Blue Owl Capital Inc. has agreed to buy Oak Street Real Estate Capital in a deal worth as much as $1.6 billion, as the private capital firm forges into the property business. 

The company will pay $950 million in cash and stock, with another $650 million subject to earn-out provision over time, according to a statement. Oak Street Real Estate managed $10.8 billion at the end of June, primarily in the sale-leaseback business.

Blue Owl, formed through a merger of Owl Rock Capital Partners and Dyal Capital Partners, is making its first acquisition since going public through a blank-check company earlier this year. It’s now forging into a new space after primarily focusing on private credit and taking stakes in other fund managers.

Oak Street Real Estate, founded in 2009 by Mark Zahr, works with companies including Amazon Inc., Walgreens Boots Alliance Inc. and Big Lots Inc. It acquires real estate, then rents it back out to those clients. The firm also buys assets from third parties, and has a separate business in which it invests in up-and-coming property managers, providing early capital to help those young firms get off the ground.

“Oak Street has created a market-leading platform in the net lease sector, leveraging the expertise and disciplined underwriting of its investment team to generate very strong returns for its investors,” Marc Lipschultz, Blue Owl co-president, said in the statement. “We believe their focus on flexible real estate related financing solutions will be very complementary to our existing Direct Lending and GP solutions capabilities.”

Blue Owl ran more than $62 billion at the end of June. Zahr will join Blue Owl’s board of directors and executive committee as president of a newly-formed division of the firm.

Oak Street provides products to high-net-worth and retail channels, which is “a critical part of Blue Owl’s business strategy,” said Michael Rees, co-founder and co-president of Blue Owl.