Marc Lipschultz: The banks. Yes, so listen, it’s a big world out there, right? It’s a multi-trillion-dollar credit market, and I know a lot of stories are about the banks versus the private lenders. It’s a world that needs both. Now today, the private lenders and frankly, during COVID, proved to be the stabilizing force for the market. And this is an interesting change if we think about the arc of 20-years, which is today, the private lenders, ourselves and a couple of others of real scale, are the ones that are consistently available to commercial users. And the public markets come and go. So we actually stabilize the capital markets and the economy in a way that, frankly, the public markets used to. The banks play a role in syndication.
Today, they obviously are sitting on many tens of billions of dollars of paper, they need to work through. So we do not see a meaningfully active syndicated market. It was really nearly nonexistent so to speak of in the fourth quarter. So this has been a time where we’ve certainly taking up a lot of that slack and therefore, share, but there’ll be plenty of room for both in the world over time.
Ken Worthington: Okay, great. Thank you.
Alan Kirshenbaum: Thanks, Ken.
Operator: The next question is from Brian Bedell with Deutsche Bank. Your line is open.
Brian Bedell: Great, thanks. Good morning, folks. If we can zoom back in on retail, can you maybe characterize how you’re sensing that risk appetite? Obviously, the tougher environment, but we do have a couple of quarters of positive markets. Do you think that is improving the risk appetite near-term or people are remaining cautious? And then kind of contrasting that with the conversations that you’re having with the gatekeepers of the platform, are they also cautious or more likely to embrace some of your differentiated products, including Real Estate? And I don’t know if you can comment on — you mentioned some new products that you might be rolling out over the next 12 to 18 months. I don’t know if you’re able to comment on any of those, but any color would be great?
Doug Ostrover: All right. That’s a lot for me to try to hit. So in terms of new products, unfortunately, we’ll announce them as we roll them out. In terms of risk appetite at the firms, they really want new, interesting, differentiated type of strategies. And the reason the firms, the gatekeepers want it because that’s what the end customers want. They want things that will allow them to allow the wire houses, in particular, to differentiate themselves with their client bases. So they have been very receptive. Now we haven’t rolled any of these out. But I think, hopefully, in the next quarter or two, we’ll announce at least one and maybe two that we’ll be working on. In terms of the risk appetite, the retail investor, it’s too early to say with the market up year-to-date.
Our flows are still decent, but we haven’t seen a big uptick or downtick. But I — my guess would be, if the market stays robust, we will see risk appetite increase and you should expect flows to increase with the market going up. But really hard to predict the mindset. But I just want to go back to what I said earlier. We’re unbelievably bullish about the opportunity. I know there’s this focus on quarter-over-quarter, but we’re thinking year-over-year. And I will tell you as we go out and we talk to those gatekeepers in particular and some of the largest advisers, they are all very focused on all. So I think we’re in the right place. We’re well situated, and as I said earlier, I would anticipate we continue to get more than our fair share in the space.
Marc Lipschultz: And one thing I could add, it’s far from a monolith, this idea of retail products or individual access points. There’s a lot of difference in these products, even if by headline, they have the same names. Our products, which have been the Blue Owl brand, the Blue Owl place within the system, is all built around products that are about stability, predictability and very strong yields. Remember, in our credit products, we talked about the strength of the credit performance before, we’ve also been raising the distribution rates. I mean, how many products, how many asset classes in 2022 where people call in investors and saying, I want to let you know the returns are going to be better than you thought. I mean that’s not a common threat.
And even when we talk about real estate, definitely not a model if you remember, our real estate strategy is very, very different from what else is in the market. Triple-net lease, long-dated commitments from extremely high credit quality counterparties, where you take all of your expenses and costs and pass them through to the tenant. And you’re not talking about trying to buy a building and re-lease it or hope it stays leased and deal with operating expenses and vacancies and therefore and hope for a better cap rate. None of that is part of our model. Our model is 15, 20-year leases on critical assets to critical clients. And our product, for example, pays a 7% yield with tax advantaged attributes for many investors. So it’s just totally different even though it lives under the word real estate.
So even within these categories, there are real differences that I think play to our strength, and we’ll continue to develop new products, as Doug said, that hopefully continue that streak of delivering something different to our partner managers.
Brian Bedell: That’s great color. Thank you.
Alan Kirshenbaum: Thanks Brian.
Operator: The next question is from Mike Brown with KBW. Your line is open.
Mike Brown: Great. Hi, good morning, everyone.
Doug Ostrover: Good morning.
Mike Brown: So wanted to ask on the FRE margins. You achieved the 60% margin target for 2022. And Alan, you gave the G&A guidance for €˜23. So it sounds like the margin can continue to see expansion into 2023. But I just wanted to check if there any puts and takes we need to consider here? And then is there a target that you have for 2023?
Alan Kirshenbaum: Sure. Thanks, Mike. I appreciate the question. In 2022, what we saw was our 60% FRE margin. That margin is going to move around a little bit based on, in particular, placement costs, distribution costs. And so I talked about the mix shift. Doug touched on the mix shift as well. In 2023, I’m reaffirming the 60% FRE margin, that’s what I think folks should look for and frankly, expect of us in 2023. That can move up or down a little bit based on where we ultimately end up for placement costs. If — we continue to see the mix shift. We see a little more institutional than retail. Institutional takes a little longer to close. It’s a little lower fee basis, but also has less placement costs. So if we continue to see that, we could see a little bit higher on the FRE margin.
And on the flip side, if retail really comes through, maybe starting in 2Q, but in the back half of the year, in particular, we could see a little more in placement costs a little lower in FRE margin, but that also sets us up to certainly meet, if not exceed the $50 billion of fee-paying AUM raise. So there’s a little bit of a push and pull when you think about FRE margin and think about the mix of our fund raise and how much is from the wealth or retail channels and how much is from the institutional channel.
Mike Brown: Great. Thank you for the explanation. Thank you for taking my question.
Alan Kirshenbaum: Thank you, Mike.
Operator: The next question is from Chris Kotowski with Oppenheimer. Your line is open.
