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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For transition period from to
Commission File Number 000-56536
Blue Owl Real Estate Net Lease Trust
(Exact name of registrant as specified in charter)
Maryland88-1672312
(State or other jurisdiction of
incorporation or registration)
(I.R.S. Employer
Identification No.)
30 N. LaSalle St., Suite 4140
60602
Chicago, IL
(Zip Code)
(Address of principal executive offices) 
888-215-2015
Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act: None

Title of each classTrading
Symbol(s)
Name of each exchange on which registered

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes ☒ No ☐



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 2, 2024, the issuer had the following shares outstanding: 160,923,574 Class S shares, 6,575,469 Class N shares, 1,216,473 Class D shares, and 187,356,373 Class I shares.



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains forward-looking statements about our business, including, in particular, statements about our plans, strategies and objectives. These forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “identify” or other similar words or the negatives thereof, although not all forward-looking statements include these words. These may include our financial estimates and their underlying assumptions, statements about plans, objectives, intentions and expectations with respect to positioning, including the impact of macroeconomic trends and market forces, future operations, repurchases, acquisitions, future performance, and statements with respect to acquisitions. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in such statements. These risks, uncertainties and other factors include, without limitation:
• our future operating results;
• our business prospects and the prospects of the assets in which we may invest;
• the impact of the investments that we expect to make;
• our ability to raise sufficient capital to execute our investment strategy;
• our ability to source adequate investment opportunities to efficiently deploy capital;
• our current and expected financing arrangements and investments;
• the effect of global and national economic and market conditions generally upon our operating results, including, but not limited to, changes with respect to inflation, interest rate changes and supply chain disruptions, geopolitical uncertainty, and changes in government rules, regulations and fiscal policies;
• the adequacy of our cash resources, financing sources and working capital;
• the timing and amount of cash flows, distributions and dividends, if any, from our investments;
• our contractual arrangements and relationships with third parties;
• actual and potential conflicts of interest with the Adviser or any of its affiliates;
• the dependence of our future success on the general economy and its effect on the assets in which we may invest;
• our use of financial leverage;
• the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments;
• the ability of the Adviser or its affiliates to attract and retain highly talented professionals;
• our ability to structure investments in a tax-efficient manner and the effect of changes to tax legislation and our tax position;
• the tax status of the assets in which we may invest;
changes in the economy, particularly those affecting the real estate industry;
risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters, epidemics or other events having a broad impact on the economy;
investing in commercial real estate assets involves certain risks, including but not limited to: tenants’ inability to pay rent; increases in interest rates and lack of availability of financing; tenant turnover and vacancies; and changes in supply of or demand for similar properties in a given market;
adverse conditions in the areas where our investments or the properties underlying such investments are located and local real estate conditions;



our portfolio is currently concentrated in certain industries and geographies, and, as a consequence, our aggregate return may be substantially affected by adverse economic or business conditions affecting that particular type of asset or geography;
limitations on our business and our ability to satisfy requirements to maintain our exclusion from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”), or to maintain our qualification as a real estate investment trust, for U.S. federal income tax purposes;
since there is no public trading market for our common shares of beneficial interest par value $0.01 (“common shares” or “shares”), repurchase of shares by us will likely be the only way to dispose of your shares. Our share repurchase plan provides shareholders with the opportunity to request that we repurchase their shares on a quarterly basis, but we are not obligated to repurchase any shares and may choose to repurchase only some, or even none, of the shares that have been requested to be repurchased in any particular calendar quarter in our discretion. In addition, repurchases will be subject to available liquidity and other significant restrictions. Further, our Board of Trustees may make exceptions to, modify and suspend our share repurchase plan if, in its reasonable judgement, it deems such action to be in our best interest and the best interest of our shareholders. As a result, our shares should be considered as having only limited liquidity and at times may be illiquid;
distributions are not guaranteed and may be funded from sources other than cash flow from operations, including, without limitation, borrowings, offering proceeds, the sale of our assets, and repayments of our real estate debt investments, and we have no limits on the amounts we may fund from such sources;
the purchase and repurchase prices for our shares are generally based on our prior month’s net asset value and are not based on any public trading market. While there will be independent valuations of our properties from time to time, the valuation of properties is inherently subjective and our NAV may not accurately reflect the actual price at which our properties could be liquidated on any given day; and
future changes in laws or regulations and conditions in our operating areas.
For more information regarding these and other risks and uncertainties that we face, refer to Part I. Item 1A “Risk Factors” in our 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 18, 2024 and any such updated factors included in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this document (or our prospectus and other filings). Except as otherwise required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.



TABLE OF CONTENTS
Page
Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2024 and 2023
Condensed Consolidated Statement of Changes in Equity for the three and six months ended June 30, 2024 and 2023
Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2024 and 2023



PART I - FINANCIAL INFORMATION
ITEM 1        FINANCIAL STATEMENTS
1



Blue Owl Real Estate Net Lease Trust
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
June 30, 2024December 31, 2023
Assets
Investments in real estate, net$2,718,941 $2,715,832 
Investments in unconsolidated real estate affiliates (includes $1,571,393 and $699,570 reported at fair value as of June 30, 2024 and December 31, 2023, respectively)
1,577,389 705,628 
Investment in leases – Financing receivables, net612,575 562,690 
Investments in real estate debt (includes $97,625 and $87,209 reported at fair value as of June 30, 2024 and December 31, 2023)
124,539 87,209 
Intangible assets, net142,582 136,530 
Cash and cash equivalents101,571 59,087 
Restricted cash68,574 77,583 
Other assets68,774 49,209 
Total assets
$5,414,945 $4,393,768 
Liabilities and Equity
Mortgage notes and credit facilities, net$1,931,409 $1,859,588 
Affiliate line of credit 200,000 
Due to affiliates106,755 71,750 
Accounts payable and accrued expenses99,209 81,499 
Other liabilities63,948 47,071 
Total liabilities
2,201,321 2,259,908 
Redeemable non-controlling interests23,687 17,976 
Redeemable common shares62,068 38,418 
Equity
Common shares — Class S, $0.01 par value per share, 145,774,129 and 92,068,163 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively
1,458 921 
Common shares — Class N, $0.01 par value per share, 1,907,909 and shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively
19  
Common shares — Class D, $0.01 par value per share, 1,209,667 and 4,488,818 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively
12 45 
Common shares — Class I, $0.01 par value per share, 161,718,890 and 101,651,731 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively
1,617 1,016 
Additional paid-in capital3,047,387 1,948,355 
Accumulated deficit and cumulative distributions(193,046)(132,638)
Accumulated other comprehensive income 16,035 3,052 
Total Shareholders' Equity
2,873,482 1,820,751 
Non-controlling interests254,387 256,715 
Total equity
3,127,869 2,077,466 
Total liabilities and equity
$5,414,945 $4,393,768 
See accompanying Notes to the Condensed Consolidated Financial Statements.
2


Blue Owl Real Estate Net Lease Trust
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three months ended
Six months ended
June 30, 2024June 30, 2023June 30, 2024June 30, 2023
Revenues
Rental revenue$48,717 $44,954 $99,671 $90,995 
Income from investment in leases - Financing receivables
15,037 13,960 29,571 27,629 
Total revenues63,754 58,914 129,242 118,624 
Expenses
Rental property operating6,701 3,397 12,788 10,686 
General and administrative7,530 4,264 11,510 7,572 
Impairment charges4,849  4,849  
Management fee10,323 4,986 18,804 9,058 
Performance participation allocation8,333 8,134 15,162 8,134 
Depreciation and amortization23,115 15,562 46,152 28,670 
Total expenses60,851 36,343 109,265 64,120 
Other income (expense)
Income from unconsolidated real estate affiliates40,094 13,180 73,394 16,774 
Net gain on dispositions of real estate714  714  
Interest expense(31,838)(28,207)(69,103)(52,333)
Interest income2,854 2,055 6,099 3,944 
Other income, net751 34 515 29 
Total other income (expense), net12,575 (12,938)11,619 (31,586)
Net income before income taxes$15,478 $9,633 $31,596 $22,918 
Income tax expense1,108  1,412  
Net income 14,370 9,633 30,184 22,918 
Net income attributable to non-controlling interests(1,234)(1,787)(2,917)(4,762)
Net income attributable to ORENT shareholders $13,136 $7,846 $27,267 $18,156 
Net income per common share – basic$0.04 $0.06 $0.10 $0.16 
Net income per common share – diluted$0.04 $0.06 $0.10 $0.16 
Weighted-average common shares outstanding, basic292,992,195 127,321,209 265,106,090 112,784,711 
Weighted-average common shares outstanding, diluted321,947,289 127,337,421 293,952,425 112,800,923 
See accompanying Notes to the Condensed Consolidated Financial Statements.
3


Blue Owl Real Estate Net Lease Trust
Condensed Consolidated Statements of Comprehensive Income
(in thousands, except per share data)
Three months ended
Six months ended
June 30, 2024June 30, 2023June 30, 2024June 30, 2023
Net income $14,370 $9,633 $30,184 $22,918 
Other comprehensive income:
Change in unrealized gain on derivative instruments
3,230 24,591 24,642 13,601 
Change in unrealized (loss) gain on AFS investment in real estate debt(134)9 100 9 
Foreign currency translation adjustment(3,032)5,924 (10,078)9,564 
Other comprehensive income
64 30,524 14,664 23,174 
Comprehensive income 14,434 40,157 44,848 46,092 
Comprehensive income attributable to non-controlling interests(1,351)(7,055)(4,598)(8,424)
Comprehensive income attributable to ORENT shareholders$13,083 $33,102 $40,250 $37,668 
See accompanying Notes to the Condensed Consolidated Financial Statements.
4


Blue Owl Real Estate Net Lease Trust
Condensed Consolidated Statement of Changes in Equity
(in thousands, except per share data)

Par Value
Class S
Common
Shares
Class N Common SharesClass D
Common
Shares
Class I
Common
Shares
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit and
Cumulative
Distributions
Total
Shareholders'
Equity
Non-controlling
Interests
Total Equity
Balance at March 31, 2024$1,172 $ $3 $1,331 $2,461,018 $16,087 $(157,716)$2,321,895 $256,444 $2,578,339 
Common shares issued287 19 9 287 609,628 — — 610,230 — 610,230 
Offering costs— — — — (18,900)— — (18,900)— (18,900)
Distribution reinvestment11 — — 11 22,784 — — 22,806 — 22,806 
Common share repurchases(12)— — (12)(24,062)— — (24,086)— (24,086)
Amortization of restricted share grants— — — — 47 — — 47 — 47 
Net income (Net income of $83 allocated to redeemable NCI)
— — — — — — 13,136 13,136 1,151 14,287 
Other comprehensive income (Other comprehensive loss of $13 allocated to redeemable NCI)
— — — — — (52)— (52)129 77 
Distributions declared on common shares ($0.1751 gross per share)
— — — — — — (48,466)(48,466)— (48,466)
Redeemable common share measurement adjustment— — — — (9)— — (9)— (9)
Contributions from non-controlling interests— — — — — — — — 45 45 
Distributions to and redemptions of non-controlling interests— — — — — — — — (5,988)(5,988)
Redeemable non-controlling interests measurement adjustment— — — — (312)— — (312)— (312)
Reallocation between additional paid-in capital and non-controlling interests due to changes in ownership— — — — (2,807)— — (2,807)2,606 (201)
Balance at June 30, 2024
$1,458 $19 $12 $1,617 $3,047,387 $16,035 $(193,046)$2,873,482 $254,387 $3,127,869 
See accompanying Notes to the Condensed Consolidated Financial Statements.






5


Blue Owl Real Estate Net Lease Trust
Condensed Consolidated Statement of Changes in Equity
(in thousands, except per share data)
Par Value
Class S
Common
Shares
Class N Common SharesClass D
Common
Shares
Class I
Common
Shares
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit and
Cumulative
Distributions
Total
Shareholders'
Equity
Non-controlling
Interests
Total Equity
Balance at December 31, 2023
$921 $ $45 $1,016 $1,948,355 $3,052 $(132,638)$1,820,751 $256,715 $2,077,466 
Common shares issued538 19 14 555 1,141,524 — — 1,142,650 — 1,142,650 
Offering costs— — — — (32,980)— — (32,980)— (32,980)
Distribution reinvestment19 — — 20 40,077 — — 40,116 — 40,116 
Common share repurchases(20)— — (20)(40,933)— — (40,973)— (40,973)
Converted common shares
— — (47)46 1 — — — —  
Amortization of restricted share grants
— — — — (287)— — (287)— (287)
Net income (Net income of $187 allocated to redeemable NCI)
— — — — — — 27,267 27,267 2,730 29,997 
Other comprehensive income (Other comprehensive income of $83 allocated to redeemable NCI)
— — — — — 12,983 — 12,983 1,598 14,581 
Distributions declared on common shares ($0.3500 gross per share)
— — — — — — (87,675)(87,675)— (87,675)
Redeemable common share measurement adjustment— — — — (24)— — (24)— (24)
Contributions from non-controlling interests— — — — — — — — 83 83 
Distributions to and redemptions of non-controlling interests— — — — — — — — (14,135)(14,135)
Redeemable non-controlling interests measurement adjustment— — — — (437)— — (437)— (437)
Reallocation between additional paid-in capital and non-controlling interests due to changes in ownership— — — — (7,909)— — (7,909)7,396 (513)
Balance at June 30, 2024
$1,458 $19 $12 $1,617 $3,047,387 $16,035 $(193,046)$2,873,482 $254,387 $3,127,869 
See accompanying Notes to the Condensed Consolidated Financial Statements.






6


Blue Owl Real Estate Net Lease Trust
Condensed Consolidated Statement of Changes in Equity
(in thousands, except per share data)
Par Value
Class S
Common
Shares
Class N
Common
Shares
Class D
Common
Shares
Class I
Common
Shares
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit and
Cumulative
Distributions
Total
Shareholders'
Equity
Non-controlling
Interests
Total Equity
Balance at March 31, 2023$551 $ $27 $495 $1,048,029 $(2,067)$(24,143)$1,022,892 $269,549 $1,292,441 
Common shares issued104 — 8 153 271,383 — — 271,648 — 271,648 
Offering costs— — — — (11,041)— — (11,041)— (11,041)
Distribution reinvestment5 — — 4 8,906 — — 8,915 — 8,915 
Common share repurchases(6)— (2)(9)(17,184)— — (17,201)— (17,201)
Amortization of restricted share grants
— — — — 37 — — 37 — 37 
Net income (Net income of $28 allocated to redeemable NCI)
— — — — — — 7,846 7,846 1,759 9,605 
Other comprehensive income (Other comprehensive income of $78 allocated to redeemable NCI)
— — — — — 25,257 — 25,257 5,190 30,447 
Distributions declared on common shares ($0.1750 gross per share)
— — — — — — (20,875)(20,875)— (20,875)
Redeemable common share measurement adjustment— — — — (145)— — (145)— (145)
Contributions from non-controlling interests— — — — — — — — 29 29 
Distributions to and redemptions of non-controlling interests— — — — — — — — (5,824)(5,824)
Redeemable non-controlling interests measurement adjustment— — — — 10 — — 10 — 10 
Reallocation between additional paid-in capital and non-controlling interests due to changes in ownership— — — — (1,128)— — (1,128)1,112 (16)
Balance at June 30, 2023$654 $ $33 $643 $1,298,867 $23,190 $(37,172)$1,286,215 $271,815 $1,558,030 
See accompanying Notes to the Condensed Consolidated Financial Statements.







7


Blue Owl Real Estate Net Lease Trust
Condensed Consolidated Statement of Changes in Equity
(in thousands, except per share data)

Par Value
Class S
Common
Shares
Class N
Common
Shares
Class D
Common
Shares
Class I
Common
Shares
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit and
Cumulative
Distributions
Total
Shareholders'
Equity
Non-controlling
Interests
Total Equity
Balance at December 31, 2022$434 $ $14 $317 $744,852 $3,678 $(13,212)$736,083 $293,567 $1,029,650 
Cumulative-effect adjustment upon adoption of ASU 2016-13 (Note 2)— — — — — — (5,162)(5,162)(1,995)(7,157)
Common shares issued220 — 21 329 582,362 — — 582,932 — 582,932 
Offering costs— — — — (20,634)— — (20,634)— (20,634)
Distribution reinvestment8 — — 6 15,380 — — 15,394 — 15,394 
Common share repurchases(8)— (2)(9)(19,324)— — (19,343)— (19,343)
Amortization of restricted share grants
— — — — 74 — — 74 — 74 
Net income (Net loss of $64 allocated to redeemable NCI)
— — — — — — 18,156 18,156 4,698 22,854 
Other comprehensive income (Other comprehensive income of $76 allocated to redeemable NCI)
— — — — — 19,512 — 19,512 3,586 23,098 
Distributions declared on common shares ($0.3500 gross per share)
— — — — — — (36,954)(36,954)— (36,954)
Redeemable common share measurement adjustment— — — — (142)— — (142)— (142)
Contributions from non-controlling interests— — — — — — — — 59 59 
Distributions to and redemptions of non-controlling interests
— — — — — — — — (31,742)(31,742)
Redeemable non-controlling interests measurement adjustment— — — — (5)— — (5)— (5)
Reallocation between additional paid-in capital and non-controlling interests due to changes in ownership— — — — (3,696)— — (3,696)3,642 (54)
Balance at June 30, 2023$654 $ $33 $643 $1,298,867 $23,190 $(37,172)$1,286,215 $271,815 $1,558,030 
See accompanying Notes to the Condensed Consolidated Financial Statements.
8


Blue Owl Real Estate Net Lease Trust
Condensed Consolidated Statement of Cash Flows
(in thousands, except per share data)
Six months ended
June 30, 2024June 30, 2023
Cash flows from operating activities:
Net income$30,184 $22,918 
Adjustments to reconcile net income to cash provided by operating activities:
Management fee
18,804 9,058 
Performance participation allocation
15,162 8,134 
Depreciation and amortization
46,152 28,670 
Amortization of tenant lease inducement777  
Straight-line rent adjustment
(9,118)(8,518)
Accretion of tenant loan receivable
(6,204)(4,966)
Amortization of below-market lease intangibles
(123)(69)
Amortization of deferred financing costs
2,330 6,430 
Impairment charges
4,849  
Income from unconsolidated real estate affiliates
(73,394)(16,774)
Net gain on dispositions of real estate
(714) 
Lease right of use asset amortization
327 327 
Net gain on derivative instruments not designated as hedges
(1,189) 
Amortization of off-market caps4,396  
Amortization of mortgage note premium/discount
 251 
Amortization of restricted shares
207 (168)
Distribution of earnings from unconsolidated real estate affiliates
46,240 5,139 
Non-cash interest expense on affiliate line of credit
4,693 8,491 
Provision for CECL742 816 
Other(95)(88)
Change in assets and liabilities:
(Increase) decrease in other assets
(6,318)2,381 
Decrease in due to affiliates
(1,006)(2,011)
(Decrease) increase in accounts payable and accrued expenses
(7,896)11,546 
Increase in other liabilities
4,931 5,604 
Net cash provided by operating activities
$73,737 $77,171 
Cash flows from investing activities:
Acquisitions of real estate
(55,671)(234,027)
Proceeds from dispositions of real estate5,260  
Acquisitions of intangible assets(9,128) 
9


Capital improvements to real estate(1,448)(58,858)
Investment in leases - financing receivables
(43,378)(40,764)
Purchase of investments in real estate debt
(45,775)(9,723)
Sale of investments in real estate debt16,733 23,846 
Investment in unconsolidated real estate affiliates
(559,325)(366,216)
Cash flows from off-market interest rate swaps and caps4,820 3,633 
Net cash used in investing activities
$(687,912)$(682,109)
Cash flows from financing activities:
Proceeds from issuance of common shares
1,138,233 582,932 
Payment of distributions to common shareholders
(46,121)(18,703)
Payment of distributions to non-controlling interests
(9,786)(9,820)
Repurchase of common share
(40,973)(6,869)
Redemption of non-controlling interests
(724)(21,992)
Proceeds from DST Program
12,940  
Repayment of affiliate line of credit(200,000) 
Borrowings of term loan credit facility
70,000 142,500 
Borrowings under revolving credit facility463,555 132,016 
Repayment of revolving credit facility(353,822)(235,666)
Borrowings under mortgage notes43,000 44,654 
Repayment of mortgage notes(139,854) 
Repayment of other borrowings(287,544) 
Payment of deferred financing costs
(2,357)(4,067)
Net cash provided by financing activities
$646,547 $604,985 
Net change in cash and cash equivalents and restricted cash
32,372 47 
Cash and cash equivalents and restricted cash, beginning of period
136,670 133,578 
Effects of currency translation on cash, cash equivalents, and restricted cash
1,103 1,129 
Cash and cash equivalents and restricted cash, end of period
$170,145 $134,754 
Reconciliation of cash and cash equivalents and restricted cash to the consolidated balance sheet
Cash and cash equivalents$101,571 $46,857 
Restricted cash68,574 87,897 
Total cash and cash equivalents and restricted cash$170,145 $134,754 
Supplemental disclosures:
Interest paid
$64,565 $45,442 
Income taxes paid$1,228 $ 
Accrued unpaid amounts for capital improvements to real estate$11,920 $7,069 
Accrued unpaid amounts for other intangible assets$36,138 $ 
Non-cash investing and financing activities:
Assumption of other borrowings in conjunction with investments in unconsolidated real estate affiliates
$287,444 $ 
Issuance of redeemable Class I Shares as interest payment for the affiliate line of credit$7,081 $7,935 
Issuance of redeemable Class I Shares as settlement of the management fee$16,544 $7,686 
Redeemable non-controlling interest issued as settlement of performance participation allocation$5,371 $2,504 
Allocation to redeemable non-controlling interest$437 $5 
Allocation to redeemable common shares$24 $142 
Distribution reinvestment$40,077 $15,394 
Accrued distributions for common shareholders
$17,418 $2,857 
10


Accrued distributions for non-controlling interests
$1,696 $1,613 
Accrued shareholder servicing fees
$78,477 $37,417 
See accompanying Notes to the Condensed Consolidated Financial Statements.
11


Blue Owl Real Estate Net Lease Trust
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands)
1.    Organization and Nature of the Business
Blue Owl Real Estate Net Lease Trust (“we”, “us”, “our”, “ORENT”, and the “Company”) invests primarily in a diversified portfolio of single-tenant commercial real estate properties subject to long-term net leases with investment grade and other creditworthy tenants or guarantors across the United States and Canada. The Company is the sole general partner and majority limited partner in Blue Owl NLT Operating Partnership LP, a Delaware limited partnership (the “NLT OP” or “Operating Partnership”). Substantially all of the Company’s business is conducted through the NLT OP. As of June 30, 2024, ORENT owns 91.6% of the NLT OP. The Company and the NLT OP are externally managed by an adviser, Blue Owl Real Estate Capital LLC (“Blue Owl Real Estate” or “Adviser”), a subsidiary of Blue Owl Capital Inc. (“Blue Owl”). The Company’s investment decisions are made by employees of the Adviser, subject to general oversight by the Company’s investment committee and the Company’s board of trustees (the “Board”). The Company was formed under the name Oak Street Net Lease Trust on April 4, 2022 (“Inception”) as a Maryland statutory trust; however, no activity occurred until the first capital funding from Blue Owl on August 9, 2022. On July 6, 2023, the Company and NLT OP changed their legal names from Oak Street Net Lease Trust and OakTrust Operating Partnership L.P., respectively.
The Company operates in a manner to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes. As a REIT, the Company is entitled to a tax deduction for some or all of the dividends paid to shareholders. Accordingly, the Company generally will not be subject to federal income taxes as long as it currently distributes to shareholders an amount equal to or in excess of the Company’s taxable income. If the Company fails to operate in a manner to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to federal and state income tax on its taxable income at regular corporate tax rates.
The Company’s principal business is the acquisition, ownership, financing and leasing of single-tenant commercial real estate properties subject to long-term net leases with investment grade and other creditworthy tenants or guarantors, and its management does not distinguish the principal business, or group the operations, by geography or property type for purposes of measuring performance. Accordingly, the Company has only one reportable segment.
As of June 30, 2024, the Company owned 182 investments in real estate, 19 investments in real estate leases and 22 build-to-suit assets currently in development, including industrial, retail, and office properties. Additionally, the Company holds interest in three joint ventures that are included in investments in unconsolidated real estate affiliates, including STORE Capital LLC and Waterparks LLC (collectively, “STORE”). STORE owns 3,230 properties which are leased to 625 tenants on a triple-net lease basis. As of June 30, 2024, the Company holds a 16.1% ownership interest in STORE. The Company’s investment in STORE qualifies as a significant investment under SEC Regulation S-X Rule 10-01(b) (refer to Note 4 - Investments in Unconsolidated Real Estate Affiliates). The Company also holds investments in real estate debt which consist of securities and loans (refer to Note 5 - Investments in Real Estate Debt).
On September 1, 2022, the Company commenced the offering of its common shares through a continuous private placement offering (“Private Offering”), under Regulation D of the Securities Act of 1933, as amended (the “1933 Act”). As of June 30, 2024, the Company is authorized to issue an unlimited number of each of its classes of shares of its common shares (Class S shares, Class N shares, Class D shares, and Class I shares), each with a par value of $0.01 per common share. The share classes have different upfront selling commissions, dealer manager fees and ongoing shareholder servicing fees. The initial offering price for shares sold through the Private Offering was $10.00 per share. The Company conducts periodic closings and sells shares at the prior net asset value (“NAV”) per share as determined using the valuation methodology recommended by the Adviser and approved by the pricing committee of the Board, plus applicable fees and commissions. The NAV per share is calculated on a fully diluted basis. NAV may differ from the values of our real estate assets as calculated in accordance with accounting principles generally accepted in the United States (“GAAP”).
On August 31, 2023, the Company, through the NLT OP, initiated a program (the “DST Program”) to issue and sell up to a maximum aggregate offering amount of $3,000,000 of beneficial interests (“Interests”) in specific Delaware statutory trusts (the “DSTs”) holding real properties (the “DST Properties”) to “accredited investors,” as that term is defined under Regulation D promulgated by the SEC under the 1933 Act in private placements exempt from registration pursuant to Section 4(a)(2) of the 1933 Act (the “DST Offerings”). As of June 30, 2024, the Company has raised proceeds of $26,736 from its DST program. See Note 6 - DST Program for additional information.
12


2.    Summary of Significant Accounting Policies and Estimates
The Company believes the following significant accounting policies, among others, affect its more significant estimates and assumptions used in the preparation of the Condensed Consolidated Financial Statements.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information as established by the Financial Accounting Standards Board (“FASB”) in the Accounting Standards Codification (“ASC”) including modifications issued under Accounting Standards Updates (“ASUs”). The Condensed Consolidated Financial Statements include the accounts of the Company, the Company’s subsidiaries, and investments in which the Company has a controlling interest. All intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on March 18, 2024.
Principles of Consolidation
The Company consolidates all entities in which it has a controlling financial interest through majority ownership or voting rights and variable interest entities whereby the Company is the primary beneficiary. In determining whether the Company has a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, the Company considers whether the entity is a variable interest entity (“VIE”) and whether it is the primary beneficiary. The Company is the primary beneficiary of a VIE when it has (i) the power to direct the most significant activities impacting the economic performance of the VIE and (ii) the obligation to absorb losses or receive benefits significant to the VIE. Entities that do not qualify as VIEs are generally considered voting interest entities (“VOEs”) and are evaluated for consolidation under the voting interest model. VOEs are consolidated when the Company controls the entity through a majority voting interest or other means.
When the requirements for consolidation are not met and the Company has significant influence over the operations of the entity, the investment is accounted for under the equity method of accounting. Equity method investments for which the Company has not elected a fair value option are initially recorded at cost and subsequently adjusted for the Company’s pro-rata share of net income, contributions and distributions. Equity method investments for which the Company has elected a fair value option (“FVO”) are initially recorded at fair value and subsequently the changes in fair value are reported in earnings.
The NLT OP is considered to be a VIE. The Company consolidates this entity as it has the ability to direct the most significant activities of the entity such as purchases, dispositions, financings, budgets, and overall operating plans.
For consolidated entities, the non-controlling partner’s share of the assets, liabilities, and operations of each entity is included in non-controlling interests as equity of the Company. The non-controlling partner’s interest is generally computed as the non-controlling interests’ ownership percentage. Any profits interest due to the other owner is reported within non-controlling interests.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Global macroeconomic conditions including the persistence of elevated inflation and interest rates, in conjunction with geopolitical uncertainty, including the ongoing hostilities between Russia and Ukraine, as well as the conflict and escalating tensions in the Middle East, continue to weigh on industry deal activity, and may have a negative impact on the Company and its investors.
The Company believes the estimates and assumptions underlying its consolidated financial statements are reasonable based on the information available as of June 30, 2024. However, uncertainty over the current global macroeconomic environment and its impact on the Company’s operations may cause actual results to differ materially from those estimates.
13


Rental Revenue
The Company’s primary source of revenues is rental revenue, which is accounted for under the lease standard. Rental revenue primarily consists of fixed contractual base rent arising from tenant leases at our properties under operating leases or sales-type leases. Revenue under leases that are deemed probable of collection is recognized as revenue on a straight-line basis over the non-cancelable term of the related leases. The Company begins to recognize revenue upon the acquisition of the related property or when a tenant takes possession of the leased space. Base rent arising from tenant leases at our properties is recognized on a straight-line basis over the life of the lease, including any rent steps or abatement provisions. For leases that are deemed not probable of collection, revenue is recorded as the lesser of (i) the amount which would be recognized on a straight-line basis or (ii) cash that has been received from the tenant, with any tenant and deferred rent receivable balances charged as a direct write-off against rental revenue in the period of the change in the collectability determination. Our estimate of collectability includes, but is not limited to, factors such as the tenant’s payment history, financial condition, industry and geographic area. These estimates could differ materially from actual results.
Investments in Real Estate
In accordance with the guidance for business combinations, the Company determines whether the acquisition of a property qualifies as a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the property acquired does not constitute a business, the Company accounts for the transaction as an asset acquisition. The guidance for business combinations states that when substantially all of the fair value of the gross assets to be acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the asset or set of assets is not a business. All property acquisitions to date have been accounted for as asset acquisitions.
Whether the acquisition of a property acquired is considered a business combination or asset acquisition, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. The Company expenses acquisition-related costs associated with business combinations as they are incurred. The Company capitalizes acquisition-related costs associated with asset acquisitions.
Upon acquisition of a property, the Company assesses the fair value of acquired tangible and intangible assets (including land, buildings, tenant improvements, “above-market” and “below-market” leases, acquired in-place leases, other identified intangible assets and assumed liabilities) and allocates the purchase price to the acquired assets and assumed liabilities. The Company assesses and considers fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that it deems appropriate, as well as other available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known and anticipated trends, and market and economic conditions.
The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. Tangible assets include land and improvements, buildings, and construction in process. The Company records acquired above-market and below-market leases at their fair values (using a discount rate which reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid pursuant to each in-place lease and (2) the Company’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases. The Company records acquired in-place lease values based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors to be considered include estimates of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, the Company considers leasing commissions, legal and other related expenses. The Company also considers an allocation of purchase price of other acquired intangibles, including acquired in-place leases.
Intangible lease assets and intangible lease liabilities are recorded as Intangible assets, net and a component of Other liabilities, respectively, on the Company’s Consolidated Balance Sheet. The amortization of acquired above and below-market leases, and lease inducements is recorded as an adjustment to Rental Revenue on the Company’s Consolidated Statement of Operations. The amortization of in-place leases and other lease intangibles is recorded as an adjustment to depreciation and amortization expense on the Company’s Consolidated Statement of Operations.
The cost of buildings and improvements includes the purchase price of the Company’s properties and any acquisition-related costs, along with any subsequent improvements to such properties. The Company’s investments in real estate are
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stated at cost and are generally depreciated on a straight-line basis over the estimated remaining useful lives of the assets as follows:
DescriptionDepreciable Life
Buildings
12 - 50 years
Land improvements
1 - 44 years
In-place lease intangibles
9 - 24 years
Other lease intangibles (1)
Over lease term
__________________
(1)Other lease intangibles primarily includes above and below market leases, lease inducements, and lease commissions.

For the three and six months ended June 30, 2024, depreciation expense was $20,913 and $41,803, respectively. For the three and six months ended June 30, 2023, depreciation expense was $13,518 and $24,581, respectively.
Land acquired under build-to-suit arrangements in a sale-leaseback transaction is accounted for as an investment in loans receivable as the related lease is not deemed to have commenced until the constructed assets are substantially complete. These investments are included within Investments in real estate debt within the Condensed Consolidated Balance Sheets. Other tangible assets acquired under such arrangements are recorded as construction in progress upon acquisition as the Company controls the assets during construction.
Significant improvements to properties are capitalized. Repairs and maintenance are expensed to operations as incurred and are included in Rental property operating expenses on the Company’s Consolidated Statement of Operations.
The Company capitalizes certain costs related to the development of real estate, including pre-construction costs, real estate taxes, insurance, construction costs, and salaries and related costs of personnel directly. Additionally, we capitalize interest costs related to development activities. Capitalization of these costs begin when the activities and related expenditures commence and cease when the project is substantially complete and ready for its intended use at which time the project is placed in service and depreciation commences. Interest costs capitalized for the three and six months ended June 30, 2024 were approximately $53, respectively. Interest costs capitalized for the three and six months ended June 30, 2023 were approximately $6,870 and $16,495, respectively. Additionally, we make estimates as to the probability of completion of development, and we expense all capitalized costs which are not recoverable.
The Company reviews its real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates an impaired value. If the GAAP depreciated cost basis of a real estate investment exceeds the undiscounted cash flows of such real estate investment, the investment is considered impaired and the GAAP depreciated cost basis is reduced to the fair value of the investment. The impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value. The evaluation of anticipated future cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Since cash flows on real estate properties considered to be “long-lived assets to be held and used” are considered on an undiscounted basis to determine whether an asset has been impaired, the Company’s strategy of holding properties over the long-term directly decreases the likelihood of recording an impairment loss. If the Company’s strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized and such loss could be material to the Company’s results. If the Company determines that an impairment has occurred, the affected assets must be reduced to their fair value.
The valuation and possible subsequent impairment of real estate properties is a significant estimate that can and does change based on the Company’s continuous process of analyzing each real estate property’s economic condition at a point in time and reviewing assumptions about uncertain inherent factors, including observable inputs such as contractual revenues and unobservable inputs such as forecasted revenues and expenses, estimated net disposition proceeds, and discount rates. These unobservable inputs are based on a real estate property’s market conditions and expected growth rates. It may be difficult to reflect fully and accurately rapidly changing market conditions or material events that may impact the value of our investments in real estate between valuations, or to obtain complete information regarding any such events in a timely manner. Changes in economic and operating conditions and the Company’s ultimate investment intent that occur subsequent to the impairment analyses could impact these assumptions and result in additional impairment of the real estate properties.
Investments in Unconsolidated Real Estate Affiliates
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The Company evaluates its equity method investments on a periodic basis to determine if there are any indicators that the value of our equity investment may be impaired and whether or not that impairment is other-than-temporary. To the extent an impairment has occurred and is determined to be other-than-temporary, the Company measures the charge as the excess of the carrying value of our investment over its estimated fair value, which is determined by calculating our share of the estimated fair market value of the underlying net assets based on the terms of the applicable partnership or joint-venture agreement. For equity investments in entities that hold real estate, the estimated fair value of the underlying investment’s real estate is calculated based on whether the acquisition of a property qualifies as a business combination or an asset acquisition. The fair value of the underlying investment’s debt, if any, is calculated based on market interest rates and other market information. The fair value of the underlying investment’s other financial assets and liabilities have fair values that generally approximate their carrying values.
The Company has elected the FVO for certain of its investments in unconsolidated real estate affiliates and therefore reports these investments at fair value in Investments in unconsolidated real estate affiliates on the Condensed Consolidated Balance Sheet. Changes in the fair value of equity method investments under the FVO are recorded as Income from unconsolidated real estate affiliates in the Condensed Consolidated Statement of Operations.
Distributions received from equity method investments are classified using the nature of distributions approach. Distributions received are classified based on the nature of the activity or activities that generated the distributions as a return on the investment, which are classified as (i) cash inflows from operating activities, or (ii) a return of investment, which are classified as cash inflows from investing activities. Transaction costs associated with the equity method investments are expensed as incurred. Investments made, including the transaction costs, for equity method investments are classified as cash outflows from investing activities in the Condensed Consolidated Statement of Cash Flows.
Foreign Currency
In the normal course of business, the Company makes investments in real estate outside the United States (“U.S.”) through subsidiaries that have a non-U.S. dollar functional currency. Non-U.S. dollar denominated assets and liabilities of these foreign subsidiaries are translated to U.S. dollars at the prevailing exchange rate at the reporting date and income, expenses, gains, and losses are translated at the average exchange rate over the applicable period. Cumulative translation adjustments arising from the translation of non-U.S. dollar denominated assets and liabilities are recorded in Other Comprehensive Income (Loss).
Fair Value Measurements
The carrying amounts of cash and cash equivalents and accounts payable and accrued expenses reasonably approximate fair value, in the Company’s judgment, because of their short-term nature.
In accordance with ASC 820, Fair Value Measurement, the Company defines fair value based on the price that would be received upon sale of an asset or the exit price that would be paid to transfer or settle a liability in an orderly transaction between market participants at the measurement date. The Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of the three broad levels described below:
Level 1 — Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
Level 2 — Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. Due to inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these investments existed.
The Company has estimated the fair value of its financial instruments and non-financial assets using available market information and valuation methodologies we believe to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that would be realized upon disposition.
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Valuation of assets and liabilities measured at fair value
The Company’s investments in real estate debt and FVO equity method investments are reported at fair value. As of June 30, 2024, the Company’s investments in real estate debt, directly or indirectly, consisted of commercial mortgage-backed securities (“CMBS”), which are securities backed by one or more mortgage loans secured by real estate assets, as well as a commercial real estate loan. The Company generally determines the fair value of its investments in real estate debt by utilizing third-party pricing service providers whenever available.
In determining the fair value of a particular investment, pricing service providers may use broker-dealer quotations, reported trades or valuation estimates from their internal pricing models to determine the reported price. The pricing service providers’ internal models for securities such as real estate debt generally consider the attributes applicable to a particular class of the security (e.g., credit rating, seniority), current market data, and estimated cash flows for each security, and incorporate specific collateral performance, as applicable. Certain of the Company’s investments in real estate debt are unlikely to have readily available market quotations. In such cases, the Company will generally determine the initial value based on the acquisition price of such investment if acquired by the Company or the par value of such investment if originated by the Company. Following the initial measurement, the Company will determine fair value by utilizing or reviewing certain of the following: (i) market yield data, (ii) discounted cash flow modeling, (iii) collateral asset performance, (iv) local or macro real estate performance, (v) capital market conditions, (vi) debt yield or loan-to-value ratios, and (vii) borrower financial condition and performance. Refer to Note 5 - Investments in Real Estate Debt for additional details on the Company’s investments in real estate debt.
The Company has elected the FVO for certain of its investments in unconsolidated real estate affiliates and therefore, reports these investments at fair value. The Company estimates the fair market value of these investments based on its pro rata share of the investments’ equity at fair value. The investments’ underlying real estate holdings and debt are valued on a recurring basis using unobservable inputs (Level 3 inputs). The fair value of the underlying real estate holdings is generally determined using the income capitalization valuation method. As of June 30, 2024, the weighted average capitalization rate utilized was 7.2%. The fair value of the underlying debt is determined by discounting the future contractual cash flows to the present value using current market interest rates. As of June 30, 2024, the weighted average interest rate utilized was 5.6%.
The Company’s derivative financial instruments are reported at fair value and consist of interest rate and foreign currency contracts. The fair values of the Company’s interest rate and foreign currency contracts were estimated using advice from a third-party derivative specialist, based on cash flows and observable inputs comprising of yield curves, foreign currency rates, and credit spreads (Level 2 inputs). Fair value information relating to derivative financial instruments is provided in Note 9 - Derivative Financial Instruments.
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The following table details the Company’s assets measured at fair value on a recurring basis:
June 30, 2024December 31, 2023
Level 2Level 3TotalLevel 2Level 3Total
Assets:
Investments in unconsolidated real estate affiliates$ $1,571,393 $1,571,393 $ $699,570 $699,570 
Investments in real estate debt54,190 43,435 97,625 30,974 56,235 87,209 
Interest rate hedging derivatives21,636  21,636 6,945  6,945 
Foreign currency hedging derivatives3,624  3,624 5,065  5,065 
Total$79,450 $1,614,828 $1,694,278 $42,984 $755,805 $798,789 
Liabilities:
Interest rate hedging derivatives914 $ 914 $4,651 $ $4,651 
Foreign currency hedging derivatives4,189  4,189 6,820  6,820 
DST financing obligation  26,805 26,805  13,694 13,694 
Total $5,103 $26,805 $31,908 $11,471 $13,694 $25,165 
The Company has a secured borrowing related to a security included within Investment in real estate debt, which is stated at cost in Other liabilities and approximates fair value.
The following table details the Company’s assets and liabilities measured at fair value on a recurring basis using Level 3 inputs:
Investments in real estate debtInvestments in unconsolidated real estate affiliatesTotal AssetsDST Financing Obligation
Balance as of December 31, 2023$56,235 $699,570 $755,805 $13,694 
Purchases 847,169 847,169  
Sales(12,800) (12,800) 
Distributions received (48,566)(48,566) 
DST Program proceeds   12,866 
Included in net income
Loss on fair value of DST financing obligation    245 
Income from unconsolidated real estate affiliates measured at fair value 73,220 73,220  
Balance as of June 30, 2024$43,435 $1,571,393 $1,614,828 $26,805 
The commercial real estate loan is categorized in Level 3 of the fair value hierarchy. As of June 30, 2024, the change in value of the investment is immaterial.
Valuation of assets measured at fair value on a nonrecurring basis
Certain of the Company’s assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments, such as when there is evidence of impairment, and therefore such assets are measured at fair value on a nonrecurring basis. The Company reviews its real estate properties for impairment each quarter and when there is an event or change in circumstances that could indicate the carrying amount of the real estate value may not be recoverable. During the three and six months ended June 30, 2024, the Company recognized $4,849 of impairment charges related to one tenant, SQRL Holdings. The Company did not recognize any impairment charges during the three and six months ended June 30, 2023.
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Valuation of liabilities not measured at fair value
As of June 30, 2024 and December 31, 2023, the fair value of the Company’s Mortgage notes and credit facilities was $2,822 below carrying value and $2,666 below carrying value, respectively. Fair value of the Company’s indebtedness is estimated by modeling the cash flows required by the Company’s debt agreements and discounting them back to the present value using an estimated market yield. Additionally, the Company considers current market rates and conditions by evaluating similar borrowing agreements with comparable loan-to-value ratios and credit profiles. The inputs used in determining the fair value of the Company’s indebtedness are considered Level 3. Fair value information pertaining to debt is provided in Note 8 – Debt.
Allowance for Credit Losses
The Company analyzes its Investment in leases - financing receivables, net and its investment in loans receivable, which are included within Investments in real estate debt in the Company’s Condensed Consolidated Balance Sheet, for potential credit losses under the current expected credit losses (“CECL”) model. The allowance for credit losses is measured, considering the Company’s ownership of the underlying asset, using a probability of default method based on the lessee’s and borrower’s respective credit ratings, the expected value related to releasing underlying assets or collateral, our historical loss experiences, and other factors related to other sale-leasebacks accounted for as financing receivables and our investments in loans receivable. Included in our model are factors that incorporate forward-looking information. Changes in the allowance for credit losses are subsequently included in the Company’s Condensed Consolidated Statements of Operations within General and administrative expenses and as a reduction to Investment in leases - financing receivables, net and Investments in real estate debt on our Condensed Consolidated Balance Sheet. As of June 30, 2024 and December 31, 2023, the Company has recorded an allowance for credit losses of $17,380 and $16,638, respectively, which all related to its Investment in leases - Financing receivables, net.
Earnings Per Share
Basic net income per common share is determined by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding during the period. All classes of common shares are allocated net income/(loss) at the same rate per share and receive the same gross distribution per share.
Share-Based Compensation
We compensate each of our non-employee trustees on the Board who are not affiliated with Blue Owl with an annual retainer of restricted Class I shares as part of their compensation for services on the Board. See Note 12 - Equity and Non-Controlling Interest for additional information regarding share-based compensation. We recognize compensation expense related to share-based awards to our independent trustees in our condensed consolidated financial statements based on the fair value of the award on the date of grant.
Recently Issued Accounting Pronouncements
The Company considers the applicability and impact of all accounting standards and pronouncements issued by the FASB. Accounting standards and pronouncements not yet adopted were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s results of operations, financial position and cash flows.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures. The amendments in ASU 2023-07 are meant to improve reportable segment disclosure requirements through enhanced disclosures in order to enable investors to better understand an entity’s overall performance and better assess the entity’s future cash flows. The enhanced disclosures include the disclosure of significant segment expenses, as well as the expansion of interim disclosure requirements to require nearly all of the annual segment disclosures. Significant segment expenses are those that are significant to the segment, regularly provided to or easily computed from information regularly provided to the chief operating decision maker (the “CODM”), and included in the reported measure of segment profit or loss. The ASU is effective for public companies for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. The ASU should be adopted on a retrospective basis unless it is impracticable to do so. Early adoption is permitted, including in an interim period. The Company is currently assessing the impact of adopting the standard on the Company's financial statement disclosures.
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3.    Investments in Real Estate, net
Investments in real estate, net consisted of the following:
June 30,
2024
December 31,
2023
Buildings$2,283,584 $2,290,367 
Land and land improvements510,417 499,936 
Construction in process40,639  
Total
2,834,640 2,790,303 
Accumulated depreciation
(115,699)(74,471)
Investments in real estate, net
$2,718,941 $2,715,832 
No construction in progress was placed into service during the six months ended June 30, 2024. During the six months ended June 30, 2023, $519,295 of construction in progress was placed into service, including $468,952 of buildings and $50,343 of land improvements.
The total rentable square feet of gross leasable area (“GLA”) of the Company was 15,373 and 14,266 thousand square feet as of June 30, 2024 and 2023, respectively, of which approximately 99% and 100% was leased, respectively.
Acquisitions
The following tables set forth the acquisition values, number of properties and total rentable square feet of GLA of the Company for the six months ended June 30, 2024 and 2023. For acquisitions not denominated in USD, the amounts have been presented in USD at the prevailing foreign exchange rate on the acquisition date:
Six Months Ended June 30, 2024
Property TypeAcquisition ValueNumber of Properties
Square Feet
(in thousands)(1)
Industrial$54,761 22$5,657 
Retail10,023 1954 
$64,784 236,611 
_____________
(1)The square footage for the retail property and a portion of industrial properties relates to build-to-suit assets.

Six Months Ended June 30, 2023
Property TypeAcquisition ValueNumber of Properties
Square Feet
(in thousands)
Industrial$248,979 4 $3,156 
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The following table details the purchase price allocation for the properties acquired during the six months ended June 30, 2024 and 2023:
Six Months Ended
June 30, 2024June 30, 2023
Buildings$13,461 $206,568 
Land and land improvements13,178 42,411 
Construction in process29,017  
In-place lease intangibles4,080  
Other lease intangibles5,142  
Below-market lease intangibles(94) 
Total Purchase Price$64,784 $248,979 
Dispositions
During the six months ended June 30, 2024, the Company disposed of one retail property and one parcel of excess land at an industrial property for total net proceeds of $5,260 and recognized a net gain on dispositions of real estate of $714.
4.    Investments in Unconsolidated Real Estate Affiliates
The Company owns interests in unconsolidated real estate investments with third parties. As of June 30, 2024 and December 31, 2023, investments in unconsolidated real estate affiliates were $1,577,389 and $705,628, respectively.
STORE
On February 3, 2023, the Company made an indirect investment through Ivory OSREC OS Aggregator LLC (“OS Aggregator”) in STORE, a publicly traded REIT invested in net-lease real estate, in an all-cash, take-private transaction. The Company has elected to account for the investment using the FVO under ASC 825.
In connection with closing of the initial investment, OS Aggregator signed a Forward Interest Purchase Agreement (the “FIPA”) pursuant to which it agreed to purchase additional indirect interests in STORE such that OS Aggregator owns, in aggregate, an indirect 25% membership interest in STORE prior to the first anniversary of the closing of the initial investment, representing an aggregate additional investment of approximately $1,063,000 as of the signing date. Pursuant to the FIPA, the Company agreed to use available fundraising proceeds, subject to certain deductions for Company operations and previously committed acquisitions, to make purchases under the FIPA, although the FIPA contains no mandatory fundraising minimums directly from the Company. The Company guaranteed the foregoing obligations under the FIPA, and it agreed to pay an aggregate amount equal to $500,000 if it were to divert available proceeds in violation of the FIPA or fail to pursue fundraising in good faith.
On February 6, 2024, subsidiaries of the Company entered into promissory notes with SuNNNy Days, LLC, an affiliate of GIC, to borrow $287,844 (the “FIPA Loan”) in exchange for assignment of ownership of the remaining units OS Aggregator was required to purchase under the FIPA. Such assignment resulted in OS Aggregator reaching an indirect 25% membership interest in STORE, and meeting the obligations of the FIPA. The FIPA Loan has an interest rate of 9.0% and a term of 18 months, with a maturity date of August 1, 2025. In March 2024, the Company repaid $134,450 of the FIPA Loan through the use of proceeds from the issuance of common shares. In April 2024, the Company repaid the remaining outstanding balance of $153,394 through the use of proceeds from the issuance of common shares.
During the six months ended June 30, 2024, the Company made incremental investments in OS Aggregator under the terms of the FIPA of $488,075, excluding the investments made using proceeds from the FIPA loan. During the six months ended June 30, 2024, the Company contributed an additional $71,250 to fund capital calls initiated by STORE to OS Aggregator. Additionally, OS Aggregator made distributions of $80,810 for the six months ended June 30, 2024, of which the Company received $47,529.
As of June 30, 2024, the Company owns a 64.3% interest in OS Aggregator. The initial and incremental investments made by the Company and affiliates of the Company in OS Aggregator were $2,384,157, representing 25.0% ownership percentage of interest in STORE. As of June 30, 2024, the fair value of the Company’s investment in STORE was $1,543,826, representing a 16.1% ownership percentage of interest in STORE.
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The Company has determined that STORE is considered a significant subsidiary under SEC Regulation S-X 10-01(b) as of June 30, 2024.
The following table provides summarized income statement information of STORE for the three and six months ended June 30, 2024 and 2023 (amounts in thousands):
Three Months EndedSix Months Ended
June 30, 2024June 30, 2023June 30, 2024June 30, 2023
Total revenue$272,464 $250,791 $542,323 $414,623 
Net income $166,364 $150,525 $345,107 $253,222 
The following tables detail the Company’s investments in unconsolidated real estate affiliates:
Carrying Amount of Investment
InvestmentOwnership PercentageJune 30, 2024December 31, 2023
STORE
16.1 %$1,543,826 $675,944 
Blue Owl NL Opportunity Credit REIT E LLC ("Fleet Farm JV")
49.1 %5,996 6,058 
Blue Owl NL Opportunity Credit Holdings REIT LLC ("Tenneco JV")
50.9 %27,567 23,626 
Total$1,577,389 $705,628 
ORENT's Share of Unconsolidated Entities' Income
Three Months Ended Six Months Ended
InvestmentJune 30, 2024June 30, 2023June 30, 2024June 30, 2023
STORE (1)
$36,205 $11,573 $68,242 $15,252 
Blue Owl NL Opportunity Credit REIT E LLC ("Fleet Farm JV") (2)
33 173 174 88 
Blue Owl NL Opportunity Credit Holdings REIT LLC ("Tenneco JV") (3)
3,856 1,434 4,978 1,434 
Total$40,094 $13,180 $73,394 $16,774 
(1)    The Company’s share of STORE’s net income includes our portion of STORE’s income and unrealized gains/losses based on our varying ownership percentage, which increased throughout the period, as well as our pro-rata share of OS Aggregator’s expenses.
(2) On August 12, 2022, the Company formed Oak Street NL Opportunity Credit REIT E LLC (“Fleet Farm JV”), a joint venture which the Company holds a 49.1% ownership in and accounts for under the equity method of accounting. The Company’s initial contribution into the joint venture was $6,986. The joint venture acquired two properties, which are leased on a triple net basis to the tenant. On September 18, 2023, Fleet Farm JV changed its legal name to Blue Owl NL Opportunity Credit REIT E LLC pursuant to a certificate of amendment to its Certificate of Formation filed with the Secretary of State of Delaware on September 18, 2023.
(3)    On June 5, 2023, the Company formed Blue Owl NL Opportunity Credit Holdings REIT LLC (“Tenneco JV”), a joint venture which the Company holds a 50.9% ownership in and accounts for under the equity method of accounting. The Company has elected to account for the investment using the FVO under ASC 825. The Company’s initial contribution into the joint venture was $41,738. The joint venture acquired four properties, which are leased on a triple net basis to the tenant. In July 2023, the Company contributed an additional $9,467 into the joint venture. The additional capital contributed pro rata by each partner was used to acquire two additional properties, which are leased on a triple net basis to the tenant. The Company received return of capital distributions of $999 and $30,487 in September and November 2023, respectively, primarily funded by a mortgage loan entered into by wholly owned subsidiaries of the Tenneco JV for its six assets in November 2023.
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5.    Investments in Real Estate Debt
The following tables detail the Company’s investments in real estate debt:
June 30, 2024
Type of Security/Loan
Weighted Average
Coupon(1)
Weighted Average Maturity Date(2)
Face
Amount
Cost BasisFair Value
CMBS
SOFR+4%
10/26/2033$54,499 $53,946 $54,190 
Commercial real estate loan (3)
14 %7/12/202543,435 43,435 43,435 
Total investments in real estate debt (4)
11 %$97,934 $97,381 $97,625 
December 31, 2023
Type of Security/Loan
Weighted Average
Coupon(1)
Weighted Average Maturity Date(2)
Face
Amount
Cost BasisFair Value
CMBS
SOFR + 4%
10/25/2034$30,995 $30,830 $30,974 
Commercial real estate loan (3)
14 %7/12/202556,235 56,235 56,235 
Total investments in real estate debt10 %$87,230 $87,065 $87,209 
__________________
(1)The term SOFR refers to the relevant floating benchmark rates, one-month SOFR.
(2)Weighted average maturity date is based on the fully extended maturity date of the instrument.
(3)The borrower for the commercial real estate loan is NLCA Real Estate Holdings, LLC.
(4)Total investments in real estate debt per the tables above exclude our investments in loans receivable, described below, which had a balance of $26,914 as of June 30, 2024. We did not hold any investments in loans receivable as of December 31, 2023.

The following table details the credit rating of the Company’s investments in real estate debt:
June 30, 2024December 31, 2023
Credit RatingCost BasisFair ValuePercentage Based
on Fair Value
Cost BasisFair ValuePercentage Based
on Fair Value
AAA$ $  %$5,176 $5,189 6 %
AA-4,928 4,917 5 %   %
A37,007 7,043 7 %7,009 7,026 8 %
Baa33,007 3,020 3 %3,008 3,014 3 %
Ba3   %2,433 2,479 3 %
BBB5,432 5,453 6 %5,514 5,530 6 %
BBB-10,265 10,348 11 %5,367 5,384 6 %
BB+6,982 6,983 7 %   %
BB2,322 2,441 3 %2,323 2,352 3 %
BB-7,008 6,990 7 %   %
NR6,995 6,995 7 %   %
Private commercial real estate loan (Not rated)43,435 43,435 44 %56,235 56,235 65 %
Total$97,381 $97,625 100 %$87,065 $87,209 100 %
The following table provides the activity for the real estate-related securities for the six months ended June 30, 2024:
Amortized Cost BasisGain/(Loss)Fair Value
Real estate-related securities as of December 31, 2023
$30,830 $144 $30,974 
Face value of real estate-related securities acquired30,829  30,829 
Sale of real estate-related securities(7,673) (7,673)
Realized gain on sale of real estate-related securities95  95 
Decrease in accrued interest income(135) (135)
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Unrealized gain on real estate securities 100 100 
Real estate-related securities as of June 30, 2024
$53,946 $244 $54,190 
Other Investments
During the six months ended June 30, 2024 the Company acquired land related to build-to-suit properties for a total purchase price of $26,916 which is being accounted for as an investment in loans receivable. The loans will mature within approximately 13 months and are held at amortized cost. Direct costs associated with originating loans is deferred and amortized as an adjustment to interest income over the term of the related loan receivable. As of June 30, 2024, the Company held 22 investments in loans receivable with a total balance of $26,914 which are included within Investments in real estate debt in the Condensed Consolidated Balance Sheet.
6.    DST Program
On August 31, 2023, the Company, through NLT OP, initiated a DST Program to issue and sell up to a maximum aggregate offering amount of $3,000,000 of Interests in specific DSTs holding DST Properties in private placement. Under the DST Program, DST Properties, which may be sold, contributed, sourced, or otherwise seeded from the Company’s real properties held through NLT OP or from third parties, will be held in one or more DSTs and leased back by a wholly-owned subsidiary of NLT OP in accordance with corresponding master lease agreements. Each master lease agreement will be guaranteed by NLT OP, which will have the right, but not the obligation, to acquire the Interests in the applicable DST from the beneficial owners or the applicable DST’s right, title, interest in any portion of the DST Properties from the beneficial owners, in each case, in exchange for cash or units of NLT OP (“OP Units”), at a purchase price equal to the fair market value of the beneficial owner’s interest in one or more of the DST Properties (the “FMV Buyback Option”). The FMV Buyback Option is exercisable during the one-year option period beginning two years from the final closing of the applicable DST Offering or in such other time frame as provided for in the applicable DST arrangement. After a one-year holding period, investors who receive OP Units pursuant to the FMV Buyback Option generally have the right to cause NLT OP to redeem all or a portion of their OP Units for, at the Company’s sole discretion, common shares of the Company, cash, or a combination of both.
The sale of interests in the DST Property will be accounted for as a failed sale-leaseback transaction due to the fair market value purchase option retained by NLT OP and as such, the property will remain on the Company’s books and records. The proceeds received from the DST will be accounted for as a financing obligation liability on the Condensed Consolidated Balance Sheets.
The Company contributed two industrial assets to the DST as part of the initial DST Program offering of $85,300, and a wholly-owned subsidiary of the Company leased back the assets in accordance with a master lease agreement. Under the master lease, the Company is responsible for subleasing the DST Property to tenants, for covering all costs associated with operating the underlying DST Property, and for paying base rent to the DST that owns such property. For financial reporting purposes, the DST Properties are included in the consolidated financial statements.
During the three and six months ended June 30, 2024, the Company raised gross proceeds of $8,417 and $12,940 from its DST Program, including $84 and $129 of upfront fees earned at closing, respectively. From inception of the DST Program through June 30, 2024, the Company has raised gross proceeds of $26,736 from its DST Program. As a result of the FMV Buyback Option, the sale of DST interests is offset by a financing obligation liability. The Company has elected to account for the DST financing obligation using the fair value option, and as such, the liability is remeasured at fair value on a recurring basis. The DST financing obligation was $26,805 and $13,659 as of June 30, 2024 and December 31, 2023, respectively, and is included within Other liabilities on the Condensed Consolidated Balance Sheets. The unrealized loss for the three and six months ended June 30, 2024 was $319 and $560, respectively, and is included in Other income, net on the Condensed Consolidated Statement of Operations. The upfront fees earned at closing are included within Other income, net on the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2024.
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7.    Intangibles
The gross carrying amount and accumulated amortization of the Company’s identified intangible lease assets consisted of the following:
June 30, 2024December 31, 2023
Weighted Average Life (Years)Intangible lease assets, grossAccumulated AmortizationIntangible lease assets, netIntangible lease assets, grossAccumulated AmortizationIntangible lease assets, net
Intangible lease assets
In-place lease intangibles13.6$98,021 $(12,101)$85,920 $94,600 $(8,551)$86,049 
Other lease intangibles
16.060,364 (3,702)56,662 52,693 (2,212)50,481 
Total intangible lease assets14.5$158,385 $(15,803)$142,582 $147,293 $(10,763)$136,530 
Amortization expense related to the intangible lease assets for the three months ended June 30, 2024 was $2,571, of which $2,203 and $368 is included in depreciation and amortization and rental revenue, respectively. Amortization expense related to intangible lease assets for the six months ended June 30, 2024 was $5,127, of which $4,350 and $777 is included in depreciation and amortization and rental revenue, respectively within the Condensed Consolidated Statement of Operations. The amount included in rental revenue is related to tenant inducements and is a reduction to revenue.
Amortization expense related to the intangible lease assets for three and six months ended June 30, 2023 was $2,045 and $4,089, respectively, and is included in depreciation and amortization within the Condensed Consolidated Statement of Operations.
The estimated future amortization on the Company’s intangible assets for each of the next five years and thereafter as of June 30, 2024 is as follows:
In-Place Tenant Lease Intangible AssetsOther Lease Intangibles
2024 (remaining)$3,778 $1,991 
20257,555 3,982 
20267,555 3,982 
20277,555 3,982 
20287,555 3,982 
20297,555 3,982 
Thereafter44,367 34,761 
Total $85,920 $56,662 
As of June 30, 2024 and December 31, 2023, the gross carrying amount of the Company’s below market lease intangibles was $3,179 and $3,085, respectively, with accumulated amortization of $345 and $222, respectively. The below market lease intangibles, net of accumulated amortization, are included in Other liabilities within our Condensed Consolidated Balance Sheet.
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8.    Debt
The following table details the mortgage notes, credit facilities and related party note payable of the Company:
Principal Balance Outstanding
Indebtedness
Weighted Average
Interest Rate(1)(6)
Weighted Average
Maturity Date
Maximum Facility SizeJune 30, 2024December 31, 2023
Mortgage notes & credit facilities:
Unsecured term loan credit facility(2)
S + 1.65%
8/11/2027$1,165,500 $1,165,500 $1,095,500 
Unsecured revolving credit facility(3)
S + 1.68%
8/11/2026724,500 339,094 231,255 
Fixed rate mortgages6.25%4/6/2029N/A43,000  
Variable rate mortgages (4)
S + 2.50%
11/5/2024N/A397,108 546,005 
Deferred financing costs, net(13,293)(13,172)
Total Mortgage notes & credit facility, net:
$1,931,409 $1,859,588 
Affiliate line of credit
Affiliate line of credit(5)
S + 1.55%
6/30/2024N/A 200,000 
Affiliate line of credit, net:
$ $200,000 
__________________
(1)The term “S” refers to the relevant floating benchmark rates, which include daily secured overnight financing rate (“SOFR”), 30-day SOFR, one-month euro interbank offered rate (“EURIBOR”), and one-month SONIA as applicable to each loan. As of June 30, 2024, we have outstanding interest rate swaps and interest rate caps that mitigate our exposure to potential future interest rate increases under our floating-rate debt. See further discussion of outstanding interest rate swaps and caps below.
(2)The unsecured term loan credit facility bears interest at a base rate plus a margin ranging from 0.25% to 1.85%. The base rate is the greater of (a) Keybank N.A.’s announced prime rate, (b) 0.5% above the federal funds effective rate, (c) SOFR plus 0.10%, and (d) 1.0%. The weighted average interest rate for the unsecured term loan credit facility for the six months ended June 30, 2024 was 6.89% (unhedged) and 5.26% (hedged). As of June 30, 2024, we have outstanding interest rate swaps with aggregate notional values of $700,000, $250,000, $145,500 and $70,000 that are structured such that the SOFR rates result in fixed rates of 3.65%, 3.42%, 4.23% and 3.67%, respectively.
(3)The unsecured revolving credit facility bears interest at a base rate plus a margin ranging from 0.30% to 1.90%. The base rate is the greater of (a) Keybank N.A.’s announced prime rate, (b) 0.5% above the federal funds effective rate, (c) SOFR plus 0.10%, and (d) 1.0%. The weighted average interest rate for the unsecured revolving credit facility for the six months ended June 30, 2024 was 6.95% (unhedged) and 6.51% (hedged). As of June 30, 2024, we have an outstanding interest rate swap with an aggregate notional value of $30,000 that is structured such that the SOFR rate results in a fixed rate of 3.67%.
(4)We have interest rate swaps and caps with an aggregate notional value of $45,927 and $382,870, respectively, as of June 30, 2024, that are structured such that the variable rates result in a fixed rate of 3.74% and a capped rate of 3.00%, respectively.
(5)The affiliate note payable bears interest at a base rate plus a margin ranging from 0.30% to 1.90%. The base rate is the greater of (a) Keybank N.A.’s announced prime rate, (b) 0.5% above the federal funds effective rate, (c) SOFR plus 0.10%, and (d) 1.0%. The weighted average interest rate for the affiliate note payable for the six months ended June 30, 2024 was 6.97%.
(6)The Company’s mortgage and notes payable contain yield or spread maintenance provisions.

The Company is subject to various financial and operational covenants under certain of its mortgage notes, term loans credit facilities, and revolving credit facility agreements. These covenants require the Company to maintain certain financial ratios, which include leverage, debt service coverage, and tangible net worth thresholds, among others. As of June 30, 2024, the Company believes it was in compliance with all of its loan covenants that could result in a default under such agreements.
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The following table details the future principal payments due under the Company’s outstanding third-party borrowings as of June 30, 2024:
YearAmount
2024 (remaining)$351,157 
2025 
2026385,045 
20271,165,500 
2028 
202943,000 
Thereafter 
Total$1,944,702 
Affiliate Line of Credit
On August 8, 2022, the NLT OP entered into an interest-bearing revolving promissory note with an affiliate, Blue Owl Capital Holdings LP (the “BO Lender”) in the principal amount of up to $250,000. The interest is payable monthly in arrears at the Lender’s election in (i) cash, (ii) Class I units of the NLT OP (using the most recently available net asset value per unit) or (iii) Class I shares of ORENT (using the most recently available net asset value per share). On November 9, 2023, NLT OP amended and restated the loan agreement to remove the revolving feature from the promissory note, and to allow NLT OP to borrow an additional $50,000 on a delayed draw basis, and to set a maturity date of June 30, 2024. As of June 30, 2024, the Company has repaid the outstanding balance under the affiliate line of credit as well as the remaining accrued interest through use of proceeds from the issuance of common shares and cash flows from operations.
9.    Derivative Financial Instruments
The Company uses derivative financial instruments to minimize the risks and/or costs associated with the Company’s investments and financing transactions. These derivatives may or may not qualify as net investment, cash flow, or fair value hedges under the hedge accounting requirements of ASC 815. Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to fluctuations in foreign exchange rates.
Changes in the fair value of cash flow hedges are recorded in accumulated other comprehensive income and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income for our interest rate swap and interest rate caps will be reclassified to interest expense as interest payments are made on the Company’s mortgages and term loan credit facility. Refer to Note 2 - Summary of Significant Accounting Policies and Estimates for additional detail.
Interest Rate Contracts
Certain of the Company’s financing transactions expose the Company to interest rate risks, which include exposure to variable interest rates on certain unsecured loans and loans secured by the Company’s real estate. The Company uses derivative financial instruments to minimize the risks and/or costs associated with the Company’s financing and to limit the Company’s exposure to the future variability of interest rates. To mitigate this risk, the Company enters into derivative financial instruments with counterparties it believes to have appropriate credit ratings and that are major financial institutions with which the Company and its affiliates may also have other financial relationships.
The Company’s objective in using interest rate derivatives is to add stability to interest expense and to manage our exposure to interest rate fluctuations. To accomplish this objective, we use interest rate swap and interest rate cap contracts to manage our exposure on the variable rate interest debt. The Company has designated its derivative financial instruments as cash flow hedges as defined under GAAP as of June 30, 2024.
Foreign Currency Exchange Rate Derivatives
Certain of the Company’s foreign investments expose it to fluctuations in foreign currency exchange rates. The Company uses foreign exchange rate derivatives, including foreign currency forwards and currency options, to reduce the risk from fluctuations in foreign exchange rates associated with its assets and liabilities denominated in foreign currencies. The Company also uses foreign currency derivatives to hedge the foreign exchange risk associated with certain of its net investments in foreign operations.
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The Company enters into currency options that give it the right but not the obligation, to sell the foreign currency amount in exchange for a functional currency amount within a limited time at a contracted price. The contracts may also be net settled in cash, based on differentials in the foreign currency exchange rate and the strike price. The Company uses currency options as an economic hedge of foreign currency exposure related to the Company’s non-U.S. investments.
The following table details the Company’s outstanding derivatives:
Notional Amount
Financial InstrumentsNumber of InstrumentsWeighted Average Maturity DateJune 30, 2024December 31, 2023
Derivatives designated as hedging instruments
Interest rate swaps511/19/2027$1,241,427 $1,242,480 
Interest rate caps29/10/2024382,870 519,000 
Derivatives not designated as hedging instruments
Foreign currency forward contracts (1)
312/6/2028131,037 131,037 
Foreign currency option contracts (1)
211/30/2028104,370 104,370 
Total $1,859,704 $1,996,887 
__________________
(1)The notional amount reflects the balance we expect to settle at the maturity date based on the contractual strike price at trade execution.

The fair value of our derivative financial instruments as well as their classification on our Condensed Consolidated Balance Sheet as of June 30, 2024 and December 31, 2023 is detailed below.
Asset DerivativesLiability Derivatives
Fair ValueFair Value
Balance Sheet
Location
June 30, 2024December 31, 2023Balance Sheet
Location
June 30, 2024December 31, 2023
Derivatives Designated as Hedging Instruments
Interest rate swapsOther Assets$19,890 $1,654 Other Liabilities$(914)$(6,305)
Interest rate capsOther Assets1,746 6,945 Other Liabilities  
Total Derivatives Designated as Hedging Instruments$21,636 $8,599 $(914)$(6,305)
Derivatives Not Designated as Hedging Instruments
Foreign currency forward contractsOther Assets$266 $ Other Liabilities$(4,189)$(6,820)
Foreign currency option contractsOther Assets3,358 5,065   
Total Derivatives Not Designated as Hedging Instruments$3,624 $5,065 $(4,189)$(6,820)
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The following table details the effect of the Company’s derivative financial instrument on the Condensed Consolidated Statement of Operations during the three months ended June 30, 2024 and 2023:
Amount of
Unrealized Gain
(Loss) Recognized
in OCI
Location of Gain
(Loss) Recognized in
Income on Derivatives
Amount of Gain (Loss)
Reclassified from
Accumulated OCI into Income
Derivatives Designated as Hedging InstrumentsJune 30, 2024June 30, 2023June 30, 2024June 30, 2023
Interest rate swap$8,272 $22,361 Interest Expense$5,223 $(2,138)
Interest rate caps2,429 (2,125)Interest Expense2,248 (2,217)
Total Derivatives Designated as Hedging Instruments$10,701 $20,236 $7,471 $(4,355)
The following table details the effect of the Company’s derivative financial instrument on the Condensed Consolidated Statement of Operations during the six months ended June 30, 2024 and 2023:
Amount of
Unrealized Gain
(Loss) Recognized
in OCI
Location of Gain
(Loss) Recognized in
Income on Derivatives
Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income
Derivatives Designated as Hedging InstrumentsJune 30, 2024June 30, 2023June 30, 2024June 30, 2023
Interest rate swap$33,981 $8,102 Interest Expense$10,365 $(5,317)
Interest rate caps5,656 (5,084)Interest Expense4,630 (5,266)
Total Derivatives Designated as Hedging Instruments$39,637 $3,018 $14,995 $(10,583)
The following table details the effect of the Company’s derivative financial instruments not designated as hedging instruments on the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2024 and 2023:
Income Statement LocationThree Months EndedSix Months Ended
Derivatives Not Designated as Hedging InstrumentsJune 30, 2024June 30, 2023June 30, 2024June 30, 2023
Foreign currency forward contractsOther Income$963 $ $2,897 $ 
Foreign currency option contractsOther Income(375) (1,708) 
Total Derivatives Not Designated as Hedging Instruments$588 $ $1,189 $ 
10.    Related Party Transactions
Due to Affiliates
The following table details the components of due to affiliates:
June 30, 2024December 31, 2023
Accrued ongoing servicing fees$78,477 $50,670 
Accrued management fee7,094 4,835 
Performance participation allocation8,333  
Advanced organization and offering costs10,594 11,919 
Other advanced expenses 2,257 1,937 
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Accrued interest - affiliate line of credit 2,389 
Total$106,755 $71,750 
Ongoing Servicing Fees
The Company accrues ongoing servicing fees payable to the Dealer Manager, Blue Owl Securities LLC (the “Dealer Manager”), for ongoing services rendered to shareholders for Class S, Class N, and Class D shares equal to 0.85%, 0.50%, and 0.25%, respectively, per annum of the aggregate NAV of the respective outstanding class of shares. The ongoing servicing fees are paid monthly in arrears.
As part of the DST Program, NLT OP is authorized to issue three classes of OP Units (Class S-1, Class N-1 and Class D-1) in exchange for Interests in DSTs in the event NLT OP elects to exercise its FMV Buyback Option and the participation of such OP Units in the Company’s distribution reinvestment plan (the “DRIP”). NLT OP will pay a service fee to the Dealer Manager for ongoing services rendered to shareholders for Class S-1, Class N-1 and Class D-1 shares equal to 0.85%, 0.50% and 0.25%, respectively, per annum of the aggregate NAV of the respective outstanding class of shares. The servicing fees will be paid monthly in arrears. Additionally, the DST Sponsor, Blue Owl Real Estate Exchange LLC, a wholly-owned subsidiary of the Company, will pay to the Dealer Manager, a service fee equal to 0.25% per annum of the price per Interest sold, to be paid quarterly in arrears.
Accrued Management Fees
The Company will pay the Adviser a management fee equal to 1.25% of NAV per annum payable monthly for services rendered related to ongoing operations of ORENT pursuant to the Investment Advisory Agreement. Additionally, to the extent that NLT OP issues NLT OP Units to parties other than the Company, our NLT OP will pay the Adviser a management fee equal to 1.25% of the NAV of NLT OP attributable to such units not held by us per annum payable monthly.
The management fee may be paid, at the Adviser’s election, in cash, Class I shares or Class I units of NLT OP. To date, the Adviser has elected to receive the management fee in the Company’s common shares, resulting in a non-cash expense. During the three and six months ended June 30, 2024, the Company incurred management fees of $10,323 and $18,804, respectively. During the three and six months ended June 30, 2023, the Company incurred management fees of $4,986 and $9,058, respectively.
During the six months ended June 30, 2024 and June 30, 2023, the Company issued 1,624,473 and 750,606 shares, respectively, to the Adviser as payment for management fees. Management fees of $7,094 and $4,835 were accrued and unpaid as of June 30, 2024 and December 31, 2023, respectively. The shares issued to the Adviser for payment of the management fee were issued at the applicable NAV per share at the end of each month for which the fee was earned. During the six months ended June 30, 2024, the Adviser did not submit any shares for repurchase.
Additionally, the Company will pay the Adviser a management fee equal to 1.25% of the total consideration received by the Company or its affiliate for selling Interests to third-party investors, net of up-front fees and expense reimbursements payable out of gross sale proceeds from the sale of such Interests and any proceeds from any loans secured directly or indirectly by the DST Properties, per annum payable monthly. The Adviser has waived the fee for the initial DST Program offering.
Performance Participation Allocation
In addition to the fees paid to the Adviser for services provided pursuant to the Investment Advisory Agreement, Blue Owl Oak Trust Carry LLC, a controlled subsidiary of Blue Owl, and Blue Owl Real Estate Net Lease Trust CPV LP, controlled by senior and other officers of Blue Owl (each a “Special Limited Partner”) hold a performance participation interest in NLT OP that entitles them to receive an allocation of NLT OP’s total return. Total return is defined as total distributions plus the change in the Company’s NAV per share, adjusted for subscriptions and repurchases. The performance participation allocation is an incentive fee paid to the Adviser and receipt of the allocation is subject to the ongoing effectiveness of the Investment Advisory Agreement. Under NLT OP agreement, the Special Limited Partners are entitled to an allocation from NLT OP equal to 12.5% of total return, after the other unit holders have received a total return of 5% (after recouping any loss carryforward amount). The allocation of the performance participation interest is measured on a calendar year basis and is paid quarterly in NLT OP Units, ORENT shares, or cash, at the election of the Special Limited Partners. As the performance participation allocation is associated with the performance of services rendered by the Adviser, and the Special Limited Partners are only entitled to the performance participation allocation fee provided that the Investment Advisory Agreement has not been terminated, the Company accounts for the performance
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participation allocation as an expense in our Condensed Consolidated Statement of Operations. During the three and six months ended June 30, 2024, the Company recognized $8,333 and $15,162, respectively, of performance participation allocation expense in the Company’s Condensed Consolidated Statement of Operations. During the three and six months ended June 30, 2023, the Company recognized $8,134 of performance participation allocation expense in the Company’s Condensed Consolidated Statement of Operations.
During the six months ended June 30, 2024 and June 30, 2023, the Company issued 528,732 and 243,536 shares, respectively, to the Special Limited Partners as payment of performance participation allocation at the respective NAV per unit. As of December 31, 2023, as a result of the issuance of units during 2023 in excess of the final fee measured on a calendar year basis, the Company recorded a receivable due to the Company from the adviser of $1,458, and is included within Other assets in our Condensed Consolidated Balance Sheets. As of June 30, 2024, there was no receivable due the Company from the Adviser as the receivable was netted against fees earned by the Advisor during the six months ended June 30, 2024.
As of June 30, 2024, and immediately following (i) the issuance of the units and (ii) the record time for the distributions on the Company’s Class I shares, no Class I units in NLT OP were exchanged for Class I shares in the Company. As of June 30, 2024, 20,439 Class I units in NLT OP had been redeemed for cash.
Advanced Organizational and Offering Costs
The Adviser advanced all of the organization and offering costs on behalf of the Company (including legal, marketing, due diligence, administrative, accounting, design and website expenses, fees and expenses of our escrow agent and transfer agent, and other expenses attributable to the Company’s organization, but excluding ongoing servicing fees) through September 1, 2023. Such costs are recorded as a component of Due to affiliates on the Company’s Condensed Consolidated Balance Sheet and are being reimbursed to the Adviser pro rata over 60 months beginning September 1, 2023.
Accrued Interest - Affiliate Line of Credit
During the six months ended June 30, 2024 and June 30, 2023, the Company issued 695,189 and 774,879 Class I shares, respectively, to our affiliate, Blue Owl Capital Holdings LP, as payment for interest on the revolving promissory note. As of June 30, 2024, the Company has repaid the outstanding balance under the affiliate line of credit as well as the remaining accrued interest. Accrued interest of $2,389 on the affiliate line of credit was accrued and unpaid as of December 31, 2023. Refer to Note 8 - Debt for additional detail.
As of June 30, 2024, ORENT affiliates and their employees owned 13,472,887 ORENT Class I shares in an aggregate amount of $136,956, based on the NAV per share/unit as of June 30, 2024.
11.    Leases
Lessor – Operating leases
The Company’s rental revenue primarily consists of rent earned from operating leases at the Company’s net lease properties which consists of fixed annual rent that escalates annually throughout the term of the applicable leases, and the tenant is generally responsible for all property-related expenses, including taxes, insurance, and maintenance. The Company's net lease properties are each leased to a single tenant.
The following table details the components of operating lease income from leases in which the Company is the lessor.
Three Months EndedSix Months Ended
June 30, 2024June 30, 2023June 30, 2024June 30, 2023
Base rent(1)
$39,108 $37,901 $79,773 $72,799 
Straight-line rental revenue, net(2)
4,006 4,356 9,118 8,518 
Variable lease payments(3)
5,541 2,663 10,657 9,609 
Amortization of above/below market lease intangibles62 34 123 69 
Total Rental revenue$48,717 $44,954 $99,671 $90,995 
__________________
(1)Base rent consists of fixed lease payments.
(2)Represents lease income related to the excess (deficit) of straight-line rental revenue over fixed lease payments.
(3)Consists of reimbursement of common area maintenance (“CAM”) and real estate taxes, and amortization of tenant inducements.
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The following table presents the undiscounted future minimum rents the Company expects to receive for its net lease properties classified as operating leases as of June 30, 2024.
YearFuture Minimum Rents
2024 (remaining)$80,022 
2025161,762 
2026164,513 
2027166,926 
2028169,431 
2029169,888 
Thereafter1,433,226 
Total$2,345,768 
Lessor – Financing receivables
In accordance with ASC 842, certain of the Company’s sales-type lease contracts are primarily accounted for as failed-sale leaseback transactions and were recorded as an Investment in leases - Financing receivables. During the six months ended June 30, 2024, the Company executed two sale-leaseback transactions that were accounted for as failed sale-leasebacks for $40,257. During the six months ended June 30, 2023, the Company did not execute any sale-leaseback transactions that were accounted for as failed-sale leasebacks. During the three and six months ended June 30, 2024, the Company recognized interest income of $15,037 and $29,571, respectively. During the three and six months ended June 30, 2023, the Company recognized interest income of $13,960 and $27,629, respectively. Interest income is recognized on an effective interest basis at a constant rate of return over the term of the applicable leases. Cash received under these contracts was $21,313 and $22,700 during the six months ended June 30, 2024 and 2023, respectively.
All of the lease payments are triple net basis to the tenant and the Company has rights in accordance with the individual lease agreements to protect the value of our leased properties. As of June 30, 2024, the future minimum payments of sales-type lease receivables were as follows:
YearFuture Minimum Payments
2024 (remaining)$25,602 
202551,969 
202652,954 
202754,081 
202856,401 
202957,465 
Thereafter7,132,524 
Total lease payment receivable7,430,996 
Less deferred interest income6,801,041 
Less allowance for credit losses17,380 
Total Investment in leases - Financing receivables$612,575 

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The following table reflects the change to the allowance for credit losses on our real estate portfolio for the six months ended June 30, 2024 and 2023:
Six Months Ended
June 30, 2024June 30, 2023
Balance, beginning of period$16,638 $ 
Initial allowance upon adoption 7,157 
Current period change in credit allowance742 816 
Balance, end of period$17,380 $7,973 
We assess the credit quality of our investments through the credit ratings of the lessee. The credit quality indicators are reviewed by us on a quarterly basis as of quarter-end. In instances where the lessee does not have a public credit rating, we may use either a comparable proxy company or the overall corporate credit rating, as applicable. We also use this credit rating to determine the probability of default (“PD”) when estimating credit losses for each investment.
The following tables detail the amortized cost basis of our investments by the credit quality indicator as of June 30, 2024 and December 31, 2023:
June 30, 2024
Ba1
Baa2B2
Caa2
Total
Investment in leases - Financing Receivables
$ $58,047 $358,768 $213,140 $629,955 
December 31, 2023
Ba1
Baa2B2Caa2Total
Investment in leases - Financing Receivables
$204,364 $52,247 $111,803 $210,914 $579,328 
Purchase Option Provisions
Certain of the Company’s leases include purchase option provisions. The provisions vary by agreement but generally allow the lessee to purchase the property during a specified period for the Company’s gross investment plus a specified proportion of appreciation. The Company expects that the purchase price will be greater than its net investment in the property at the time of potential exercise by the lessee.
Lessee - DST Program Master Lease
During the year ended December 31, 2023, the Company contributed two industrial assets to the DST as part of the initial DST Program offering. The assets are leased back to the Company by a wholly-owned subsidiary of the Company under the master lease agreement. The following table presents the undiscounted future minimum rent payment obligation of the wholly-owned subsidiary:
YearFuture Minimum Payments
2024 (remaining)$2,239 
20254,478 
20264,478 
20274,478 
20284,636 
20294,885 
Thereafter73,313 
Total$98,507 
12.    Equity and Non-Controlling Interest
Authorized Capital
As of June 30, 2024, the Company had the authority to issue an unlimited number of preferred shares and four classes of common shares including Class S shares, Class N shares, Class D shares, and Class I shares. Each class of common shares and preferred shares has a par value of $0.01. The Company’s Board of Trustees has the ability to establish the
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preferences and rights of each class or series of preferred shares, without shareholder approval, and as such, it may afford the holders of any series or class of preferred shares preferences, powers and rights senior to the rights of holders of common shares. The differences among the common share classes relate to upfront transaction fees and ongoing shareholder servicing fees. See Note 2 – Summary of Significant Accounting Policies and Estimates for a further description of such items. Other than the differences in upfront transaction fees and ongoing shareholder servicing fees, each class of common shares has the same economic and voting rights.
Common Shares
The following table details the movement in the Company’s outstanding shares of common shares:
Three Months Ended June 30, 2024
Class SClass NClass DClass ITotal
March 31, 2024117,157,624  301,228 133,100,327 250,559,179 
Common shares issued28,723,471 1,907,909 901,643 28,641,561 60,174,584 
Distribution reinvestment1,082,688  6,796 1,159,856 2,249,340 
Common shares repurchased(1,189,654)  (1,182,854)(2,372,508)
June 30, 2024145,774,129 1,907,909 1,209,667 161,718,890 310,610,595 
Six Months Ended June 30, 2024
Class SClass NClass DClass ITotal
December 31, 202392,068,163  4,488,818 101,651,731 198,208,712 
Common shares issued53,824,016 1,907,909 1,376,352 55,456,741 112,565,018 
Distribution reinvestment1,891,056  19,238 2,049,536 3,959,830 
Common shares repurchased(2,009,106)  (2,035,261)(4,044,367)
Common shares converted(1)
  (4,674,741)4,596,143 (78,598)
June 30, 2024145,774,129 1,907,909 1,209,667 161,718,890 310,610,595 
________________
(1)On January 29, 2024, 4,674,741 Class D Shares with a value of $46,636 were converted into 4,596,143 Class I shares based on the NAV per share as of December 31, 2023.

Redeemable Common Shares
In connection with the Company’s payment of its Affiliate line of credit and management fee, the Adviser holds Class I Common Shares. See Note 8 – Debt for further details of the affiliate line of credit and Note 10 – Related Party Transactions for further details on the management fee. The Adviser and BO Lender have the ability to redeem the Class I shares for cash at their election, therefore the Company has classified these Class I shares as Redeemable common shares outside of equity on the Company’s Condensed Consolidated Balance Sheet. As of June 30, 2024 and December 31, 2023, we have issued 6,055,528 and 3,735,867 redeemable common shares, respectively, which remain outstanding.
The Redeemable common shares are recorded at the greater of (i) their issuance amount, or (ii) their redemption value, which is equivalent to the fair value of the shares at the end of each measurement period. Accordingly, the Company recorded an allocation adjustment of $9 and $24 during the three and six months ended June 30, 2024, respectively, and $145 and $142 during the three and six months ended June 30, 2023, respectively.
Share and Unit Repurchases
The Company adopted a share repurchase plan whereby, subject to certain limitations, from January 2023 through June 30, 2023, shareholders could request, on a monthly basis, that the Company repurchase all or any portion of their shares. Shares were repurchased at a price equal to the transaction price on the applicable repurchase date, subject to any early repurchase deduction. For any shares held for less than one year, the Board waived the 2% penalty that would have otherwise applied to the redemption value to shareholders. The total amount of aggregate repurchases of Class S, Class D, and Class I shares (excluding any early repurchase deduction) was limited to 2% of the aggregate NAV per month (measured using the aggregate NAV as of the end of the immediately preceding month) and 5% of the aggregate NAV per calendar quarter (measured using the aggregate NAV as of the end of the immediately preceding quarter).
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The Company adopted an amended and restated repurchase plan (the “Quarterly Repurchase Plan”) that was effective from July 1, 2023 through October 17, 2023. Under the Quarterly Repurchase Plan, the Company repurchased once per quarter no more than 5% aggregate NAV per calendar quarter (measured using the average aggregate NAV as of the end of the immediately preceding three months). The Company conducted such repurchase offers in accordance with the requirements of Rule 13e-4 promulgated under the Securities Exchange Act of 1934, as amended.
The Company adopted an amended and restated repurchase plan (the “Amended Share Repurchase Plan”) that was effective October 18, 2023. Under the Amended Share Repurchase Plan, the Company will repurchase shares once per quarter. The repurchase price per share will generally be equal to the NAV per share as of the last calendar day of the first month of the applicable calendar quarter, except that shares that have not been outstanding for at least one year will be repurchased at 98% of the transaction price. The aggregate NAV of total repurchases of Class S, Class D and Class I Shares is limited to no more than 5% of the Company’s aggregate NAV per calendar quarter (measured using the average aggregate NAV as of the end of the preceding three months for which NAV is available). Shareholders may request on a quarterly basis that the Company repurchase all or any portion of their shares and may submit such repurchase requests beginning after the start of the second month of the applicable calendar quarter.
The Company adopted an amended and restated share repurchase plan (the “Third Amended Share Repurchase Plan”) effective March 13, 2024. Under the Third Amended Share Repurchase Plan, the Company will not apply the Early Repurchase Deduction on repurchases of the Company’s common shares submitted by discretionary model portfolio management programs (and similar arrangements) as approved by the Company.
The Company adopted an amended and restated share repurchase plan (the “Fourth Amended Share Repurchase Plan”) effective April 19, 2024 to incorporate the Class N shares.
Other than as described for Redeemable Common Shares and Redeemable Non-Controlling Interests, the Company is not obligated to repurchase any shares and could choose to repurchase fewer shares than were requested to be repurchased, or none at all. Further, the Board may modify and suspend the Company’s share repurchase plan if it deems such action to be in the Company’s best interest and the best interest of its shareholders. In the event that the Company determined to repurchase some but not all of the shares submitted for repurchase during any quarter, shares repurchased during that quarter would be repurchased on a pro rata basis.
For the three months ended June 30, 2024, the Company repurchased 2,372,508 shares of common shares and 37,933 OP Units for a total of $24,086 and $385, respectively. Additionally, the Company converted 105,744 OP Units to REIT Shares with a value of $1,075. For the six months ended June 30, 2024, the Company repurchased 4,044,367 shares of common shares and 50,593 OP Units for a total of $40,974 and $516. Additionally, the Company converted 429,046 OP Units to REIT Shares with a value of $4,416. The Company had no unfulfilled repurchase requests during the six months ended June 30, 2024.
For the three months ended June 30, 2023, the Company repurchased 1,689,248 shares of common shares and 101,458 OP Units for a total of $17,201 and $1,034, respectively. For the six months ended June 30, 2023, the Company repurchased 1,897,942 shares of common shares and 2,158,725 OP Units for a total of $19,343 and $21,992, respectively. The Company had no unfulfilled repurchase request during the six months ended June 30, 2023.
Distributions
The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to its shareholders each year to comply with the REIT provisions of the Internal Revenue Code. Each class of common shares receive the same gross distribution per share. The net distribution varies for each class based on the applicable shareholder servicing fee, which is deducted from the monthly distribution per share and paid directly to the applicable distributor.
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The following table details the aggregate distributions declared for each applicable class of common shares for the three months ended June 30, 2024 and 2023:
Three Months Ended
June 30, 2024June 30, 2023
Class SClass NClass DClass IClass SClass NClass DClass I
Aggregate gross distributions declared per common share$0.1751 $0.0584 $0.1751 $0.1751 $0.1750 $ $0.1750 $0.1750 
Shareholder servicing fee per common share(0.0215)(0.0043)(0.0064) (0.0216) (0.0063) 
Net distributions declared per common share $0.1536 $0.0541 $0.1687 $0.1751 $0.1534 $ $0.1687 $0.1750 
The following table details the aggregate distributions declared for each applicable class of common shares for the six months ended June 30, 2024 and 2023:
Six Months Ended
June 30, 2024June 30, 2023
Class SClass NClass DClass IClass SClass NClass DClass I
Aggregate gross distributions declared per common share$0.3500 $0.0584 $0.3500 $0.3500 $0.3500 $ $0.3500 $0.3500 
Shareholder servicing fee per common share(0.0428)(0.0043)(0.0125) (0.0433) (0.0126) 
Net distributions declared per common share$0.3072 $0.0541 $0.3375 $0.3500 $0.3067 $ $0.3374 $0.3500 
The Company has adopted a distribution reinvestment plan whereby shareholders will have their cash distributions automatically reinvested in additional common shares unless they elect to receive their distributions in cash. The per share purchase price for shares purchased pursuant to the distribution reinvestment plan will be equal to the transaction price at the time the distribution is payable. Shareholders will not pay an upfront transaction fee when purchasing shares pursuant to the distribution reinvestment plan. The ongoing servicing fees with respect to shares of Class S shares, Class N shares, and Class D shares are calculated based on the NAV for those shares and may reduce the NAV.
Redeemable Non-controlling Interest
In connection with its performance participation interest, the Special Limited Partners hold Class I units in NLT OP. See Note 10 - Related Party Transactions for further details of the Special Limited Partner’s performance participation interest. Because the Special Limited Partners have the ability to redeem its Class I units for Class I shares in the Company or cash at their election, the Company has classified these Class I units as Redeemable Non-controlling Interest in mezzanine equity on the Company’s Condensed Consolidated Balance Sheet.
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The following table details the redeemable non-controlling interest activity related to the Special Limited Partners for the six months ended June 30, 2024 and 2023:
Six Months Ended
June 30, 2024June 30, 2023
Balance, beginning of period$17,976 $1,657 
Settlement of prior performance participation allocation5,371 2,504 
Repurchases(208) 
GAAP income allocation188 64 
Other comprehensive income83 76 
Distributions(672)(128)
Fair value allocation437 5 
Reallocation between additional paid-in capital and non-controlling interests due to changes in NLT OP ownership512 54 
Balance, end of period$23,687 $4,232 
During the six months ended June 30, 2024 and 2023, the Company issued Class I units in NLT OP to the Special Limited Partners as payment of the performance participation allocation. As of June 30, 2024, 20,439 units had been redeemed for cash, and no units had been exchanged for Class I shares in the Company.
The Redeemable Non-controlling Interests are recorded at the greater of (i) their carrying amount, adjusted for their share of the allocation of GAAP net income or loss and distributions, or (ii) their redemption value, which is equivalent to the fair value of such interests at the end of each measurement period. Accordingly, the Company recorded an allocation adjustment between Additional Paid-in Capital and Redeemable Non-controlling Interest of $312 and $437 during the three and six months ended June 30, 2024, respectively, and $(10) and $5 during the three and six months ended June 30, 2023, respectively.
Share-Based Compensation
During the six months ended June 30, 2024 and 2023, we awarded independent members of the Board a total of 38,683 and 16,397 shares of restricted Class I shares, respectively. The restricted Class I shares are subject to a vesting period of 13.5 months. The Company incurred total share-based compensation expense of approximately $94 and $207 for the three and six months ended June 30, 2024, respectively, and $84 and $168 three and six months ended June 30, 2023, respectively.
13.    Commitments and Contingencies
The Company is involved in various claims and litigation matters arising in the ordinary course of business, some of which involve claims for damages. Many of these matters are covered by insurance, although they may nevertheless be subject to deductibles or retentions. Although the ultimate liability for these matters cannot be determined, based upon information currently available, the Company believes the ultimate resolution of such claims and litigation will not have a material adverse effect on its financial position, results of operations or liquidity.
During the six months ended June 30, 2024, the Company acquired 22 investments related to build-to-suit arrangements with maximum contractual funding obligations of $173,064. During the six months ended June 30, 2024, the Company paid and/or accrued $30,100, resulting in a remaining maximum contractual obligation amount of $142,964 as of June 30, 2024. Our estimate of the Company’s total future commitments to complete the construction of the build-to-suit assets is $104,628 as of June 30, 2024.
14.    Earnings Per Share
Basic net income/(loss) per common share is determined by dividing net income/(loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period, excluding unvested restricted Class I shares. The restricted Class I shares are considered to be participating securities because they contain non-forfeitable rights to distributions. The restricted Class I shares participate equally with all classes of common shares, therefore net income/(loss) has not been presented separately.
All classes of common shares are allocated net income/(loss) at the same rate per share and receive the same gross distribution per share.
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Three Months EndedSix Months Ended
June 30, 2024June 30, 2023June 30, 2024June 30, 2023
Net income $14,370 $9,633 $30,184 $22,918 
Net income attributable to non-controlling interests(1,234)(1,787)(2,917)(4,762)
Net income attributable to ORENT shareholders $13,136 $7,846 $27,267 $18,156 
Net income attributable to dilutive OP Units1,234  2,917  
Net income attributable to ORENT shareholders - dilutive$14,370 $ $30,184 $ 
Weighted average number of common shares outstanding - basic292,992,195 127,321,209 265,106,090 112,784,711 
Effect of dilutive unvested grants of restricted Class I shares38,683 16,212 38,683 16,212 
Effect of dilutive OP Units28,916,411  28,807,652  
Weighted average shares of common shares outstanding - dilutive321,947,289 127,337,421 293,952,425 112,800,923 
Net income per common share - basic$0.04 $0.06 $0.10 $0.16 
Net income per common share - diluted$0.04 $0.06 $0.10 $0.16 
The computation of diluted net income per common share for the three and six months ended June 30, 2024 includes 38,683 dilutive restricted Class I shares. The computation of diluted net income per common share for the three and six months ended June 30, 2024 includes 28,916,411 and 28,807,652 dilutive NLT OP Units, respectively.
The computation of diluted net income per common share for the three and six months ended June 30, 2023 includes 16,212 dilutive restricted Class I shares. The computation of diluted net income per common share for the three and six months ended June 30, 2023 excludes 27,779,181 and 28,404,641 potentially dilutive NLT OP Units because their effect would have been anti-dilutive.
15.    Segment Reporting
The Company’s principal business is the acquisition, ownership, financing and leasing of single-tenant commercial real estate properties subject to long-term net leases with investment grade and other creditworthy tenants or guarantors.
The Company’s Chief Executive Officer is responsible for allocating resources and assessing performance, and as such is the CODM. The CODM reviews information at the consolidated entity level, and does not distinguish the principal business, or group the operations, by geography or property type for purposes of measuring performance or allocating resources. Accordingly, the Company has one operating segment and one reportable segment as of June 30, 2024.
16.     Income Taxes
The Company has elected to be taxed as a REIT under the applicable provisions of the Code for every year beginning with the year ended December 31, 2022. The Company has also elected for some of its subsidiaries to be treated as taxable REIT subsidiaries (“TRSs”), which are subject to federal and state income taxes.
For the three and six months ended June 30, 2024, the Company incurred income tax expense of $1,108 and $1,412, respectively. The Company did not incur any income tax expense for the three and six months ended June 30, 2023.
The components of income tax expense for three and six months ended June 30, 2024 were as follows:
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Current ExpenseThree Months Ended June 30, 2024Six Months Ended June 30, 2024
U.S. Federal$74 $112 
U.S. State32 73 
Foreign906 906 
Total current expense$1,012 $1,091 
Deferred Tax Expense
U.S. Federal$62 $219 
U.S. State34 102 
Total deferred tax expense$96 $321 
Total income tax expense, net$1,108 $1,412 
Income tax expense is higher than expected pretax book income of the TRS at the 21% federal statutory rate as a result of basis differences on intercompany transfers of property to the TRS and state and local tax expense.
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for GAAP purposes and the amount used for income tax purposes. As of June 30, 2024, the Company had a net deferred tax liability of $247 related to its DST program included within Other liabilities in the Condensed Consolidated Balance Sheets, comprised of a deferred tax asset of $397 for organization expenses and a deferred tax liability of $644 for basis differences in real property. As of December 31, 2023, the Company had a net deferred tax asset of $71 included within Other assets in the Condensed Consolidated Balance Sheets, comprised of a deferred tax asset of $390 for organization expenses and a deferred tax liability of $319 for basis differences in real property.
Generally, the Company is subject to audit under the statute of limitations by the Internal Revenue Service (“IRS”) for the year ended December 31, 2022 and subsequent years. The Company is subject to audit under the statutes of limitation by the Canada Revenue Agency and provincial authorities with respect to its Canadian entities for the year ended December 31, 2022 and subsequent years.
17.    Subsequent Events
In preparation of the accompanying Condensed Consolidated Financial Statements, the Company has evaluated events and transactions that occurred after June 30, 2024 for recognition or disclosure purposes. Based on this evaluation, we identified the following subsequent events, from June 30, 2024 through the date the financial statements were issued.
Financings
On July 19, 2024, the Company repaid the outstanding principal on a mortgage note payable maturing in 2024 through use of proceeds of $85,073 from its revolving credit facility.
Proceeds from the Issuance of Common Shares
From July 1, 2024 through the date the financial statements were issued, the Company sold an aggregate of 37,334,420 shares of its common shares (consisting of 14,722,106 Class S shares, 4,662,668 Class N shares, Class D shares, and 17,949,646 Class I shares) resulting in net proceeds of $378,698 to the Company as payment for such shares.


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ITEM 2        MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References herein to “Blue Owl Real Estate Net Lease Trust,” “Company,” “we,” “us,” or “our” refer to Blue Owl Real Estate Net Lease Trust and its subsidiaries unless the context specifically requires otherwise.
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed in Part I. Item 1A — “Risk Factors” in our 2023 Annual Report on Form 10-K filed with the SEC on March 18, 2024. Dollars are in thousands, except for per share amounts.
Overview
Blue Owl Real Estate Net Lease Trust invests primarily in stabilized income-generating commercial real estate in the United States. To a lesser extent, we may invest outside the U.S. and in real estate debt. The Company is the sole general partner and majority limited partner in Blue Owl NLT Operating Partnership LP, a Delaware limited partnership (“NLT OP” or the “Operating Partnership”), and we own substantially all of our assets through NLT OP. We are externally managed by our Adviser, Blue Owl Real Estate Capital, LLC. The Company’s principal business is the acquisition, ownership, financing and leasing of single-tenant commercial real estate properties subject to long-term net leases with investment grade and other creditworthy tenants or guarantor, and its management does not distinguish the principal business, or group the operations, by geography or property type for purposes of measuring performance. Accordingly, the Company has only one reportable segment.
The Company was formed on April 4, 2022 (“Inception”) under the name Oak Street Net Lease Trust as a Maryland statutory trust; however, no activity occurred until the first capital funding from Blue Owl on August 9, 2022. On July 6, 2023, the Company changed its legal name from Oak Street Net Lease Trust (the “Name Change”) and changed its resident agent and principal office in the State of Maryland (the “Agent Change”) pursuant to a certificate of amendment to its Certificate of Trust filed with the State Department of Assessments and Taxation of the State of Maryland on July 3, 2023. The Company also amended and restated its Declaration of Trust and its bylaws on July 6, 2023 to reflect the Name Change and the Agent Change. In addition, on July 6, 2023, NLT OP changed its legal name from OakTrust Operating Partnership L.P. and the Adviser changed its legal name from Oak Street Real Estate Capital, LLC.
The Company is a non-listed, perpetual life real estate investment trust (“REIT”) that qualifies as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”) for U.S. federal income tax. We generally will not be subject to U.S. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income to Shareholders and maintain our qualification as a REIT.
As of June 30, 2024, we have received net proceeds of $3,125,553 from the sale of our common shares. We have contributed the net proceeds to NLT OP in exchange for a corresponding number of Class S, Class N, Class D, and Class I units of NLT OP. NLT OP has primarily used the net proceeds to make investments in real estate and real estate debt as further described below under “Investment Portfolio.” We intend to continue selling shares on a monthly basis.
DST Program
On August 31, 2023, the Company, through NLT OP, initiated a program (the “DST Program”) to issue and sell up to a maximum aggregate offering amount of $3,000,000 of beneficial interests (“Interests”) in one or more Delaware statutory trusts (the “DSTs”) holding real properties (the “DST Properties”). The Interests will be issued and sold to “accredited investors,” as that term is defined under Regulation D promulgated by the SEC under the 1933 Act in private placements exempt from registration pursuant to Section 4(a)(2) of the 1933 Act (the “DST Offerings”). Under the DST Program, DST Properties, which may be sold, contributed, sourced or otherwise seeded from the Company’s real properties held through NLT OP or from third parties, will be held in one or more DSTs, and will be leased back by a wholly-owned subsidiary of NLT OP in accordance with corresponding master lease agreements. Each master lease agreement will be guaranteed by NLT OP, which will have the right, but not the obligation, to acquire the Interests in the applicable DST from the beneficial owners, in each case, in exchange for cash or units of NLT OP (“OP Units”), at a purchase price equal to the fair market value of the beneficial owner’s Interest or the fair market value of the beneficial owner’s interest in one or more of the DST Properties (the “FMV Buyback Option”). The FMV Buyback Option is exercisable during the one-year option period beginning two years from the final closing of the applicable DST Offering or in such other time frame as provided for in the applicable DST arrangement. After a one-year holding period, investors who receive OP Units pursuant to the FMV
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Buyback Option generally have the right to cause NLT OP to redeem all or a portion of their OP Units for, at the Company’s sole discretion, common shares of the Company, cash or a combination of both.
We expect that the DST Program will give us the opportunity to expand and diversify our capital-raising strategies by offering what we believe to be an attractive investment product for investors that may be seeking replacement properties to complete like-kind exchange transactions under Section 1031 of the Internal Revenue Code of 1986, as amended. Affiliates of the Adviser are expected to receive fees in connection with the sale of the Interests and the management of the DSTs. We intend to use the net offering proceeds from the DST Program to make investments in accordance with our investment strategy and policies, reduce our borrowings, repay indebtedness, fund the repurchase of shares of all classes of our common shares under our share repurchase plan and for other corporate purposes. We have not allocated specific amounts of the net proceeds from the DST Program for any specific purpose.
As of June 30, 2024, the Company has raised proceeds of $26,736 from its DST program including $267 of upfront fees earned at closing. As a result of the FMV Buyback Option, the sale of DST interests is offset by a financing obligation liability. The Company has elected to account for its DST financing obligation using the fair value option, and as such, the liability is remeasured at fair value on a recurring basis.
Emerging Growth Company Status
We are and we will remain an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) until the earlier of (a) the last day of the fiscal year (i) following the fifth anniversary of the date of an initial public offering pursuant to an effective registration statement under the 1933 Act, (ii) in which we have total annual gross revenue of at least $1,235,000, or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our shares that is held by non-affiliates exceeds $700,000 as of the date of our most recently completed second fiscal quarter, and (b) the date on which we have issued more than $1,000,000 in non-convertible debt during the prior three-year period. For so long as we remain an “emerging growth company” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002. We cannot predict if investors will find our Shares less attractive because we may rely on some or all of these exemptions.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the 1933 Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We will take advantage of the extended transition period for complying with new or revised accounting standards, which may make it more difficult for investors and securities analysts to evaluate us since our financial statements may not be comparable to companies that comply with public company effective dates and may result in less investor confidence.
Recent Developments
The Company’s businesses are materially affected by conditions in the financial markets and economic conditions in the U.S. and to a lesser extent, elsewhere in the world.
During the three months ended June 30, 2024, the persistence of both elevated inflation and interest rates, in conjunction with geopolitical uncertainty, including the ongoing hostilities in Eastern Europe and the Middle East, continued to weigh on industry deal activity. It remains difficult to predict the full impact of recent events and any future changes in interest rates or inflation.
Industry valuations remain under pressure due to a combination of rising interest rates, cost inflation, elevated vacancy rates, and uncertainty around future capital availability. However, industry transaction volumes increased slightly compared to the previous quarter. In contrast, our real estate business, focused on triple net lease, continued to deploy significant capital. Our investors continue to benefit from the inflation-mitigating characteristics of the net lease structure, highly predictable net rent growth, and long-duration contractual income across the portfolio.
We are continuing to closely monitor developments related to the macroeconomic factors that have contributed to market volatility, and to assess the impact of these factors on financial markets and on our business. Our future results may be adversely affected by slowdowns in fundraising activity and the pace of capital deployment. It is currently not possible to predict the ultimate effects of these events on the financial markets, overall economy, and our Financial Statements. See “Part I. Item 1A. Risk Factors — Risks Related to Our Business and Operations” in our 2023 Annual Report on Form 10-K filed with the SEC on March 18, 2024.
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Q2 2024 Highlights (Results of Operations)
Operating Results
Declared monthly net distributions totaling $53,529 for the three months ended June 30, 2024. The details of the average annualized distribution rates and total returns are shown in the following table:
Class SClass NClass DClass I
Annualized Distribution Rate(1)
6.09 %6.38 %6.76 %6.89 %
Year-to-Date Total Return, without upfront selling commissions(2)
3.33 %0.55 %3.63 %3.68 %
Year-to-Date Total Return, assuming maximum upfront selling commissions(2)
(1.53)%(1.42)%0.79 %N/A
Inception-to-Date Total Return, without upfront selling commissions(2)
6.81 %6.76 %6.88 %8.01 %
Inception-to-Date Total Return, assuming maximum upfront selling commissions(2)
4.82 %(15.82)%6.01 %N/A
__________________
(1)The annualized distribution rate is calculated as the current month's distribution annualized and divided by the prior month's net asset value, which is inclusive of all fees and expenses. The Company believes the annualized distribution rate is a useful measure of overall investment performance of our shares.
(2)Total return is calculated as the change in NAV per share during the respective periods plus any distributions per share declared in the period and assumes any distributions are reinvested in accordance with our distribution reinvestment plan. Total return for periods greater than one year are annualized. The Company believes total return is a useful measure of the overall investment performance of our shares.
Investments
Acquired 22 industrial and three retail properties for a total purchase price of $131,957 during the three months ended June 30, 2024, of which $26,916 relates to land acquired that involves build-to-suit arrangements and is accounted for as investments in loans receivable. These acquisitions are consistent with our strategy of acquiring diversified, income-producing, commercial real estate assets concentrated in high growth markets.
Disposed of one retail property and one parcel of excess land at an industrial property for total net proceeds of $5,260 and recognized a net gain on dispositions of real estate of $714 during the three months ended June 30, 2024.
Invested $30,829 and sold $7,005 in real estate debt, consisting of CMBS investments during the three months ended June 30, 2024.
Funded a capital call initiated by STORE of $33,750. The Company’s investment, combined with those of affiliates of the Company, through Ivory OSREC OS Aggregator (“OS Aggregator”) totaled $2,384,157, representing 25.0% of the closing capital contribution of STORE.
Capital Activity and Financings
Raised net proceeds of $605,813 from the sale of our common shares and repurchased 2,372,508 of our common shares for $24,086 during the three months ended June 30, 2024.
During the three months ended June 30, 2024, we incurred and paid down our mortgage notes and credit facility debt as follows: (i) incurred and paid down secured debt of $43,000 and $393, respectively; and (ii) incurred and paid down unsecured debt of $233,282 and $313,626, respectively.
Repaid the outstanding balance of $200,000 on the affiliate line of credit.
Repaid the $153,394 outstanding balance on the promissory notes with SuNNNy Days, LLC, an affiliate of GIC, which the Company borrowed to purchase the remaining interests under the STORE Forward Interest Purchase Agreement.
Overall Portfolio
Our portfolio as of June 30, 2024 consisted of investments in real estate (57%), investments in leases (12%), investments in real estate debt (2%), and investments in unconsolidated real estate affiliates (29%), based on fair value.
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Our 231 properties as of June 30, 2024 consisted of Industrial (61%), Retail (25%), Land (7%), and Office (7%), based on fair value.
Our investments in real estate debt as of June 30, 2024, consisted of a commercial real estate loan and CMBS. For further details on credit rating and underlying real estate collateral, refer to “Investment Portfolio – Investments in Real Estate Debt”.
Our investments in unconsolidated real estate affiliates consisted of equity investments in STORE, Tenneco JV, and Fleet Farm JV. As of June 30, 2024, our investments in STORE, Tenneco JV, and Fleet Farm JV were $1,543,826, $27,567, and $5,996, respectively.
Investment Portfolio
Real Estate Investments
The following chart describes the diversification of our investments in real estate by property type1 based on fair value as of June 30, 2024:
Property Type 1
14163

1     Property Type weighting is measured as the asset value of our real estate investments for each sector category against the total asset value of all real estate investments, excluding the value of any third-party interests in such real estate investments. “Real estate investments” include our direct property investments and properties held within joint ventures managed by our Adviser. “Real estate investments” excludes properties held in joint ventures managed by third parties, including the Company’s investment in STORE.
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The following table provides a summary of our portfolio as of June 30, 2024, including Investments in real estate and Investments in leases – financing receivables:
Property Type (1)
Number of PropertiesSq. Feet (in thousands)
Occupancy Rate (4) (5)
Average Effective Annual Base Rent Per Leased Sq. Foot
Gross Asset Value (3)
Annual Base Rent
Percentage of Total Revenue
Industrial (2)
6221,557100%$6.00$2,378,504 $128,367 58%
Retail (2)
1633,42196%$15.70971,379 53,573 24%
Land21,526N/A$12.30267,605 18,791 9%
Office41,006100%$19.90263,736 19,996 9%
Total
23127,510$3,881,224 $220,727 100%
__________
(1)Excludes indirect investment in STORE.
(2)Includes properties owned by unconsolidated entities.
(3)Based on fair value as of June 30, 2024.
(4)Occupancy rate is calculated as the percentage of square footage leased.
(5)Land and build-to-suit investments are excluded from Occupancy Rate.

Real Estate and Leases
The following table provides information regarding our real estate property types as of June 30, 2024:
Property Type and Investment (1)
Number of PropertiesLocationAcquisition/Commencement DateOwnership InterestSq. Feet (in thousands)
Occupancy Rate (7)
Industrial:
Amazon5VariousAug. - Dec. 2022100%4,964100%
Dorel Industries1Cornwall, ONNovember 2022100%492100%
EquipmentShare.com (6)
32Various
Oct. - Nov. 2022, June 2024
100%5,788100%
Magna International1Bowling Green, KYSeptember 2022100%1,176100%
Paradigm3VariousOctober 2022100%314100%
Whirlpool1Amana, IANovember 2022100%1,572100%
Tenneco(2)
11VariousDec. 2022 - Jul. 2023100% / 51%3,437100%
LOC Performance2VariousMarch 2023100%990100%
QVC2VariousJanuary 2023100%2,166100%
Save Mart (4)
2VariousSeptember 2023100%555100%
Quanta Cloud
1San Jose, CAJune 2024100%91100%
Johnson Controls1Seattle, WASeptember 2022100%12100%
Retail:
Cracker Barrel53VariousSeptember 2022100%537100%
Fleet Farm (2)
2VariousAugust 202249%428100%
Ramoco Fuels NC LLC (5)
27VariousSeptember 2023100%94100%
Convenience Store Operator (5)
28VariousSeptember 2023100%143—%
Walgreen Co.29VariousSeptember 2022100%425100%
Maverick Gaming11VariousSept. 2022 - Jul. 2023100%317100%
Save Mart10VariousJuly 2023100%475100%
LV Petroleum (6)
3
Various
May - June 2024
100%1,002100%
Office:
Chubb2Whitehouse, NJNovember 2022100%429100%
Energy Center1Houston, TXOctober 2022100%524100%
EquipmentShare.com1Colombia, MOOctober 2022100%53100%
Land:
Bally's1Chicago, ILNovember 2022100%1,311
N/A(3)
HOF Village Waterpark1Canton, OHNovember 2022100%215
N/A(3)
Total
23127,510

__________________
(1)Excludes indirect investment in STORE which owns properties leased to tenants on a triple-net lease basis
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(2)Includes properties owned by unconsolidated entities. Ownership Interest less than 100% represents percentage of unconsolidated affiliate owned by the Company
(3)Land and build-to-suit investments are excluded from Occupancy Rate.
(4)Properties contributed to DST Program, but remain consolidated under GAAP. As of June 30, 2024, approximately 31% of the DST interests has been sold to third parties.
(5)Properties previously leased to SQRL Holdings and initially acquired in September 2022.
(6)Includes build-to-suit assets currently in development.
(7)Occupancy Rate is calculated as the percentage of square footage leased.

Lease Expirations
The following schedule details the expiring leases at our real estate properties by annualized base rent and square footage as of June 30, 2024 (square feet data in thousands):
YearNumber of Expiring LeasesAnnualized Base Rent% of Total Annualized Base Rent ExpiringSquare Feet (in thousands)% of Total Square Feet Expiring
2024 (remaining)— $— — %— — %
2025— — — %— — %
2026— — — %— — %
2027— — — %— — %
20281,946 %191 %
2029— — — %— — %
2030— — — %— — %
2031— — — %— — %
203210,554 %1,187 %
203316 5,158 %233 %
Thereafter162 203,069 92 %19,236 92 %
Total181$220,727 100 %20,847 100 %

STORE
As of June 30, 2024, the Company holds a 16.1% ownership interest in STORE, which owns 3,230 properties in the United States, leased to 625 tenants in various industries on a triple-net basis. We initially acquired the investment in STORE in February 2023 with incremental interests purchased throughout 2023 and during the six months ended June 30, 2024. We have determined that STORE is a significant subsidiary under SEC Regulation S-X 10-01(b) as of June 30, 2024. Accordingly, the Company is required to include STORE’s summarized statement of operations information for the three and six months ended June 30, 2024. See “Item 1. Financial Statements—Notes to Condensed Consolidated Financial Statements—4. Investments in Unconsolidated Real Estate Affiliates” for the summarized statement of operations.
Investments in Real Estate Debt
The following table details our investments in real estate debt as of June 30, 2024 (in thousands):
Type of Security/Loan
Weighted Average Coupon (1)
Weighted Average Maturity Date (2)
Face AmountCost BasisFair Value
CMBS
SOFR +4%
10/26/2033$54,499 $53,946 $54,190 
Commercial real estate loan (3)
14 %7/12/202543,435 43,435 43,435 
Total investments in real estate debt11 %$97,934 $97,381 $97,625 
__________________
(1)The term secured overnight financing rate (“SOFR”) refers to the relevant floating benchmark rates, one-month SOFR.
(2)Weighted average maturity date is based on the fully extended maturity date of the instrument.
(3)The borrower for the commercial real estate loan is NLCA Real Estate Holdings, LLC.


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Results of Operations
The following table sets forth the results of our operations for the three months ended June 30, 2024 and 2023 (in thousands, except per share data):
Three Months EndedChange
June 30, 2024June 30, 2023$
Revenues
Rental revenue$48,717 $44,954 $3,763 
Income from Investment in leases - Financing receivables15,037 13,960 1,077 
Total revenues63,754 58,914 4,840 
Expenses
Rental property operating6,701 3,397 3,304 
General and administrative7,530 4,264 3,266 
Impairment charges4,849 — 4,849 
Management fee10,323 4,986 5,337 
Performance participation allocation8,333 8,134 199 
Depreciation and amortization23,115 15,562 7,553 
Total expenses60,851 36,343 24,508 
Other income (expense)
Income from unconsolidated real estate affiliates40,094 13,180 26,914 
Net gain on dispositions of real estate714 — 714 
Interest expense(31,838)(28,207)(3,631)
Interest income2,854 2,055 799 
Other income, net751 34 717 
Total other income (expense), net12,575 (12,938)25,513 
Net income before income taxes$15,478 $9,633 $5,845 
Income tax expense1,108 — 1,108 
Net income 14,370 9,633 4,737 
Net income attributable to non-controlling interests(1,234)(1,787)553 
Net income attributable to ORENT shareholders $13,136 $7,846 $5,290 
Net income per common share – basic$0.04 $0.06 
Net income per common share – diluted$0.04 $0.06 
Weighted-average common shares outstanding, basic292,992,195 127,321,209 
Weighted-average common shares outstanding, diluted321,947,289 127,337,421 
Rental Revenue
Rental revenue from our income property operations was $48,717 for the three months ended June 30, 2024 and $44,954 for the three months ended June 30, 2023. The increase in respective revenues during the periods presented is primarily due to an increase in the real estate portfolio from 170 properties as of June 30, 2023 to 182 properties as of June 30, 2024, as well as an increase in expense recovery income included in variable lease payments from June 30, 2023 to June 30, 2024.
Income from Investment in Leases - Financing Receivables
Income from investment in leases - financing receivables was $15,037 for the three months ended June 30, 2024 and $13,960 for the three months ended June 30, 2023. The increase in respective revenues during the periods presented is due to an increase in the investment properties that were accounted for as financing receivables from 14 at June 30, 2023 to 19
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at June 30, 2024, resulting from failed sales-leaseback transactions under U.S. GAAP for the three months ended June 30, 2024.
Rental Property Operating Expenses
Rental property expenses were $6,701 for the three months ended June 30, 2024, and $3,397 for the three months ended June 30, 2023. The increase is primarily the result of an increase in our current year maintenance, insurance, and real estate tax expenses.
General and Administrative Expenses
General and administrative expenses were $7,530 for the three months ended June 30, 2024 and $4,264 for the three months ended June 30, 2023. The increase in respective general and administrative expenses is primarily due to increases in salaries expense and legal fees
Impairment of Intangibles
During the three months ended June 30, 2024, the Company recognized $4,849 of impairment charges related to lease intangibles and straight-line rent receivable for properties previously leased to SQRL Holdings.
Management Fee
The management fee for the three months ended June 30, 2024 and 2023 was $10,323 and $4,986, respectively. The increase was primarily due to an increase in NAV.
Performance Participation Allocation
Performance participation allocation was $8,333 for the three months ended June 30, 2024 and $8,134 for the three months ended June 30, 2023. The increase was primarily due to increases in the NAV for NLT OP.
Depreciation and Amortization
Depreciation and amortization was $23,115 for the three months ended June 30, 2024 and $15,562 for the three months ended June 30, 2023. The increase in depreciation and amortization during the periods presented is due to an increase in the real estate portfolio from 170 properties as of June 30, 2023, to 182 properties as of June 30, 2024, as well as assets placed in service during 2023 that were previously under construction.
Income from Unconsolidated Real Estate Affiliates
Income from unconsolidated real estate affiliates was $40,094 for the three months ended June 30, 2024, and $13,180 for the three months ended June 30, 2023. The increase in Income from Unconsolidated Real Estate Affiliates is primarily due to the increase in the Company’s ownership in STORE.
Net Gain on Dispositions of Real Estate
During the three months ended June 30, 2024, the Company recognized a net gain on dispositions of real estate of $714. The Company disposed of one retail property and a parcel of excess land at one industrial property for total proceeds of $5,260.
Interest Expense
Interest expense was $31,838 for the three months ended June 30, 2024, and $28,207 for the three months ended June 30, 2023. The increase in expense was primarily due to an increase in credit facility borrowings, interest on the FIPA loan incurred during the three months ended June 30, 2024, and a reduction in capitalized interest for properties under construction, as the properties were placed in service in 2023.
Interest Income
Interest income was $2,854 and $2,055 for the three months ended June 30, 2024 and 2023, respectively. The increase in interest income in the current year was primarily due to higher interest income on our investments in real estate debt, as well as an increase in interest earned on our deposits with banks.
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Other Income, net
For the three months ended June 30, 2024 the Company recognized other income, net of $751, compared to other income, net of $34 for the three months ended June 30, 2023. The change was primarily due to gains on derivatives for which the Company has not elected hedge accounting and higher transaction expenses, offset by decreases in expenses related to our DST Program.


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The following table sets forth the results of our operations for the six months ended June 30, 2024 and 2023 (in thousands, except per share data):
Six Months EndedChange
June 30, 2024June 30, 2023$
Revenues
Rental revenue$99,671 $90,995 $8,676 
Income from Investment in leases - Financing receivables29,571 27,629 1,942 
Other revenue129,242 118,624 10,618 
Expenses
Rental property operating12,788 10,686 2,102 
General and administrative11,510 7,572 3,938 
Impairment charges4,849 — 4,849 
Management fee18,804 9,058 9,746 
Performance participation allocation15,162 8,134 7,028 
Depreciation and amortization46,152 28,670 17,482 
Total expenses109,265 64,120 45,145 
Other income (expense)
Income from unconsolidated real estate affiliates73,394 16,774 56,620 
Net gain on dispositions of real estate714 — 714 
Interest expense(69,103)(52,333)(16,770)
Interest income6,099 3,944 2,155 
Other income, net515 29 486 
Total other income (expense), net11,619 (31,586)43,205 
Net income before income taxes31,596 22,918 8,678 
Income tax expense1,412 — 1,412 
Net income $30,184 $22,918 $7,266 
Net income attributable to non-controlling interests(2,917)(4,762)1,845 
Net income attributable to ORENT shareholders $27,267 $18,156 $9,111 
Net income per common share – basic$0.10 $0.16 
Net income per common share – diluted$0.10 $0.16 
Weighted-average common shares outstanding, basic265,106,090 112,784,711 
Weighted-average common shares outstanding, diluted293,952,425 112,800,923 
Rental Revenue
Rental revenue from our income property operations was $99,671 for the six months ended June 30, 2024 and $90,995 for the six months ended June 30, 2023. The increase in respective revenues during the periods presented is primarily due to an increase in the real estate portfolio from 170 properties as of June 30, 2023 to 182 properties as of June 30, 2024, contractual rent increases across the existing portfolio, and an increase in expense recovery income included in variable lease payments from June 30, 2023 to June 30, 2024.
Income from Investment in Leases - Financing Receivables
Income from investment in leases - financing receivables was $29,571 for the six months ended June 30, 2024 and $27,629 for the six months ended June 30, 2023. The increase in respective revenues during the periods presented is due to
49


an increase in the investment properties that were accounted for as financing receivables from 14 at June 30, 2023 to 19 at June 30, 2024, resulting from failed sales-leaseback transactions under U.S. GAAP for the six months ended June 30, 2024
Rental Property Operating Expenses
Rental property operating expenses were $12,788 for the six months ended June 30, 2024 and $10,686 for the six months ended June 30, 2023. The increase was primarily the result of an increase in our current year real estate tax expense estimate, state and local taxes, and insurance expense, offset by decreased maintenance expense compared to the prior year.
General and Administrative Expenses
General and administrative expenses were $11,510 for the six months ended June 30, 2024 and $7,572 for the six months ended June 30, 2023. The increase in respective general and administrative expense is primarily due to increases in salaries expense and legal fees.
Impairment of Intangibles
During the six months ended June 30, 2024, the Company recognized $4,849 of impairment charges related to properties previously leased to SQRL Holdings.
Management Fee
The management fee for the six months ended June 30, 2024 and 2023 was $18,804 and $9,058, respectively. The increase was primarily due to an increase in NAV.
Performance Participation Allocation
Performance participation allocation was $15,162 for the six months ended June 30, 2024 and $8,134 for the six months ended June 30, 2023. The increase was due to increases in NAV for NLT OP.
Depreciation and Amortization
Depreciation and amortization was $46,152 for the six months ended June 30, 2024 and $28,670 for the six months ended June 30, 2023. The increase in depreciation and amortization during the periods presented is due to an increase in the real estate portfolio from 170 properties as of June 30, 2023, to 182 properties as of June 30, 2024, as well as assets placed in service during 2023 that were previously under construction.
Income from Unconsolidated Real Estate Affiliates
Income from unconsolidated real estate affiliates was $73,394 for the six months ended June 30, 2024 and $16,774 for the six months ended June 30, 2023. The increase in Income from Unconsolidated Real Estate Affiliates is primarily due to the increase in the Company’s ownership in STORE.
Gain on Dispositions of Real Estate
During the six months ended June 30, 2024, the Company recognized a net gain on dispositions of real estate of $714. The Company disposed of one retail property and one parcel of excess land at an industrial property for total proceeds of $5,260.
Interest Expense
Interest expense was $69,103 for the six months ended June 30, 2024 and $52,333 for the six months ended June 30, 2023. The increase in expense was primarily due to an increase in credit facility borrowings, interest on the STORE FIPA loan, and a reduction in capitalized interest for properties under construction, as the properties were placed in service in 2023.
Interest Income
Interest income was $6,099 and $3,944 for the six months ended June 30, 2024 and 2023, respectively. The increase in interest income in the current year was primarily due to higher interest income on our investments in real estate debt, as well as an increase in interest earned on our deposits with banks.
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Other Income, net
For the six months ended June 30, 2024, the Company recognized other income, net of $515, compared to other income, net of $29 for the six months ended June 30, 2023. The change was primarily due to gains on derivatives for which the Company has not elected hedge accounting, offset by higher transaction expenses as well as expenses related to our DST Program.
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Net Asset Value and NAV Per Share Calculation
Each class has an undivided interest in our assets and liabilities, other than class-specific ongoing servicing fees. In accordance with the valuation guidelines, our NAV per share for each class as of the last calendar day of each month, using a process that reflects several components, includes the estimated fair value of (1) each of our properties (including the DST Properties), (2) our real estate debt and other securities for which third-party market quotes are available, (3) our other real estate debt and other securities, if any, and (4) our other assets and liabilities. The NAV for each class of shares will be based on the net asset values of our investments (including real estate debt and other securities), the addition of any other assets (such as cash on hand), and the deduction of any liabilities (including the allocation/accrual of any performance participation to Blue Owl Oak Trust Carry LLC, a controlled subsidiary of Blue Owl, and Blue Owl Real Estate Net Lease Trust CPV LP, controlled by senior and other officers of Blue Owl (each a “Special Limited Partner”) and the deduction of any ongoing servicing fees specifically applicable to such class of shares). At the end of each month, before taking into consideration repurchases or class-specific expense accruals for that month, any change in our aggregate NAV (whether an increase or decrease) is allocated among each class of shares based on each class’s relative percentage of the previous aggregate NAV plus issuances of shares that were effective on the first calendar day of such month. Following the aggregation of the net asset values of our investments, the addition of any other assets (such as cash on hand), and the deduction of any other liabilities, any class-specific adjustments are incorporated into our NAV, including additional issuances and repurchases of our Shares and accruals of class-specific ongoing servicing fees. For each applicable class of shares, the ongoing servicing fee is calculated as a percentage of the aggregate NAV for such class of shares. At the close of business on the date that is one business day after each record date for any declared distribution, our NAV for each class will be reduced to reflect the accrual of our liability to pay any distribution to our shareholders of record of each class as of the record date. NAV per share for each class is calculated by dividing such class’s NAV at the end of each month by the number of Shares outstanding for that class at the end of such month.
Our total NAV presented in the following tables includes the NAV of our Class S, Class N, Class D, and Class I common shares, as well as the partnership interests of NLT OP held by parties other than the Company. The following table provides a breakdown of the major components of our NAV as of June 30, 2024 (dollars are in thousands):
Components of NAVJune 30, 2024
Cash and cash equivalents$101,571 
Restricted cash68,574 
Investments in real estate, net2,919,937 
Investment in leases - financing receivables609,891 
Investments in real estate debt124,541 
Intangible assets, net172,572 
Investments in unconsolidated real estate affiliates1,578,429 
Other assets41,622 
Mortgage notes and credit facility(1,931,561)
Due to Affiliates(17,684)
Accounts payable and accrued expenses(92,686)
Other Liabilities(69,278)
Net Asset Value$3,505,928 
Number of outstanding shares/units345,745,816 
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The following table provides a breakdown of our total NAV and NAV per share/unit by class as of June 30, 2024 (dollars are in thousands except for per share amounts):
NAV per shareClass S SharesClass N SharesClass D SharesClass I Shares
Third - Party Operating Partnership Units (2)
Total
NAV$1,473,319 $19,428 $12,092 $1,705,484 $295,605 $3,505,928 
Number of outstanding shares/units145,774,129 1,907,909 1,209,667 167,774,419 
(1)
29,079,692 345,745,816 
NAV Per Share/Unit as of June 30, 2024
$10.1069 $10.1828 $9.9958 $10.1653 $10.1653 
__________________
(1)Includes Class I Shares subject to redemption features, classified as Redeemable common shares.
(2)Includes the partnership interests of NLT OP held by the Special Limited Partners and parties other than us.
The following table details the weighted average capitalization rate by property type, which is the key assumptions used in the valuations as of June 30, 2024:
Property Type
Capitalization Rate (1)
Industrial5.6 %
Land7.0 %
Office8.1 %
Retail6.5 %
__________________
(1)Includes our direct property investments and properties held within joint ventures managed by our Adviser. Excludes properties held in joint ventures managed by third parties, including the Company’s investment in STORE.

These assumptions are determined by the Adviser and reviewed by our independent valuation advisor. A change in these assumptions would impact the calculation of the value of our property investments. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our investment values:
InputHypothetical ChangeIndustrialLandOfficeRetail
Capitalization Rate0.25 % Decrease+3.5 %+3.4 %+3.4 %+4.4 %
(weighted average)0.25 % Increase(3.6)%(3.2)%(3.2)%(4.0)%
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The following table reconciles shareholders’ equity and NLT OP partner’s capital per our Consolidated Balance Sheet to our NAV (in thousands):
June 30, 2024
Shareholder's equity$2,873,482 
Non-controlling interests attributable to NLT OP254,136 
Redeemable non-controlling interests23,687 
Redeemable common shares62,068 
Total partners' capital of NLT OP under GAAP3,213,373 
Adjustments:
Accrued shareholder servicing fee77,423 
Accrued organization and offering costs10,593 
Accumulated depreciation and amortization under GAAP149,921 
Unrealized net real estate and real estate debt appreciation104,855 
Accrued interest on financing receivables(20,064)
Straight-line rent(30,173)
NAV$3,505,928 
The following details the adjustments to reconcile GAAP shareholders’ equity and total partners’ capital of NLT OP to our NAV:
Under GAAP, we accrue the ongoing shareholder servicing fee as an offering cost at the time we sell the Class S, Class N, and Class D shares. For purposes of calculating NAV, we recognize the ongoing servicing fee as a reduction of NAV on a monthly basis when such fee is paid.
The Adviser agreed to advance certain organization and offering costs on our behalf through September 1, 2023. Such costs will be reimbursed to the Adviser on a pro-rata basis over a 60 month period beginning September 1, 2023. Under GAAP, organization costs have been accrued as a liability. For purposes of calculating NAV, such costs will be recognized as paid over the 60-month reimbursement period.
We depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such depreciation and amortization is not recorded for purposes of calculating our NAV. Our mortgage notes, term loan credit facilities, and unsecured revolving credit facilities (“Debt”) are presented at their amortized cost basis in our consolidated GAAP financial statements. As such, any increases or decreases in the fair market value of our investments in real estate or our Debt are not included in our GAAP results. For purposes of calculating our NAV, our investments in real estate and our Debt are recorded at fair value.
In accordance with GAAP, the Company accrues interest income from Investments in leases – financing receivables under the effective interest method. Interest income in excess of the payment is recorded as interest receivable, which is not recognized for purposes of calculating NAV.
We recognize rental revenue on a straight-line basis under GAAP. Such straight-line rent adjustments are excluded for purposed of calculating NAV.
Distributions
Beginning September 21, 2022, we declared monthly distributions for each class of our common shares, which are generally paid 20 days after month-end. We have paid distributions consecutively each month since such time. Class S, Class D, and Class I common shares received aggregate gross distributions of $0.1751 and $0.3500 per share for the three and six months ended June 30, 2024, respectively. Class N received aggregate gross distributions per share of $0.0584 per share for the three and six months ended June 30, 2024 as Class N shares were only outstanding for one month of the period. The net distribution varies for each class of common shares based on the applicable shareholder servicing fee, which is deducted from the monthly distribution per share and paid directly to the Dealer Manager for further remittance to the applicable distributor.
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The following table details the total net distribution for each of our share classes for the six months ended June 30, 2024 and 2023:
Record DateClass SClass NClass DClass I
January 31, 2024$0.0512 $— $0.0563 $0.0583 
February 29, 20240.0512 — 0.0563 0.0583 
March 31, 20240.0512 — 0.0562 0.0583 
April 30, 20240.0512 — 0.0562 0.0583 
May 31, 20240.0512 — 0.0562 0.0584 
June 30, 20240.0512 0.0541 0.0563 0.0584 
Total$0.3072 $0.0541 $0.3375 $0.3500 
Record DateClass SClass NClass DClass I
January 31, 2023$0.0511 $— $0.0562 $0.0583 
February 28, 20230.0512 — 0.0563 0.0583 
March 31, 20230.0510 — 0.0562 0.0584 
April 30, 20230.0511 — 0.0562 0.0583 
May 31, 20230.0512 — 0.0563 0.0583 
June 30, 20230.0511 — 0.0562 0.0584 
Total$0.3067 $— $0.3374 $0.3500 
The following table details our distributions declared for the three and six months ended June 30, 2024 and June 30, 2023 (in thousands):
Three Months EndedSix Months Ended
June 30, 2024June 30, 2023June 30, 2024June 30, 2023
AmountPercentageAmountPercentageAmountPercentageAmountPercentage
Distributions
Payable in cash$30,678 57 %$11,960 57 %$55,789 57 %$21,560 58 %
Reinvested in shares22,851 43 %8,915 43 %41,968 43 %15,394 42 %
Total distributions$53,529 100 %$20,875 100 %$97,757 100 %$36,954 100 %
Sources of Distributions
Cash flows from operating activities (1)
$53,529 100 %$20,877 100 %$97,757 100 %$36,949 100 %
Offering proceeds— — %— — %— — %— — %
Total sources of distributions$53,529 100 %$20,877 100 %$97,757 100 %$36,949 100 %
Cash flows from operating activities$36,833 $30,218 $73,737 $77,171 
Funds from Operations (2)
$38,072 $20,743 $72,842 $41,296 
Adjusted Funds from Operations (2)
$39,084 $31,856 $73,975 $54,903 
______________
(1)As of June 30, 2024, our inception to date cash flows from operating activities have funded 100% of our distributions.
(2)See "Funds from Operations and Adjusted Funds from Operations" below for a description of Funds from Operations and Adjusted Funds from Operations. Refer to below for reconciliations of these amounts to GAAP net income attributable to ORENT shareholders and for considerations on how to review these metrics.

Funds from Operations and Adjusted Funds from Operations
We believe funds from operations (“FFO”) is a meaningful non-GAAP supplemental measure of our operating results. Our consolidated financial statements are presented using historical cost accounting which, among other things, requires depreciation of real estate investments to be calculated on a straight-line basis. As a result, our operating results imply that the value of our real estate investments have decreased over time. However, we believe that the value of our real estate investments will fluctuate over time based on market conditions and, as such, depreciation under historical cost accounting
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may be less informative as a measure of our performance. FFO is an operating measure defined by the National Association of Real Estate Investment Trusts (“NAREIT”) that is broadly used in the REIT industry. FFO, as defined by NAREIT and presented below, is calculated as net income or loss (computed in accordance with GAAP), excluding (i) depreciation and amortization, (ii) impairment of investments in real estate, (iii) net gains or losses from sales of real estate, and (iv) similar adjustments for non-controlling interests and unconsolidated entities.
We also believe that adjusted FFO (“AFFO”) is an additional meaningful non-GAAP supplemental measure of our operating results. AFFO further adjusts FFO to reflect the performance of our portfolio by adjusting for items we believe are not directly attributable to our operations. Our adjustments to FFO to arrive at AFFO include removing the impact of (i) straight-line rental income and expense, (ii) deferred income amortization, (iii) amortization of above- and below-market lease intangibles, (iv) amortization of mortgage premium/discount, (v) unrealized gains or losses from changes in the fair value of real estate debt, investments in unconsolidated real estate affiliates, and other financial instruments, (vi) gains and losses resulting from foreign currency translations, (vii) provision for credit losses, (viii) non-cash income, (ix) non-cash performance participation allocation, even if repurchased by us, (x) management fees paid in shares or NLT OP Units, even if subsequently repurchased by us, (xi) non-cash interest expense on affiliate line of credit paid in shares or NLT OP Units, even if subsequently repurchased by us, (xii) organization costs, (xiii) amortization of deferred financing costs, (xiv) shareholder servicing fees paid during the period, and (xv) similar adjustments for non-controlling interests and unconsolidated entities. AFFO is not defined by NAREIT and our calculation of AFFO may not be comparable to disclosures made by other REITs.
The Company’s definition of AFFO excludes the impact of the amortization of deferred financing costs (“DFCs”) on our debt, which is included in GAAP net income (loss). We do not consider the amortization of DFCs to be directly attributable to our operations and view DFCs similar to acquisition expenses, which are capitalized into the cost basis of our investments, and therefore excluded from AFFO. We believe that excluding amortization of DFCs from our calculations of AFFO and results in metrics that better reflect the results of our operations.
FFO and AFFO should not be considered more relevant or accurate than GAAP net income (loss) in evaluating our operating performance. In addition, FFO and AFFO should not be considered as alternatives to net income (loss) as indications of our performance or as alternatives to cash flows from operating activities as indications of our liquidity, but rather should be reviewed in conjunction with these and other GAAP measurements. Further, FFO and AFFO are not intended to be used as liquidity measures indicative of cash flow available to fund our cash needs, including our ability to make distributions to our shareholders. In addition, our methodology for calculating AFFO may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported AFFO may not be comparable to the AFFO reported by other companies.
The following table presents a reconciliation of net income (loss) attributable to ORENT shareholders to FFO and AFFO attributable to ORENT shareholders (in thousands):
Three Months EndedSix Months Ended
June 30, 2024June 30, 2023June 30, 2024June 30, 2023
Net income attributable to ORENT shareholders$13,136 $7,846 $27,267 $18,156 
Adjustments to arrive at FFO:
Depreciation and amortization23,115 15,562 46,152 28,670 
Impairment charges4,849 — 4,849 — 
Net gain on dispositions of real estate(714)— (714)— 
Amount attributable to investment in unconsolidated affiliate149 149 298 298 
Amount attributable to non-controlling interests for above adjustments(2,463)(2,814)(5,010)(5,828)
FFO attributable to ORENT shareholders38,072 20,743 72,842 41,296 
Adjustments to arrive at AFFO:
Straight-line rental income(4,006)(4,356)(9,118)(8,518)
Amortization of ground lease and below market lease intangibles102 129 204 258 
Amortization of mortgage discount— 92 — 251 
Unrealized gains on foreign currency derivatives(588)(9)(1,189)(9)
Unrealized gains from changes in fair value of financial instruments
134 — (100)— 
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Adjustment for investments accounted for under fair value option(13,122)— (22,121)— 
Unrealized loss from changes in fair value of DST financing obligation 319 — 560 — 
Provision for credit losses
1,760 888 742 816 
Accretion of tenant loan receivable(4,167)(2,505)(7,803)(4,966)
Performance participation allocation8,333 8,134 15,162 8,134 
Management fee10,323 4,986 18,804 9,058 
Interest on affiliate line of credit1,862 4,415 5,420 8,491 
Organization costs36 170 (113)289 
Amortization of deferred financing costs3,395 3,300 6,726 6,430 
Shareholder servicing fees(2,931)(1,356)(5,242)(2,470)
Amount attributable to investment in unconsolidated affiliate(49)(54)(98)(108)
Amount attributable to non-controlling interests for above adjustments(389)(2,721)(701)(4,049)
AFFO attributable to ORENT shareholders$39,084 $31,856 $73,975 $54,903 
Liquidity and Capital Resources
Liquidity
We believe we have sufficient liquidity to operate our business, with immediate liquidity comprised of cash and cash equivalents of $101,571 and $200,384 available under our credit facility as of June 30, 2024. In addition to our immediate liquidity, we obtain incremental liquidity through the sale of our common shares, from which we generated net proceeds of $1,138,233 for the six months ended June 30, 2024, as well as through the ability to sell our CMBS investments with a fair value of $54,190 as of June 30, 2024. Additionally, we may incur indebtedness secured by our real estate and real estate debt investments, borrow money through unsecured financings, or incur other forms of indebtedness. We may also generate incremental liquidity through the sale of our real estate.
Our primary liquidity needs are to fund our investments, make distributions to our shareholders, repurchase common shares pursuant to our share repurchase plan, pay operating expenses, fund capital expenditures, and repay indebtedness. Our operating expenses include, among other things, the management fee we pay to the Adviser and the performance participation allocation that NLT OP pays to the Special Limited Partners, both of which will impact our liquidity to the extent the Adviser or the Special Limited Partners elect to receive such payments in cash, or subsequently redeem shares or NLT OP Units previously issued to them.
Our cash needs for acquisitions and other capital investments will be funded primarily from the sale of common shares and through the incurrence or assumption of debt. Other potential future sources of capital include secured or unsecured financings from banks or other lenders and proceeds from the sale of assets. If necessary, we may use financings or other sources of capital in the event of unforeseen significant capital expenditures. We expect to be able to refinance debt obligations maturing in the near term through the use of capacity on our unsecured line of credit or exercise of existing extension options.
We continue to believe that our current liquidity position is sufficient to meet the need of our expected investment activity.
Capital Resources
As of June 30, 2024, our indebtedness included loans secured by our properties, unsecured credit facilities, and an affiliate note payable.
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The following table is a summary of our indebtedness as of June 30, 2024 (in thousands):
Principal Balance as of
Indebtedness
Weighted Average Interest Rate(1)(6)
Weighted Average Maturity Date
Maximum Facility SizeJune 30, 2024December 31, 2023
Mortgage notes & credit facility:
Unsecured term loan credit facility(2)
S + 1.65%
8/11/2027$1,165,500 $1,165,500 $1,095,500 
Unsecured revolving credit facility(3)
S + 1.68%8/11/2026$724,500 339,094 231,255 
Fixed rate mortgages6.25%4/6/2029N/A43,000 — 
Variable rate mortgages (4)
S + 2.50%
11/5/2024N/A397,108 546,005 
Deferred financing costs, net(13,293)(13,172)
Total Mortgage notes & credit facility, net:
$1,931,409 $1,859,588 
Affiliate line of credit
Affiliate line of credit(5)
S + 1.55%6/30/2024N/A— 200,000 
Affiliate line of credit, net:
$— $200,000 
Total indebtedness$1,931,409 $2,059,588 
_______________
(1)The term “S” refers to the relevant floating benchmark rates, which include daily secured overnight financing rate (“SOFR”), 30-day SOFR, one-month euro interbank offered rate (“EURIBOR”), and one-month SONIA as applicable to each loan. As of June 30, 2024, we have outstanding interest rate swaps and interest rate caps that mitigate our exposure to potential future interest rate increases under our floating-rate debt. See further discussion of outstanding interest rate swaps and caps below.
(2)The unsecured term loan credit facility bears interest at a base rate plus a margin ranging from 0.25% to 1.85%. The base rate is the greater of (a) Keybank N.A.’s announced prime rate, (b) 0.5% above the federal funds effective rate, (c) SOFR plus 0.10%, and (d) 1.0%. The weighted average interest rate for the unsecured term loan credit facility for the six months ended June 30, 2024 was 6.89% (unhedged) and 5.26% (hedged). As of June 30, 2024, we have outstanding interest rate swaps with aggregate notional values of $700,000, $250,000, $145,500 and $70,000 that are structured such that the SOFR rates result in fixed rates of 3.65%, 3.42%, 4.23% and 3.67%, respectively.
(3)The unsecured revolving credit facility bears interest at a base rate plus a margin ranging from 0.30% to 1.90%. The base rate is the greater of (a) Keybank N.A.’s announced prime rate, (b) 0.5% above the federal funds effective rate, (c) SOFR plus 0.10%, and (d) 1.0%. The weighted average interest rate for the unsecured revolving credit facility for the six months ended June 30, 2024 was 6.95% (unhedged) and 6.51% (hedged). As of June 30, 2024, we have an outstanding interest rate swap with an aggregate notional value of $30,000 that is structured such that the SOFR rate results in a fixed rate of 3.67%.
(4)In March 2023, certain of our mortgages were amended to transition certain London interbank offered rate (“LIBOR”)-based rates to certain replacement reference rates. As of June 30, 2024, this reference rate transition has impacted only certain of our mortgages. We have interest rate swaps and caps with an aggregate notional value of $45,927 and $382,870, respectively, as of June 30, 2024, that are structured such that the variable rates result in a fixed rate of 3.74% and a capped rate of 3.00%, respectively.
(5)The affiliate note payable bears interest at a base rate plus a margin ranging from 0.30% to 1.90%. The base rate is the greater of (a) Keybank N.A.’s announced prime rate, (b) 0.5% above the federal funds effective rate, (c) SOFR plus 0.10%, and (d) 1.0%. The weighted average interest rate for the affiliate note payable for the six months ended June 30, 2024 was 6.97%.
(6)The Company’s mortgage and notes payable contain yield or spread maintenance provisions.

On September 1, 2022, the Company commenced the offering of its shares through a continuous private placement offering. The Company is authorized to issue an unlimited number of each of its four classes of shares of its common shares (Class S shares, Class N shares, Class D shares, and Class I shares).
As of August 2, 2024, we had received net proceeds of $3,475,815 from selling an aggregate 341,581,244 common shares in the private offering (consisting of 159,882,016 Class S shares, 6,570,577 Class N shares, 6,006,070 Class D shares, and 169,122,581 Class I shares).
Cash Flows
Cash flows provided by operating activities was $73,737 for the six months ended June 30, 2024 compared to $77,171 for the six months ended June 30, 2023. The change in cash flows provided by operating activities was primarily due to an increase in payments of amounts due to affiliates and payments of accounts payable and accrued expenses compared to the six months ended June 30, 2023.
Cash flows used in investing activities was $687,912 for the six months ended June 30, 2024 compared to $682,109 for the six months ended June 30, 2023. The change in cash flows used in investing activities for the six months ended June 30, 2024 was primarily due to an increase in investments in unconsolidated real estate affiliates of $193,109, offset by lower investments in real estate.
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Cash flows provided by financing activities was $646,547 for the six months ended June 30, 2024 compared to $604,985 for the six months ended June 30, 2023. The change in cash flows provided by financing activities was primarily due to an increase of $555,301 from the issuance of our common shares offset by an increase in payments of our mortgage notes and credit facilities, affiliate line of credit, other borrowings, and distributions.
Critical Accounting Estimates
The preparation of the financial statements in accordance with GAAP involve significant judgments and assumptions and require estimates about matters that are inherently uncertain, as described in our 2023 Form 10-K for the year ended December 31, 2023. These judgments will affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our consolidated financial statements. The following is a summary of changes to our significant accounting policies that we believe are the most affected by our judgments, estimates, and assumptions for the six months ended June 30, 2024. See Note 2 to our condensed consolidated financial statements for further descriptions of the below accounting policies.
Investments in Real Estate
Land acquired under build-to-suit arrangements in a sale-leaseback transaction is accounted for as an investment in loans receivable as the related lease is not deemed to have commenced until the constructed assets are substantially complete. These investments are included within Investments in real estate debt within the Condensed Consolidated Balance Sheets. Other tangible assets acquired under such arrangements are recorded as construction in progress upon acquisition as the Company controls the assets during construction.
Recent Accounting Pronouncements
See “Item 1. Financial Statements—Notes to Condensed Consolidated Financial Statements—2. Summary of Significant Accounting Policies and Estimates” for a discussion concerning recent accounting pronouncements.
Future Cash Requirements
The following table aggregates our contractual obligations and commitments as of June 30, 2024 (in thousands):
ObligationsTotalLess than 1 year1-3 years3-5 yearsMore than 5 years
Indebtedness$1,944,702 $351,157 $385,045 $1,208,500 $— 
Organizational and offering costs10,593 2,354 7,062 1,177 — 
Total$1,955,295 $353,511 $392,107 $1,209,677 $— 


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ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are exposed to interest rate risk with respect to our variable-rate indebtedness, whereas an increase in interest rates would directly result in higher interest expense. We seek to manage our exposure to interest rate risk by utilizing a mix of floating rate financings with staggered maturities and through interest rate hedging agreements to fix all or a portion of our variable rate debt. As of June 30, 2024, the outstanding principal balance of our indebtedness was $1.9 billion and consisted of mortgage notes, term loan credit facilities, and unsecured revolving credit facilities.
Certain of our mortgage notes, term loan credit facilities, unsecured revolving credit facilities and affiliate note payable are variable rate and indexed to one-month SOFR, three-month SOFR, one-month EURIBOR, and one-month SONIA (collectively, the “Reference Rates”). We have executed interest rate swaps for a portion of these borrowings to hedge the risk of increasing interest rates. For the three and six months ended June 30, 2024, a 10 basis point increase in each of the Reference Rates would have resulted in increased interest expense of $0.4 million and $0.8 million, respectively. Our exposure to interest rate risk may vary in future periods as the amount and terms of our interest rate hedging agreements change over time as we implement our hedging program.
Investments in Real Estate Debt
As of June 30, 2024 and December 31, 2023, we held $124.5 million and $87.2 million of investments in real estate debt, respectively, of which $97.6 and $87.2 are reported at fair value, respectively, on our Condensed Consolidated Balance Sheet. Our investments in real estate debt consist of floating-rate and fixed rate debt. The floating rates are indexed to the Reference Rates, and as such, are exposed to interest rate risk. Our net income will increase or decrease depending on interest rate movements. While we cannot predict factors that may or may not affect interest rates, for the three and six months ended June 30, 2024, a 10 basis point increase or decrease in the Reference Rates would have resulted in an inconsequential increase or decrease to income from investments in real estate debt.
We may also be exposed to market risk with respect to our investments in real estate debt due to changes in the fair value of our investments. We seek to manage our exposure to market risk with respect to our investments in real estate debt by making investments in real estate debt backed by different types of collateral and varying credit ratings. The fair value of our investments may fluctuate, therefore the amount we will realize upon any sale of our investments in real estate debt is unknown. However, as of June 30, 2024 and December 31, 2023, a 10% change in the fair value of our investments in real estate debt would result in a change in the carrying value of our investments in real estate debt of $9.8 million and $8.7 million, respectively.
ITEM 4.     CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this quarterly report on Form 10-Q was made under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based upon this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by SEC rules and forms and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
During the most recent quarter, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) identified in connection with the evaluation described above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1    LEGAL PROCEEDINGS
From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. We may also be subject
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to regulatory proceedings. While the outcome of these legal or regulatory proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations. As of June 30, 2024, we were not involved in any material legal proceedings.
ITEM 1A.     RISK FACTORS
For information regarding factors that could affect our results of operations, financial condition and liquidity, see the risk factors discussed in Part I. Item 1A. “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 18, 2024.
ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities
In conjunction with our commencement of operations, on August 9, 2022, we issued and sold 190,000 shares of our Class I Shares to Blue Owl Capital Holdings, for an aggregate purchase price of $1.9 million. On January 18, 2023, Blue Owl Capital Holdings acquired 210,000 of our Class I Shares from Owl Rock Feeder FIC LLC, an entity owned and controlled by certain of Blue Owl’s senior management, for an aggregate purchase price of $2.2 million. On February 1, 2023, we issued and sold an additional 2,042,841 of our Class I Shares to Blue Owl Capital Holdings, for an aggregate purchase price of $21.0 million. These shares were issued and sold in reliance upon the available exemptions from registration requirements of Section 4(a)(2) of the 1933 Act.
In September 2022, we began accepting subscriptions from investors providing for the private placement of our Shares. As of August 2, 2024, we have sold 159,882,016 Class S Shares, 6,570,577 Class N Shares, 6,006,070 Class D Shares and 169,122,581 Class I Shares for an aggregate price of $3,475,815. These Shares have been issued and sold in reliance upon the available exemption from registration requirements of the 1933 Act under Section 4(a)(2) thereof and Regulation D thereunder.
Share Repurchases
Our Board of Trustees adopted the Amended Share Repurchase Plan effective starting March 13, 2024. Under the Amended Share Repurchase Plan, rather than repurchase Shares on a monthly basis or quarterly through repurchase offers made in accordance with the requirements of Rule 13e-4 of the Exchange Act, we repurchase shares once per quarter no more than 5% aggregate NAV per calendar quarter (measured using the average aggregate NAV as of the end of the immediately preceding three months). Effective April 19, 2024, the Company adopted a further amended and restated share repurchase plan, which incorporated the Class N shares.
Other than as described for Redeemable Common Shares and Redeemable Non-Controlling Interests, the Company is not obligated to repurchase any shares and may choose to repurchase fewer shares than have been requested to be repurchased, or none at all. Further, our Board of Trustees may modify and suspend the Company’s share repurchase plan if it deems such action to be in the Company’s best interest and the best interest of its shareholders. In the event that the Company determines to repurchase some but not all of the shares submitted for repurchase during any month, shares repurchased at the end of the month will be repurchased on a pro rata basis.
The following table sets forth purchases by the Company of its common shares during the three months ended June 30, 2024 under this publicly announced share repurchase program in effect for the period.
Repurchase Request Deadline
Total Number of Common Shares Purchased
(a)
Average Price per Common Share
(b)(1)
Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs
(c)
Maximum Approximately Dollar Value of Common Shares That May Yet be Purchased as Part of Publicly Announced Plans or Programs(2)
June 6, 20242,372,509 10.1522 2,372,509 — 
Total2,372,509 $10.1522 2,372,509 $— 
_______________
(1)Repurchase pricing date was April 30, 2024.
(2)Repurchases are limited as set forth in our share repurchase plan described above. All requests under the share repurchase plan were satisfied.

From Inception through June 30, 2024, 2,283,508 Class I units in the Operating Partnership were issued to the Special Limited Partners. Subsequent to initial issuance, 1,390,806 Class I units were distributed to participants in the Special Limited Partners, with the remaining 892,702 Class I units held directly by the Special Limited Partners as of June 30, 2024. As of June 30, 2024, the Adviser held 8,498,468 Class I REIT shares, of which 6,055,528 shares were issued as
61


payment of management fees and interest on the affiliate loan. The redemption of any Class I units held by the Special Limited Partner or Class I REIT shares held by the Adviser acquired as payment of management fee and interest earned by the Adviser occurs outside of our share repurchase plan.
ITEM 3.     DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4.     MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.     OTHER INFORMATION
During the six months ended June 30, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, (as such terms are defined in Item 408(a) of Regulation S-K of the 1933 Act).
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ITEM 6.     EXHIBITS
(b)Exhibits
3.1
3.2
3.3
3.4
4.1
4.2
10.1
10.2
10.3
31.1*
31.2*
32.1*
32.2*
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (embedded within the Inline XBRL document)
*    Filed herewith
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Blue Owl Real Estate Net Lease Trust
By:/s/ Kevin Halleran
Name: Kevin Halleran
Title: Chief Financial Officer
(Principal Financial Officer)
Date: August 8, 2024
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