Shares of Blue Owl Capital dropped on Friday. The decline followed a report about the firm’s exposure to a troubled UK property lender. Investors reacted quickly after the news surfaced.
The stock fell about 3.8%. It dropped even more in early trading before the market opened. At one point the decline reached about 4.3%.
The concern comes from Blue Owl’s financial exposure to Century Capital Partners, a London based lender that recently entered administration.
Blue Owl exposure to Century Capital raises investor concerns
Blue Owl Capital manages about $307 billion in assets. According to reports, the firm helped fund the riskiest part of loans issued by Century Capital.
The exposure is estimated at about £36 million, which is roughly $48 million. These loans were part of Century’s property lending business.
Century focused mainly on short term loans tied to high end real estate in central London. These types of loans are often used by property developers who need quick financing.
However these deals also carry higher risk. Borrowers usually turn to lenders like Century when they cannot secure traditional bank loans.
Last month Century Capital filed for administration. The company had about £95 million in total debt when it collapsed.
Century Capital collapse linked to wider UK property lending stress
Century’s financial problems came shortly before another lender faced similar trouble. Market Financial Solutions also entered a form of insolvency in the United Kingdom.
Several financial institutions had exposure to Century. Senior creditors include major lenders such as NatWest Group and Hampshire Trust Bank.
Both banks provided higher priority funding compared with private credit investors.
Century relied on funding lines from both banks and private credit firms. These funds allowed it to issue short term property loans with higher interest rates.
Despite the collapse, administrators handling Century’s case remain optimistic. RSM UK, the firm overseeing the process, expects the loans to be fully recovered.
Importantly, creditors have not accused Century of fraud. That sets it apart from the situation involving Market Financial Solutions.
For now investors are watching closely. The situation highlights the risks tied to private credit funding in the property market, especially when lenders focus on high risk real estate borrowers.