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Related Party Transactions
 9 Months Ended
Sep. 30, 2023
Related Party Transactions [Abstract]  
Related Party Transactions Related Party Transactions
Due to Affiliates
The following table details the components of due to affiliates:
September 30, 2023December 31, 2022
Accrued ongoing servicing fees$43,622 $25,877 
Accrued management fee4,135 2,036 
Performance participation allocation5,791 2,504 
Advanced organization and offering costs12,107 6,369 
Other advanced expenses 5,319 — 
Accrued interest - affiliate line of credit2,878 2,439 
Total$73,852 $39,225 
Ongoing Servicing Fees
The Company accrues ongoing servicing fees payable to the Dealer Manager, Blue Owl Securities LLC, for ongoing services rendered to shareholders for Class D and Class S shares equal to 0.25% and 0.85%, 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, the Company, on behalf of itself as general partner and on behalf of the limited partners of NLT OP, entered into the Second Amended and Restated Limited Partnership Agreement of NLT OP (the “Operating Partnership Agreement”). The Operating Partnership Agreement amends the prior limited partnership agreement of the NLT OP to, among other things, issue two new classes of OP units, Class D-1 and Class S-1, to facilitate the issuance of OP Units in exchange for Interests in DSTs in the event the 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 to the Dealer Manager, Blue Owl Securities LLC for ongoing services rendered to shareholders for Class D-1 and Class S-1 shares equal to 0.25% and 0.85%, 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 the 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 the 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 our 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 nine months ended September 30, 2023, the Company incurred management fees of $6,045 and $15,103, respectively.
During the nine months ended September 30, 2023, the Company issued 1,267,552 shares to the Adviser as payment for management fees. Management fees of $4,135 and $2,036 were accrued and unpaid as of September 30, 2023 and December 31, 2022, 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 nine months ended September 30, 2023, the Adviser did not submit any shares for repurchase.
On August 31, 2023, in connection with the DST Program, the Company and NLT OP entered into an Amended and Restated Investment Advisory Agreement (the “Advisory Agreement”) to allow for an additional 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, the Special Limited Partner holds a performance participation interest in the NLT OP that entitles it to receive an allocation of the 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 the NLT OP agreement, the Special Limited Partners are entitled to an allocation from the 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 Partner. As the performance participation allocation is associated with the performance of a service by the Adviser, it is expensed in our Condensed Consolidated Statement of Operations. During the three and nine months ended September 30, 2023 and the period from Inception through September 30, 2022, the Company recognized $5,791, $13,925, and $1,685, respectively, of performance participation allocation expense in the Company’s Condensed Consolidated Statement of Operations.
On February 1, 2023, the Company issued 243,536 units in NLT OP to the Special Limited Partner as payment of performance participation allocation. Such units were issued at the NAV per unit as of December 31, 2022. Additionally, on August 1, 2023 the Company issued 788,112 units in NLT OP to the Special Limited Partner as payment of the performance participation allocation. Such units were issued at the NAV per unit as of June 30, 2023. Also, as of September 30, 2023, 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. Subsequent
to the issuance of the Class I shares and Class I units, no Class I shares or units were redeemed or exchanged for Class I shares in the Company.
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
The amount represents the interest accrued as of September 30, 2023 on the interest-bearing revolving promissory note entered into with affiliate, Blue Owl Capital Holdings LP. Refer to Note 8 - Debt.
As of September 30, 2023, ORENT affiliate entities and their employees owned 9,959,303 ORENT Class I shares in an aggregate amount of $103,162, based on the NAV per share/unit as of September 30, 2023.