If you’ve cracked open the Wall Street Journal in the last month, you’ve probably seen some scary headlines around private credit.
Redemption freezes. A $1.4 billion fire sale. Retail investors calling their advisers in a panic.
The headlines around Blue Owl Capital are enough to give any investor a knot in their stomach. And if you’re invested in anything called private credit (or are thinking about it), suddenly it looks like the whole category is on fire.
I’ve seen multiple investors who were previously interested in our Private Commercial Credit Fund (PCCF) get cold feet because of what they’re reading in the mainstream financial news.
But what those articles actually describe is much narrower than the headlines suggest: a firm that lent billions to software companies with no hard-asset collateral. A very specific kind of lending with very specific risks.
And it has almost nothing in common with how real estate-backed private credit works.
Blue Owl was not a real estate lender
Blue Owl built one of the largest private credit platforms on Wall Street. By late 2025, their loan book was heavily concentrated in software companies. The “collateral” behind those loans were things like enterprise value, revenue projections, and intellectual property – nothing tangible that you can touch, lien, or sell at auction.
When tech valuations softened starting in 2022, those borrowers’ creditworthiness dropped with them. Retail investors, expecting liquidity similar to a money market, got nervous and started pulling out. Ultimately, Blue Owl was forced to halt redemptions in one of their funds, and sell $1.4 billion in loans at a slight discount to fund existing redemption requests. Their stock price cratered.
The losses are real, and investor panic is understandable. But the root cause can be traced back to something very specific: unsecured corporate lending concentrated in a single sector.
“Private credit” covers $3.5 trillion of completely different things
This is the part that frustrates me.
The term “private credit” is an enormous umbrella that covers everything from lending against a 200-unit apartment building to lending against a software company’s projected annual recurring revenue. Those are entirely different risk profiles, different collateral structures, and most importantly, different recovery paths if something goes wrong.
But the WSJ and other outlets don’t draw any distinction – and neither do most readers. So when “private credit” appears in a crisis headline, every company and fund in the category gets painted with the same broad brush.
It’s like reading that an experimental drug trial failed and throwing out your blood pressure medication. Both are “medicine.” But that’s where the similarities end.
Real estate-backed credit is a different animal
When we make a loan through PCCF, the collateral is a physical property. A building. Land. Something that exists regardless of what happens in the tech sector, the public markets, or the broader economy.
If a borrower runs into trouble, we have real protections:
Actual liens on the property
Takeover provisions to step in and control the asset
Reporting requirements that keep borrowers accountable
When Blue Owl’s borrowers struggled, there was no building to seize, no physical asset to fall back on, and Blue Owl couldn’t take over the business. The collateral (protection) was a valuation number on a spreadsheet.
The liquidity structure tells you a lot, too
One detail buried in the WSJ coverage shouldn’t be overlooked: Blue Owl offered investors quarterly redemptions with relatively modest restrictions – no multi-year lockup, just a 5% cap on how much the fund would buy back each quarter.
That attracted investors who expected money-market-like liquidity. But the underlying loans were anything but. And when redemption requests exceeded what the fund could handle, Blue Owl didn’t just gate temporarily – they permanently eliminated quarterly redemptions. A classic run on the bank.
We intentionally structured PCCF differently. There’s a two-year lockup, followed by quarterly redemptions with 90-day notice. It ensures our investors understand the commitment, and helps keep us from being forced into a fire sale.
How to read the next headline
So the next time you see a “private credit” headline, ask one question: what was backing those loans?
If the answer is software revenue projections and enterprise value, that's a fundamentally different risk than physical real estate with liens and takeover rights.
Blue Owl tells you everything about the risks of effectively unsecured lending – and almost nothing about private credit as a category.