Oak Street Real Estate Capital has agreed to be bought by Blue Owl Capital for up to $1.6bn (€1.4bn).

Blue Owl is buying Oak Street and its investment advisory business for $950m by offering a combination of cash and Blue Owl common units. Blue Owl has also agreed to pay Oak Street shareholders earnouts of up to $650m in additional payments based on Oak Street meeting certain targets.

Chicago-based Oak Street was founded in 2009 and manages $10.8bn worth of assets. The company focuses on structuring sale-leasebacks, which includes triple net leases, as well as providing seed and strategic capital.

Blue Owl is a $62.4bn alternative asset manager that provides investors access to direct lending and general partner capital solutions strategies through a variety of products.

The merger adds a complementary real estate capability to its suite of financing solutions, according to Blue Owl.

Doug Ostrover, co-founder and CEO of Blue Owl, said: “We are very excited about this strategic transaction and believe that Oak Street’s experienced team and strong franchise will both contribute to and benefit from the scale and positive network effects of the Blue Owl platform.”

Marc Lipschultz, co-founder and co-president of Blue Owl, said: “Oak Street has created a market-leading platform in the net lease sector, leveraging the expertise and disciplined underwriting of its investment team to generate very strong returns for its investors.

“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 and co-president of Blue Owl, said: “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.”

Marc Zahr, co-founder and CEO of Oak Street, said: “There is a strong fit between Blue Owl and Oak Street, highlighted by our mutual drive to be market leaders in what we do, our shared deep appreciation for the value of long-duration capital, and our focus on downside protection and robust income generation for our investors.”

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