Blue Owl Capital Corporation II

Summary
Blue Owl Capital Corporation II is a Maryland corporation formed in 2015 that operates as a closed-end, externally managed business development company (BDC) under the Investment Company Act of 1940 and intends to qualify as a regulated investment company (RIC) for U.S. federal income tax purposes. The Adviser is Blue Owl Credit Advisors LLC, an affiliate of Blue Owl Capital Inc. The Company primarily originates and invests in debt, and to a lesser extent equity, in U.S. middle-market companies through direct lending and related structures, and may invest through portfolio companies, joint ventures, and special purpose vehicles.

Core business

• Investment objective: Generate current income, with capital appreciation as a secondary objective.
• Primary strategy: Originate and hold debt and selective equity investments in U.S. middle-market companies (typical EBITDA $25–$500 million; revenue $125 million–$5 billion). Target senior secured, unsecured, subordinated/mezzanine loans, broadly syndicated loans, and select equity/equity-related securities (including warrants and preferred stock).
• Geography: Primarily U.S. middle-market borrowers; may invest up to 30% outside the United States.
• Investment approach: Direct origination, control-friendly structures where appropriate, extensive due diligence, covenant protections with some covenant-lite exposure, potential equity co-investments, and use of special financing vehicles and joint ventures.
• Portfolio management: External management by Blue Owl Credit Advisors LLC, which handles sourcing, underwriting, structuring, monitoring, and board/observer rights, with embedded monitoring and workout capabilities.

Portfolio and financials (as of December 31, 2025)

• Portfolio size and scope
  • Portfolio companies: 183.
  • Industries: Investments across 30 industries; largest industry by fair value was internet software and services at 10.9%.
  • Average investment size: Approximately $8.6 million per portfolio company (by fair value).
  • Portfolio concentration: Diversified across industries; individual company exposure generally targeted to remain below 5% of the portfolio.
• Portfolio composition by asset type (by fair value)
  • First-lien senior secured debt: 77.4% (48.0% of total are unitranche loans, including last-out portions).
  • Second-lien senior secured debt: 8.3%.
  • Unsecured debt: 2.5%.
  • Specialty finance debt: 0.5%.
  • Preferred equity: 4.3%.
  • Common equity: 5.1%.
  • Specialty finance equity: 1.9%.
  • Joint ventures: <1%.
• Debt characteristics
  • Floating-rate exposure: 97.0% of debt investments (by fair value).
  • Weighted-average portfolio metrics: Weighted-average revenue approximately $921 million and weighted-average EBITDA approximately $201 million (period shown).
  • Portfolio diversification: 183 companies across 30 industries, with concentration in technology-related sectors and manufacturing among others.
• Valuation, liquidity and capitalization
  • Amortized cost of investments: $1,604,407 thousand.
  • Fair value of investments: $1,576,550 thousand.
  • Unrealized depreciation: $(27,857) thousand.
  • Outstanding unfunded commitments: $148.5 million.
  • Cash and undrawn capacity: Approximately $447.0 million.
  • Asset coverage: 240% (231% in 2024).
  • Leverage metrics: Net debt-to-equity pro forma of 0.52x; target leverage ratio approximately 0.75x.
  • Liquidity and funding: External leverage via revolving credit facilities and unsecured notes; use of portfolio rotations contemplated to fund investments.
• Earnings and distributions
  • Portfolio emphasis on current income from debt investments with potential equity upside.
  • Adviser receives base management and incentive fees under the Investment Advisory Agreement.
  • The Company intends to distribute substantially all available earnings consistent with RIC status and to minimize U.S. federal income tax by meeting distribution requirements.
  • Dividend practice has included monthly cash distributions. The Board voted on February 17, 2026 to terminate the distribution reinvestment plan and commence paying distributions in cash beginning on or after March 18, 2026.

Recent developments (post-12/31/2025)

• February 17, 2026: Board determined to terminate the distribution reinvestment plan; distributions on and after March 18, 2026 will be paid in cash.
• February 18, 2026: Entered into loan sale agreements with four institutional investors to sell a portion of portfolio company investments with aggregate debt commitments of $600 million at a price of 99.8% of par (part of a $1.4 billion asset-sale transaction).
• March 5, 2026: Board declared a special cash return of capital distribution of $2.50 per share (approximately 30% of NAV as of 12/31/2025), payable on or before March 31, 2026, to shareholders of record as of March 24, 2026.

Operational and governance context

• Legal form and regulation: Externally managed, closed-end management investment company that elected to be regulated as a BDC under the 1940 Act and to qualify annually as a RIC. Asset coverage tests and RIC diversification and income requirements apply.
• Adviser and related parties: Blue Owl Credit Advisors LLC manages day-to-day operations, sourcing, due diligence, portfolio construction, monitoring, and governance-related duties, with board or observer rights at portfolio companies. The Blue Owl Credit platform manages substantial AUM—approximately $157.8 billion across Blue Owl Credit Advisers, with $115.0 billion in direct lending strategies.
• Fees and agreements: The Investment Advisory Agreement provides for base management fees and incentive compensation on income and capital gains, subject to Board oversight and annual approval. Administration services are provided by the Adviser or its affiliates. The Adviser may bear certain organization and offering costs up to specified limits and may defer or waive fees at its discretion.
• Risk management and valuations: The Adviser uses a credit process that includes covenant evaluation, active monitoring, and workout capabilities. Quarterly fair value measurements involve external valuation input and Board oversight.
• Liquidity and exits: Investments typically have maturities of three to ten years. Liquidity is generated through exits (sales, refinancings, IPOs), asset rotations, borrowings, and potential securitizations or collateralized loan obligations via affiliated entities.

Key takeaways

• What it does: A BDC targeting current income with selective equity upside through debt and equity investments in U.S. middle-market companies, primarily via direct lending.
• Portfolio scale and composition: 183 portfolio companies across 30 industries; average investment size about $8.6 million; 97% of debt investments are floating-rate; heavy first-lien exposure at 77.4%.
• Financial position: Fair value of investments approximately $1.576 billion; unfunded commitments about $148.5 million; cash/undrawn capacity about $447.0 million; asset coverage around 240%.
• Governance and management: Externally managed by Blue Owl Credit Advisors LLC; the Adviser conducts investment decisions, due diligence, and portfolio monitoring. The Company has no employees of its own.
• Recent actions: Early-2026 asset sales and a special cash distribution, and a shift from a DRIP to cash distributions.