilution from stock compensation.
Finally, Doug touched on inflation and rising rates in his remarks, so I wanted to hit this with everyone. Our business is very well positioned for a rising rate environment. If you look at slide 17 of our earnings presentation, you will see that our 1Q annualized FRE revenues could increase by 2%-4%+ if rates increase by 200-300 basis points. This would all be incremental to anything we have previously discussed. We didn't include potential rate changes in our forecast, but not included in the 2022 revenue target given in February of $1.3 billion. Summing it all up, we are very pleased with our results for the quarter. We are hitting in all of our key metrics, and we continue to have very exciting growth plans ahead of us, which we feel we are well-positioned to execute on.
We look forward to seeing everyone later this month at our Investor Day event. Thank you again to everyone who has joined us on the call today. With that, operator, can we please open the line for questions?
At this time, I would like to remind everyone in order to ask a question, press star and the number one on your telephone keypad. We'll pause for just a moment to compile a Q&A roster. Your first question comes from the line of Craig Siegenthaler. Your line is open.
Hey, good morning, everyone. This is Craig Siegenthaler from Bank of America. Hope you're all doing well.
Hey, Craig.
Doing great. Hey, Craig.
Doug, I was actually hoping that you could elaborate on your bullishness on the tech lending backdrop, because I'm just thinking if economic conditions moderate and there's a period of slower underlying profit growth from the portfolio companies and less investment activity from the private equity industry, which you lend to, I was just curious behind your confidence in the robust growth trajectory in tech.
Hey, Craig, it's Marc. I'll take that one. You know, I think it's both our expectations, but it's also the reality. The activity levels right now, we have never seen more large and high-quality opportunities, and they're almost entirely in the software space. We are the market leader in terms of capabilities in that space. You know, both sitting here now and just to give you a statistic to go with this, again, the preponderance of this being driven by software. If you look at last year, there was a total of 40 private financings that we saw of $1 billion or greater. Again, very heavily driven by software.
This first quarter alone, we've seen over 20 that are $1 billion or greater, and now new categories enter $2.5 billion or greater. The reason that matters is not just the size, it does speak to deployment opportunity, but these are incredibly large market-leading global companies. I couldn't—and we're not trying to comment on whether their growth rates will be exactly what, you know, the sponsors think, better, worse, 20%, 15%, 25%. That's not what matters to us. It's the durability and attractiveness of the long-term franchise. In our tech portfolio, or our tech one, we lend on average in the low 30% level.
If one just took an abstract $5 billion buyout, which is no longer large in the tech sector, you know, that would be $1.5 billion of debt with a $3.5 billion equity check. Our bullishness comes from both the current activity level, which is quite exceptional. Our outlook, which is with all the dry powder, $2 trillion of dry powder in the hands of private equity, again, with a particular concentration, heavily tipped towards software and tech, that needs to be and will be deployed. Many of the sponsors see this disruption in the market as, you know, as a moment of opportunity. The time will tell for whether that's true or not, but that is clearly the action that's been undertaken.
That's leading to some of the best things we've seen, frankly. I guess just add one more. Remember, we also have this structured capability in tech. This is our yield-enhanced capability. That was really built for this exact environment, which is companies that are great private tech companies that maybe got ahead of themselves on valuations. It doesn't mean they aren't deeply valuable. These are some of our most exciting, lowest risk opportunities where we also get equity upside. I'm really not trying to overstate it. We feel like now is exactly kind of the pinnacle moment for the tech opportunity. Yeah. I'll just chime in for 30 seconds. Marc really hit on all the high points.
I think it's important to remember when we talk about technology, we're talking mostly about enterprise software. We don't do startups. We look for things that have high recurring revenue, very little churn, high predictability of cash flow. As we look out across the lending landscape, we actually think these businesses are some maybe the best things we can lend to. We're excited about it, and we're excited about our position in the market.
I apologize. Let me close with one not small comment on that point, which is in our tech lending platform, Owl Rock Tech One, we have since inception still never had a default. We've never had a loan in arrears. So the durability, again, isn't really a case of theory. It's been the most durable sector in our portfolio and broader than that. But I think there's a lot to like right now. Thank you for that. And Marc, if we broaden that conversation out to include the whole credit business, all of Owl Rock, you know, it's nice to know there was never a default in the tech business. And also, I think you said earlier that realized losses are pretty much or very low.
If we move earlier into this, the credit quality stage, so early-stage credit quality like delinquencies, non-accruals, what you're seeing with covenants, how does the portfolio look today versus six months ago, just because economic conditions have moderated a little bit?
Yeah. A couple of things. It's a great question, of course. You know, first, let me take one step back and as a Blue Owl matter, I think it's really important for the shareholders. Remember, Blue Owl as a firm, we are essentially 100% fee-driven revenue, management fee-driven revenue. We care deeply about the performance of our products, but actually the question you're raising doesn't affect the earnings of Blue Owl. We don't have carry. That question's gonna be very salient for firms that are carry-centric and have, you know, a variety of products that are gonna go up and down with, you know, the answer to a question like that or in equity valuation changes. We don't. We get paid fees.
For Blue Owl shareholders on this call, you know, the fortunate answer to questions like, "Well, what happens if credit quality issues tick up?" Or, "What happens with inflation?" The answer is, doesn't matter to people on this call. Now, it matters to us, and it matters to all of us when we think about growth of products, so let me still answer your question because of course, we care a lot about it as a firm and for our LPs. Credit quality has remained very strong, very robust. We continue to run at extremely low delinquency rates, default rates. I mean, any measure you wanna use, we continue to feel extremely good. The portfolio's in robust shape. Across our platform in total, we're running at loan-to-value in the low forties. I refer to thirties for tech.
It's in the low forties across the whole firm. As we go into this, most of our borrowers are in very strong shape. Remember, we've always built at Owl Rock, Blue Owl in particular, a very defensive strategy. That is to say we've always erred on the side of low risk, which to some degree you could say hasn't mattered over the last several years. Well, now it's gonna matter, and we have built an entire franchise on, look, we want the best companies with low loan-to-values. You can't give us 50 extra basis points to get us to take impairment risk. That's just not how we operate, and those differences are gonna start to show among managers. You know, here again, let's go with the statistics.
You know, we've originated $56 billion of loans, and we're running at a 5 basis point realized loss rate. The losses in total associate with $300 million of original notional loans. You know, of course, a more rocky environment, of course that's an uptick. I don't think any of us can invest planning for what amounts to asymptotically zero losses. Portfolio's looking very strong. Final statistic as we go into this across the broader portfolio, EBITDA to interest coverage, we're heading in with an average of 2.7 times. There's a lot of room in that statistic for both declines in EBITDA even though these are generally pretty robust businesses that we invest in, as well as rising rates off a low floor. Again, we're not being dismissive of them.
We're thinking real hard about the volatile environment, but we're feeling quite good.
Thank you, Marc.
Thank you, Marc.
Sure.
Thank you, Craig.
Your next question comes from the line of Alex Blostein. Your line is open.
Hey, guys. Good morning.
Good morning, Alex.
Good morning.
I wanted to start maybe with a question around real estate. There's a couple of stats, I think, Marc, you mentioned in your prepared remarks. I just wanted to understand them a little better. I think one of the things you mentioned was around a $20 billion runway you see. I wanna say it was for deployment, but it wasn't 100% clear. Can you maybe contextualize that a little bit more? Maybe taking a step back, how are you guys thinking about prospects for real estate platform over the next 12-18 months, given your comments around the new fundraise and the opportunity you see in retail?
Sure. Very happy to, Alex. Thank you. First off, the $20 billion really refer to sort of pipeline. It really speaks, I mean, it has to flow through, of course. Like in every investment business, we end up doing a very small portion of the things we look at and consider. But really the point of the statistic is it remains a very robust opportunity set, much larger than our target deployment levels. You know, book to bill, so to speak, not quite booked, but the opportunity set is very robust, as we say here. That was really the purpose of that statistic, remains very strong compared to historical standards. As to the outlook, to your very good point. There's a few forces at work.
By and large, this environment is quite appealing for our real estate business. It's appealing because as cost of capital within the corporate structure rises, then of course our triple net lease solutions may in many cases look more competitive to what I guess we might have thought of before as low, maybe kind of oddly low borrowing costs for strong corporate borrowers back, you know, last year, last quarter for that matter. So as those costs come up, I think our solutions actually look more competitive, number one. Number two, in a more volatile environment, people obviously look for other ways to finance outside of what might be just the obvious, "Okay, well, I'll just go issue a bond. I'll just go borrow from a bank." We offer these structured solutions that for those who have real estate assets, they can tap into.
We look at the backdrop as quite positive from the point of view of deployment and from the point of view of what that means though for the quality of the assets and the performance. You know, here's the beauty of it. First off, since inception of Oak Street, you know, we're very excited about our credit performance at five basis points realized loss. In Oak Street, we've never had a single rent payment missed, let alone a default. I mean, that durability is, I you know, I would say pretty extraordinary. What we like about this composition is, you know, more people are looking for creative solutions. Cost of capital are up, so that gives more room for us to put our solutions in place.
The durability, you know, of having both the asset and the corporate counterparty on a 15, 20-year net lease, you know, feels in a volatile environment, you know, a true flight to safety.
Got it. Great. Thanks. The other question that I had, Alan, this is probably for you. Just wanted to dig in a little bit more into the kind of these placement fee structures. And really just kind of try and understand if we're gonna be in this pretty robust retail fundraising environment. Are these placement fees gonna be fairly then recurring and sizable for the next sort of several quarters? Or is it more a function of once you get onto a certain platform, there's a larger upfront cost that you pay, and then it kinda goes down a bit. Help me just kind of understand the distribution and placement fee costs that I guess you guys are gonna start calling out in future quarters.
Sure. Thanks, Alex. The lumpiest ones are the larger upfront ones are really on our private to public BDC raises. We've had this a couple times in the past over the last seven years, and it could continue from time to time. I expect you'll see that in 2Q. I don't know that you'll see it again for the rest of this year on a private to public. And then some of our permanent privates, we will have some warehouse costs. They won't be the big lumpy up fronts like you'll see in the private to public. But we'll have that on an ongoing basis as well. That again is not as lumpy as the private to publics.
Yeah. Alex, good to chat with you. Look, when you take a step back, I don't think they'll be recurring per se. For the near term, we're kinda hoping for large numbers because that means we've raised quite a bit of capital, and the payback is relatively quick. Obviously we do our best to drive that cost as low as possible. You know, it's a competitive market out there, and we're not paying any more than any of our peers. We're hopeful in the near term to have, you know, big numbers, and then I think it will slow down over time. The biggest numbers, as Alan was alluding to, are not really from our recurring funds or our core income funds. It's when we're doing a specific BDC and it's more of an episodic fundraise.
You'll see those less frequent and a much smaller number for the funds that are perpetually offered.
I'm expecting the biggest number, Alex. We'll see how the year plays out, but I would expect the biggest number this year comes in 2Q, and that could bring a 15-20+% G&A number as a ratio to revenues. I would expect it ticks down significantly from there in 3Q and then again in 4Q.
Got it. All right. That makes sense. Just one other cleanup for me. A little nuance, but on the equity-based comp, if we look at the back of the deck, I think it's running quite a bit higher than what we're used to seeing. I think it's like $96 million for the quarter. Can you just flesh out one more time what the equity-based comp run rate should be on a kinda go-forward basis and why it was so elevated this quarter?
Yeah. You're gonna start to see now, and this is all GAAP numbers, obviously, Alex. You're gonna start to see amortization of some of our earn-outs for both Oak Street and coming up Wellfleet. That piece you're seeing is largely Oak Street.
Okay. That's run rate, so like $90+ million a quarter?
It should be run rate, yes.
Got it.
Yeah, we closed that at the very end of December, so you have a full quarter in for 1Q.
Great. All right. Thank you very much.
Thanks, Alex.
Your next question comes from the line of Robert Lee. Your line is open.
Great. Thanks for taking my questions. Good morning, everyone. Hope everyone's doing well.
Yeah.
Thanks. Maybe Doug, I kinda probably missed some of it, but could you maybe unpack a little bit some of the quarter to date fundraising? I think I probably missed some of the numbers, but if you could just like step through it. Was the 2.8 total so far the right total? I kinda missed some of it.
I'm gonna let Alan do it because I'll make a mistake if I do it.
Hey, Robert. How are you?
Good. Thank you.
We've got, year to date is about $6.7 billion. The quarter to date in 2Q is $2.8 billion. That's obviously through a couple days ago. We have some products that close on the first of the month, like a core income product, and some products that close mid-month, like Dyal Fund Five. It's a little bit of a mixed bag, whether that's one month or two months in our quarter to date numbers. Of the $2.8 billion, you've got $2.2 billion of that that was raised in direct lending, about $500 million of that in GP Capital Solutions, and then a very small contribution from real estate.
Great. Thank you. Maybe on the GP Solutions business, you know, for Mike, can you maybe. You touched on it a little bit, but maybe drill a little bit deeper, you know, how this environment, and I don't know if it affects it at all, but how maybe the performance of the public managers in, you know, impacts deployment or pricing as you see in the private markets. Maybe, as you think about, you know, fund six, you know, starting up in 2023, is there any reason to expect a different size targeted fundraise versus fund five? You know, I guess call it the $9 billion. You know, how should we think of that, as we look ahead to next year?
Yeah, thanks Rob. Good to speak with you. Sorry to give you a boring answer, but the GP Solutions business, these partnerships come together after, you know, years and years of relationship building. A lot of deep thought on the side of these GPs that are the biggest and most important leaders in this space. The wheels get set in motion, you know, not just quarters ago, but years ago. There is very little market volatility that will do to impact the long-term strategic planning of these relationships. Our deployment is very sort of consistent when you look at it over, you know, multiple quarters or years. We're not seeing any slowdown. In fact, if anything, deal activity is quite robust.
There is seasonality in these conversations. We typically have. You know, since 2015, we've only deployed about 10% of our capital in the first quarter. You know, close to 65%-70% of it builds as we move past the summer. We see that happening now and why we're pretty confident that we'll be on to fund six in 2023. Size, you know, will be TBD. We'll as we've talked about our goals for five, our fund five are $9 billion, and we'll see exactly where we land that plane. Certainly confident in that number. We'll see if we go above.
That will then sort of take us to our views on the size of fund six as we get into 2023.
Maybe digging into that a tiny bit. I mean, how is this environment, you know, impacting your pace of fundraising? I mean, I think there's been just generic, you know, some concern out there, not, you know, specific to the industry obviously, about the pace of fundraising given the volatility. I think given your, the nature of your LP base, you know, maybe you find this as a kind of extending it a little more than it normally would or, you know, how should we think of that?
Yeah, Rob, as you look at the performance of the funds, I mean they're quite exceptional, we believe. So the demand is there. We've heard other peers talk about the denominator effect and how total commitments might be down. We don't see that. We don't see that at all across Blue Owl. As you've heard, a big focus on retail, and as we focus on institutional fundraising, we're not seeing a lower total commitment from large institutional investors. What we're seeing is a crowded market where bandwidth is the key constraint across the institutional set. As an example, we're working with a large institution that's going to make a commitment.
They did all their work in January and February, and they've just been trying to get us a slot on their investment committee calendar, knowing that others in the market are having closes before ours. For our product lineup, we don't see any real denominator effect, and we're raising capital ahead of, you know, the need for it from a deployment perspective. We're able to, you know, think about a sooner raise for fund six than we had anticipated when you look back a couple years.
Great. Thank you for taking my questions.
Thank you, Robert.
Thanks, Marc.
Your next question comes from the line of Glenn Schorr. Your line is open.
Thanks very much. When I look at slide 16 on the direct lending originations, you see it down sharply for the last couple of quarters and down a little bit year-over-year. I heard your comment about the big pipeline and second quarter looks good. I wonder if we could talk about what produces that type of volatility, and if you could talk about whether it be second quarter or the rest of 2022 in relation to some of the better quarters that you've had. Thanks so much.
Sure. Well, first let me just kind of level set and then come on to sort of the kind of where it goes from here. Actually, this quarter, remember, there is definitely a seasonality to the private equity business and therefore the lending business. The fourth quarter will almost always be the strongest market conditions, obviously considered in terms of people closing before year-end and then restarting new transactions into the beginning of the year. Let's just take a kind of step back and compare numbers. Year-over-year, our originations were double last year, and our net originations were the second highest we've ever experienced as a firm. I just want to clarify and probably reframe the interpretation of slide 16.
This is actually, if you look, this would be for 4 quarters running. If I do the comparison year-over-year, added 1 more bar, the originations this quarter are actually double. The 3.4, as I said, is the highest, second-highest net we've ever had. Starting point. Part two, as I noted, you know how busy we have been, and it's been, you know, extraordinarily productively busy, I guess, not just busy. The tails, though, to close things, well, first of all, it's always takes some amount of time between, hey, we started something in the beginning of the year. Yeah, did have a war breakout in February, obviously. But importantly, this is actually part of the strength of our model, a lot of these deals, the really large ones, are now take privates, as you know.
Take privates by their nature, of course, take longer from sign to close. That's quite fine by us. We obviously plan accordingly in terms of deployment of the capital, but it's one of the great advantages of private capital over the syndicated market in a volatile environment like this. Someone who doesn't actually wanna own the risk is trying to make two points, you know, hoping they can clear the trade out to somebody else. Having to do that for 4, 5, 6 months, you know, I don't think seems very appealing. But for us, we're trying to own the paper. Now, whether we have to wait a few months, 3 months to own it, or 6 months in the context of our 5-7-year loan is, you know, quite fine.
With all that said, you know, I think we expect Q2 to be a very robust quarter, and into Q3, frankly, given the tails on some of these things. The forward pipeline, in this sense pipeline of, you know, signed but not yet closed is extremely strong.
That very robust, could we take that as similar year-on-year growth-ish?
You know, I can't give you guidance on exactly 'cause the timing of each of these deals, and some are quite large. I just don't know. I think you can take it as, you know, a definitely strong indication that we're heading into Q2 and Q3 with a typically large amount of paper already committed, but not yet closed.
I think it's important to remember, you know, we are primarily funding new buyouts. With over $2 trillion of dry powder sitting in the PE market, we expect M&A to remain robust, and we're really at the epicenter of all of that. I think as you think about direct lending, I would focus a lot on PE fundraising. As long as that stays strong, we expect, you know, over time to continue to have record originations. As Marc said, timing it quarter to quarter is nearly impossible. I can tell you when we look at the amount of activity out there and the amount of dry powder, you know, we expect the pipeline for financing or the capital needs to remain really robust.
I would also add, Glenn, that as you saw transaction fees come down in 1Q commensurate with gross originations, you know, Marc is talking about atypical levels in 2Q and 3Q. You could generally expect transaction fees will follow that.
I definitely appreciate all that color. Thanks.
Thank you, Glenn.
Thanks, Glenn.
Your next question comes from the line of Patrick Davitt. Your line is open.
Good morning, guys. Most of my questions have been answered. Maybe just one on the tech lending side. You've got tech ORTF 2 in the market, right? ORTIC launched and you know the hope that ORTF 1 could go public. As we look to the IPO of ORTF 1 in particular, how do we think about the potential for that to actually happen given the amount of fundraising you're doing, you know, for ORTF 2 or ORTIC? I think the latter has lower fees than ORTF 1 would have once it goes public. Could you kind of unpack all those dynamics and does it push out, I guess, the view to ORTF 1 going public?
Thanks, Patrick. Good question. Look, we can't comment publicly on the exact timing of an IPO. Obviously, ORTF is an SEC registrant. Just pulling the lens back on that for a moment, though, obviously right now the markets aren't the right type of markets to try to do an IPO. That portfolio is fully invested. It's fully levered. Our shareholders are enjoying a low fee structure. We're not in a rush to get out and IPO that. We wanna make sure we have the right markets to do that. We're done fundraising there. We're done fundraising. We're done with deployment. We're just replacing pay downs at this point. Again, fully invested, fully levered portfolio.
We're obviously fundraising now for ORTF 2. Exact timing TBD. We'll have to see what the markets hold in the back half of this year, but obviously right now is not the right time to take it out.
It is certainly true that the market volatility has implications for the exact timing of when we list it, and I prefer the term list really as opposed to IPO, because once listed is when the fees step up. That can be done obviously in quite different environments from a potential IPO. We're not gonna try to do anything that doesn't make good sense, for everyone and for all the investors. With that said, I mean, you know, could it vary by a quarter as to when that step up, which then lasts, you know, permanently comes in? It could. I mean, within a quarter, as Doug keeps saying, we don't try to think about our business quarter to quarter that way.
We know where the destination is with that one. That same volatility is what's creating so much opportunity for investment in the tech space. We already talked about this, so I won't rehash it, but the enormous amount of activity to purchase software companies and then what we think will be the significant need for private businesses intact for structured capital. You know, that volatility is quite the friend for what we think will be, you know, the strong key results we can deliver in ORTF II and ORTIC.
And-
Just one quick thing, you know, I think on the 20th at Investor Day, we will give everyone a lot more color about our expectations for fundraising and all of those products.
The other thing I'd add, Patrick, when I gave my guidance on our February call about the $1.3 billion of revenues that we would expect to post for 2022, I've talked separately about the $65 million fee step up. There's very little of that $65 million in my $1.3 billion.
Got it. Thank you.
Thank you, Patrick.
Again, if you'd like to ask a question, press star then the number one on your telephone keypad. Our next question comes from the line of Adam Beatty. Your line is open.
Hi. Good morning. Thank you for taking my question.
Adam.
Probably just one for me today, about Wellfleet, and just wanted to understand, you know, obviously, you know, a solid business, a good addition to the franchise. Want to understand how you're thinking about, synergies on the product side and maybe the distribution side as well. We've been talking a lot about retail and other product development. How does Wellfleet fit into that kind of bigger picture? Thank you.
Well, thanks for the question. You know, Wellfleet, there's just a tremendous amount of synergies with our direct lending business, especially in our core income product where we provide some liquidity. We really needed the public market expertise. We were debating, do we build it internally or do we go out and acquire it and have a group that has a dedicated track record, a great track record, by the way, pays for themselves, and we think we can grow that business significantly. They just joined recently, I think it was April first. It's been a seamless transaction. We're really excited about having that team on. You know, it's a relatively small business, $6 billion and change of assets. I think we can create a tremendous amount of value there.
I think we can make, you know, multiples of a return on our investment. It was a relatively small investment. I don't think it's gonna have a material impact on our earnings, but I think it will be highly accretive. Again, on Investor Day, we'll spend some time going through that in a lot more detail.
No, that sounds great. Appreciate the thoughts on build versus buy. Thanks.
Thank you, Adam.
Thanks, Adam.
There are no further questions at this time. CEO Doug Ostrover, I turn the call back over to you.
Well, we appreciate everybody spending about an hour with us. We're grateful for everybody listening in. As always, you know, our goal is to try to exceed expectations. I really encourage all of you, if you can make it to Investor Day on the twentieth, I think you'd find it worthwhile. You'll be able to watch it over Zoom as well. We're excited to really share the vision of what we think we can build here. We'll look forward to following up again in a few weeks. Thanks again, everyone.
This concludes today's conference call. You may now disconnect.