10-Q

Large accelerated filer

Accelerated filer

Non-Accelerated
filer

Smaller reporting company

Emerging Growth Company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 March 31, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission file number

000-56594

26North BDC, Inc.

(

Exact Name of Registrant as Specified in Its Charter)


Maryland		93-2305832
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

600 Madison Avenue, 26 th Floor New York, NY		10022
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (212)

224-0626

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
None	None	None

Securities registered pursuant to Section 12(g) of the Act:

Shares of Common Stock, par value $0.001 per share

(Title of Class)

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 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.

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Act). YES ☐ NO ☒

As of March 31, 2024 there was no established public market for the registrant’s shares of Common Stock. The number of shares of Registrant’s Common Stock, $0.001 par value per share, outstanding as of May 10, 2024 was 5,800,895.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “target,” “estimate,” “intend,” “continue” or “believe” or the negatives of, or other variations on, these terms or comparable terminology. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. Our forward-looking statements include information in this Report regarding general domestic and global economic conditions, our future financing plans, our ability to operate as a business development company (“BDC”) and the expected performance of, and the yield on, our portfolio companies. There may be events in the future, however, that we are not able to predict accurately or control. The factors listed under “Risk Factors” in our annual report on Form 10-K for the period ended December 31, 2023 (the “Annual Report”) and in this Report, as well as any cautionary language in this Report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. The occurrence of the events described in these risk factors and elsewhere in this Report could have a material adverse effect on our business, results of operations and financial position.

•

our future operating results;

•

our ability to source investment opportunities;

•

our inability to control the business operations of our portfolio companies, and potential inability to dispose of our interests in our portfolio companies;

•

our use of borrowed money to finance a portion of our investments;

•

provisions of a credit facility or other borrowings that may limit discretion in operating our business;

•

the impact of high rates of inflation;

•

changes in the general interest rate environment;

•

our use of total return swaps and related risks similar to those associated with the use of leverage;

•

the discontinuation of the London Interbank Offered Rate and use of alternative reference rates;

•

the valuation of our investments in portfolio companies, particularly those having no liquid trading market;

•

our ability to recover unrealized losses;

•

the impact of competition for investment opportunities;

•

the outcome and impact of any litigation or regulatory proceeding;

•

our dependence on our and third parties’ communications and information systems;

•

the impact of cybersecurity risks, cyber incidents, corruption of confidential information on us or our portfolio companies;

•

our ability to comply with legal requirements, contractual obligations and industry standards relating to security, data protection and privacy;

•

our ability to manage the impact of any changes to current operating policies, investment criteria or strategies;

•

any changes to the anticipated timing or manner of liquidity events;

•

the ability of the Adviser to manage and support our investment process;

•

actual and potential conflicts of interest with the Adviser;

•

our access to confidential information which may restrict our ability to take action with respect to some investments;

•

restrictions on our ability to enter into transactions with our affiliates;

•

our ability to make investments that could give rise to a conflict of interest;

•

the risks associated with indemnity provisions in some of our agreements;

•

actual and potential conflicts associated with investments by 26North employees in us;

•

the Adviser’s compliance with pay-to-play laws, regulations and policies;

•

our ability to find or replace our administrator or sub-administrator(s) in the event of a resignation;

•

our ability to qualify and maintain our qualification as a BDC and as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”);

•

regulations governing our operations as a BDC and RIC which impact our ability to raise capital or borrow for investment purposes;

•

the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended, and the rules and regulations issued thereunder;

•

our ability to manage risks associated with leverage and investing in middle-market companies and common or preferred equity securities;

•

the effect of changes to tax legislation and our tax position;

•

the tax status of the enterprises in which we may invest;

•

our ability and the ability of our portfolio companies to manage risks associated with an economic downturn and the time period required for robust economic recovery therefrom;

•

a contraction of available credit and/or an inability to access capital markets or additional sources of liquidity;

•

risks associated with possible disruption in our or our portfolio companies’ operations due to wars and other forms of conflict, terrorist acts, security operations and catastrophic events or natural disasters, such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics;

•

changes in political, economic or industry conditions, the interest rate environment, inflationary concerns, financial and capital markets, and other external factors, including pandemic-related or other widespread health crises, inflation, supply chain disruptions and geopolitical conflicts; and

•

other risks, uncertainties and other factors previously identified in our other filings with the Securities and Exchange Commission (the “SEC”) that we make from time to time.

Any forward-looking statement made by us in this Report speaks only as of the date of this Report. Factors or events that could cause our actual results to differ from our forward-looking statements may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. You are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “1934 Act”), which preclude civil liability for certain forward-looking statements, do not apply to the forward-looking statements in this Report because we are an investment company.

Unless indicated otherwise in this Report or the context so requires, references to “Company,” “we,” “us,” and “our” mean 26North BDC, Inc. The terms “26N” and “26North” refer collectively to 26North Partners LP and its subsidiaries and affiliated entities. The terms “Adviser” and our “investment adviser” refer to 26North Direct Lending LP, our investment adviser. The terms “Administrator” and our “administrator” refer to 26North Direct Lending Administration LLC, our administrator.

26North BDC, Inc.

Consolidated Schedule of Investments as of March 31, 2024

(in thousands)

(Unaudited)


Portfolio Company (1)(6)	Investment Type	Industry	Reference Rate Spread (4)	Interest Rate			Maturity Date	Par Amount/ Shares		Amortized Cost (5)			Fair Value			Percentage of Net Assets
Debt Investments
Azurite Intermediate Holdings, Inc .(2)	First Lien Senior Secured Term Loan	IT Services	SOFR + 6.500%		11.826	%	03/19/2031	$	5,708	$	5,623		$	5,623			3.85	%
Azurite Intermediate Holdings, Inc. (2)(3)(7)	First Lien Senior Secured Delayed Draw Term Loan	IT Services	SOFR + 6.500%				03/19/2031		—		(97	)		(195	)		(0.13	)%
Azurite Intermediate Holdings, Inc. (2)(3)(7)	First Lien Senior Secured Revolving Loan	IT Services	SOFR + 6.500%				03/19/2031		—		(31	)		(31	)		(0.02	)%
CPEX Purchaser, LLC (2)	First Lien Senior Secured Term Loan	Software	SOFR + 6.000%		11.331	%	03/01/2030		33,042		32,389			32,382			22.20	%
CPEX Purchaser, LLC (2)(3)	First Lien Senior Secured Delayed Draw Term Loan	Software	SOFR + 6.000%				03/01/2030		—		(194	)		(196	)		(0.13	)%
CPEX Purchaser, LLC (2)(3 ) (7)	First Lien Senior Secured Revolving Loan	Software	SOFR + 6.000%				03/01/2030		—		—			(75	)		(0.05	)%
Icefall Parent, Inc. (2)	First Lien Senior Secured Term Loan	Diversified Financial Services	SOFR + 6.500%		11.802	%	01/25/2030		24,937		24,454			24,438			16.76	%
Icefall Parent, Inc. (2)(3)(7)	First Lien Senior Secured Revolving Loan	Diversified Financial Services	SOFR + 6.500%				01/25/2030		—		(46	)		(47	)		(0.03	)%
Penn TRGRP Holdings LLC (2)	First Lien Senior Secured Term Loan	Diversified Financial Services	SOFR + 7.750%		13.059	%	09/27/2030		25,225		24,737			24,720			16.95	%
Penn TRGRP Holdings LLC (2)(3)	First Lien Senior Secured Delayed Draw Term Loan	Diversified Financial Services	SOFR + 7.750%		13.059	%	09/27/2030		677		677			646			0.44	%
Penn TRGRP Holdings LLC (2)(3)(7)	First Lien Senior Secured Revolving Loan	Diversified Financial Services	SOFR + 6.750%				09/27/2030		—		(72	)		(78	)		(0.05	)%
Serrano Parent, LLC (2)	First Lien Senior Secured Term Loan	IT Services	SOFR + 6.500%		11.810	%	05/13/2030		28,297		27,690			27,660			18.96	%

Total Investments										$	115,130		$	114,847			78.75	%

(1)	All investments are pledged as collateral under the JPM Facility. See Note 6. Borrowings in the Notes to the Consolidated Financial Statements.

(2)

These investments were valued using unobservable inputs and are considered Level 3 investments. Fair value was determined in good faith by the Adviser, as the Company’s valuation designee, in accordance with the Company’s valuation policy. See Note 2. Significant Accounting Policies and Note 5. Fair Value Measurements in the Notes to the Consolidated Financial Statements.

(3)

Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion, although the investment may be subject to an unused commitment fee. Negative cost and fair value results from unamortized fees, which are capitalized to the investment cost. The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated. See Note 7. Commitments and Contingencies in the Notes to the Consolidated Financial Statements.

(4)

Unless otherwise indicated, the interest rate on the principal balance outstanding for all floating rate loans is indexed to the Term Secured Overnight Financing Rate (“SOFR”), which typically resets semiannually, quarterly, or monthly at the borrower’s option. The applicable base rate may be subject to a floor. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, we have provided the applicable margin over the reference rate based on each respective credit agreement. As of March 31, 2024, the reference rates for the floating rate loans were the 1 Month SOFR of 5.32%, 3 Month SOFR of 5.35% and 6 Month SOFR of 5.39%.

(5)	The cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

(6)	Under Section 55(a) of the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of March 31, 2024, the Company had no non-qualifying assets.

(7)	Unfunded loan commitment is subject to a 0.50% unused commitment fee.

The accompanying notes are an integral part of these consolidated financial statements.

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26North BDC, Inc.

Consolidated Schedule of Investments as of December 31, 2023

(in thousands)


Portfolio Company (1)(6)	Investment Type	Industry	Reference Rate Spread (4)	Interest Rate			Maturity Date	Par Amount/ Shares		Amortized Cost (5)			Fair Value			Percentage of Net Assets

Debt Investments
Penn TRGRP Holdings LLC (2)	First Lien Senior Secured Term Loan	Diversified Financial Services	SOFR + 7.750%		13.098	%	09/27/2030	$	25,225	$	24,737		$	24,720			35.17	%
Penn TRGRP Holdings LLC (2)(3)	First Lien Senior Secured Delayed Draw Term Loan	Diversified Financial Services	SOFR + 6.750%		12.098	%	09/27/2030		294		294			264			0.38	%
Penn TRGRP Holdings LLC (2)(3)(7)	First Lien Senior Secured Revolving Loan	Diversified Financial Services	SOFR + 6.750%				09/27/2030		—		(75	)		(78	)		(0.11	)%
Serrano Parent, LLC (2)	First Lien Senior Secured Term Loan	IT Services	SOFR + 6.500%		11.880	%	5/12/2030		28,297		27,672			27,660			39.35	%

Total Investments										$	52,628		$	52,566			74.79	%

(1)	All investments are pledged as collateral under the JPM Facility. See Note 6. Borrowings in the Notes to the Consolidated Financial Statements.

(2)

(3)

(4)

Unless otherwise indicated, the interest rate on the principal balance outstanding for all floating rate loans is indexed to the Term Secured Overnight Financing Rate (“SOFR”), which typically resets semiannually, quarterly, or monthly at the borrower’s option. The applicable base rate may be subject to a floor. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, we have provided the applicable margin over the reference rate based on each respective credit agreement. As of December 31, 2023, the reference rates for the floating rate loans were the 1 Month SOFR of 5.35%, 3 Month SOFR of 5.33% and 6 Month SOFR of 5.16%.

(5)	The cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

(6)	Under Section 55(a) of the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2023, the Company had no non-qualifying assets.

(7)	Unfunded loan commitment is subject to a 0.50% unused commitment fee.

The accompanying notes are an integral part of these consolidated financial statements.

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26North BDC, Inc.

Notes to Consolidated Financial Statements

(in thousands, except per share data, percentages and as otherwise noted)

March 31, 2024

1. ORGANIZATION

26North BDC, Inc. (together with its consolidated subsidiaries, the “Company”, “we”, “us”, or “our”) is incorporated under the laws of the State of Maryland and was formed on

October 13, 2022. The Company commenced operations on October 11, 2023. The Company is an externally managed,

non-diversified,

closed-end

management investment company, and elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”) on October 3, 2023. In addition, the Company intends to elect to be treated and to qualify each year thereafter as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2023.

The Company established 26N DL Funding 1 LLC (“Financing SPV”) as a wholly-owned direct subsidiary, whose assets are used to secure Financing SPV’s credit facility. Financing SPV is incorporated under the laws of the State of Delaware and was formed on August 4, 2023. As of March 31, 2024, all of the Company’s investments were held at Financing SPV.

On February 28, 2024, the

Company formed a wholly-owned subsidiary, 26North BDC CA SPV, LLC, a Delaware limited liability company (“CA SPV”), which is intended to hold a California finance lenders license. CA SPV is intended to originate loans to borrowers headquartered in California. From time to time the Company may form wholly-owned subsidiaries to facilitate the normal course of business. As of March 31, 2024, CA SPV had not commenced operations.

The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation. The Company invests primarily in directly originated senior secured loans to middle market companies domiciled in the United States. The Company’s portfolio consists primarily of direct originations of (i) first lien senior secured debt and unitranche debt (including last out portions of such loans) and, to a lesser extent, (ii) second lien senior secured debt and unsecured debt, including mezzanine debt. In connection with its debt investments, the Company is permitted to receive equity warrants or make select equity

co-investments.

The Company generally considers middle market companies to consist of companies with between $25 million and $100 million of annual EBITDA, although the Company may from time to time invest in larger or smaller companies.

26North Direct Lending LP, a Delaware limited partnership and subsidiary of 26North Partners LP (together with its affiliates, “26North”), serves as the investment adviser to the Company (the “Adviser”), and is registered as an investment adviser with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Adviser, subject to the overall supervision of the board of directors of the Company (the “Board” or the “Board of Directors”), will be responsible for managing the Company’s business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring investments, and monitoring the Company’s portfolio companies on an ongoing basis through a team of investment professionals.

The Company has conducted and from time to time may conduct private offerings (each, a “Private Offering”) of the Company’s shares of common stock, par value $0.001 (“Common Stock”) in the United States to “accredited investors” within the meaning of Regulation D promulgated under the Securities Act of 1933, as amended (the “1933 Act”), and outside the United States in accordance with Regulation S or Regulation D promulgated under the 1933 Act, in reliance on exemptions from the registration requirements of the 1933 Act. At each closing of the current Private Offering, each investor will make a capital commitment (a “Capital Commitment”) to purchase shares of the Company’s Common Stock pursuant to a subscription agreement entered into with the Company. Investors are required to fund drawdowns to purchase shares of Common Stock up to the amount of their respective Capital Commitment on an

as-needed

basis each time the Company delivers a drawdown notice.

On September 7, 2023, the Adviser purchased 1,000 shares of Common Stock at a price of $25.00 per share as the Company’s initial capital. The Company completed its initial closing on

Capital Commitments

October 2, 2023, in connection with the reorganization of 26N Direct Lending Fund LP, a private fund that was not registered under the 1940 Act or the 1934 Act, with and into the Company (the “Reorganization”). After the Reorganization was effected, the Company called

$41.5 million of capital from investors in exchange for 1,661,350 of the Company’s shares of Common Stock. The shares of Common Stock were issued on October 11, 2023, and the Company commenced operations on such date.

On October 18, 2023, the Company commenced its loan origination and investment activities.

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2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to Regulation

S-X.

Certain financial information that is included in annual consolidated financial statements, including certain financial statement disclosures, prepared in accordance with GAAP, is not required for interim reporting purposes and has been condensed or omitted herein. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes related thereto for the period ended December 31, 2023, included in the Company’s annual report on Form

10-K,

which was filed with the SEC on March 8, 2024 (the “Annual Report”). The results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full fiscal year, any other interim period, or any future year or period.

As an investment company, the Company applies the accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies (“ASC 946”) issued by the Financial Accounting Standards Board (“FASB”).

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Such amounts could differ from those estimates and such differences could be material. Assumptions and estimates regarding the valuation of investments involve a higher degree of judgment and complexity and these assumptions and estimates may be significant to the consolidated financial statements. Actual results may ultimately differ from those estimates.

Basis of Consolidation

As provided under ASC Topic 946 and Regulation

S-X,

the Company will not consolidate its investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. All material intercompany transactions are eliminated in consolidation.

The Company consolidated the results of the Company’s wholly-owned subsidiary which is considered to be an investment company. All significant intercompany balances and transactions have been eliminated in consolidation. As of March 31, 2024, the Company’s only consolidated subsidiary was Financing SPV.

Revenue Recognition

Interest Income

Interest income is recorded on an accrual basis and includes the accretion of discounts and amortizations of premiums. Discounts from and premiums to par value on debt investments purchased are accreted/amortized into interest income over the life of the respective security using the effective interest method. The amortized cost of debt investments represents the original cost, including loan origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion of discounts and amortization of premiums, if any. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.

PIK Income

The Company may have loans in its portfolio that contain

payment-in-kind

(“PIK”) provisions. PIK income (i) represents interest that is accrued and recorded as interest income at the contractual rates, (ii) increases the loan principal on the respective capitalization dates, and (iii) is generally due at maturity. Such income, if any, is included in interest income in the Consolidated Statement of Operations. If at any point the Company believes PIK is not expected to be realized, the investment generating PIK will be placed on

non-accrual

status. When a PIK investment is placed on

non-accrual

status, the accrued, uncapitalized interest is generally reversed through interest income. To maintain the Company’s status as a RIC, this

non-cash

source of income must be paid out to Stockholders in the form of dividends, even though the Company has not yet collected cash.

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Dividend Income

Dividend income on preferred equity securities, if any, is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the

ex-dividend

date for publicly traded portfolio companies.

Fee Income

The Company may receive various fees in the ordinary course of business such as structuring, consent, waiver, amendment, syndication and other miscellaneous fees as well as fees for managerial assistance rendered by the Company to the portfolio companies. Such fees, if any, are recognized as income when earned or the services are rendered.

Non-Accrual

Income

Loans are generally placed on

non-accrual

status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on

non-accrual

status. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on

non-accrual

status. Interest payments received on

non-accrual

loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability.

Non-accrual

loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on

non-accrual

status if the loan has sufficient collateral value and is in the process of collection. As of March 31, 2024 and for the three months then ended, no loans in the portfolio were on

non-accrual

status.

Other Income

Dividends earned on money market balances are recorded on an accrual basis. Such income is included in other income in the Consolidated Statement of Operations.

Investments

Investment transactions are recorded on a trade date basis.

Realized gains or losses are measured by the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries, and would be recorded within Net realized gains (losses) on the Consolidated Statement of Operations, if any.

The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period, and is recorded within Net change in unrealized appreciation (depreciation) on the Consolidated Statement of Operations.

Valuation of Investments

The Company is required to report its investments, including those for which current market values are not readily available, at fair value.

U.S. GAAP for an investment company requires investments to be recorded at fair value. The Company values its investments in accordance with ASC 820, Fair Value Measurements (“ASC 820”), which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the applicable measurement date, and Rule

2a-5

under the 1940 Act.

Fair value is based on observable market prices or parameters or derived from such prices or parameters when such quotations are readily available. In accordance with Rule

2a-5

under the 1940 Act, a market quotation is “readily available” only when it is a quoted price (unadjusted) in active markets for identical instruments that a fund can access at the measurement date, provided that such a quotation is not considered to be readily available if it is not reliable. The Company utilizes

mid-market

pricing (i.e.,

mid-point

of average bid and ask prices) to value these investments. These market quotations are obtained from independent pricing services, if available; otherwise generally from at least two principal market makers or primary market dealers.

Where prices or inputs are not available or, in the judgment of the Board, not reliable, valuation techniques based on the facts and circumstances of the particular investment will be utilized. These valuation approaches involve some level of management estimation

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and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments’ complexity. In the absence of observable, reliable market prices, the Company values its investments using various valuation methodologies applied on a consistent basis.

Market Approach

Transaction prices quoted by exchanges are generally deemed to be the most reliable evidence of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants and shall be used without adjustment to measure fair value whenever available. The use of transaction prices is consistent with the market approach. ASC 820 defines the market approach as, “a valuation approach that uses prices and other relevant information generated by market transactions involving identical or comparable (that is, similar) assets or liabilities.” Our Adviser will apply the market approach as the preferred valuation methodology unless another approach is deemed to be more appropriate. It is noted, however, that quoted transaction prices need to be from a sufficiently active market that can sustain the quantity of an investment held by the Company. If the valuation committee determines that the transaction prices are not from an active market or are in quantities that are not comparable to the amounts owned by the Company, then the exchange price may be disregarded in favor of a more appropriate method. Our Adviser seeks to stay informed of the creation of new markets or the occurrence of private transactions that would be relevant to the fair value of investments held by the Company. However, due to the nature of these private market transactions, our Adviser will not always become aware of such developments. Our Adviser will incorporate relevant market transaction information and other relevant data points into the valuation of assets and liabilities from the point in time when it becomes aware of the new information. Such data points will generally not be retroactively applied to prior period valuations.

Income Approach

As an alternative to the market approach, the income approach may be used to value equity investments in private companies where recent observable market transactions are not available. The income approach converts future amounts (for example, cash flows or income and expenses) to a single current (that is generally discounted) amount. When the income approach is used, the fair value measurement reflects current market expectations about those future amounts. While the market approach is preferred as the most reliable indication of fair value, certain of the Company’s investments may require alternative valuation methodologies if an observable market transaction has not occurred for an extended period of time.

In all cases, our Adviser will consider the facts and circumstances and retains the right, in its sole judgement and discretion, to apply alternative valuation techniques as it deems fit to approximate the fair value of any investment in keeping with the intent of ASC 820.

ASC 820 prioritizes the use of observable market prices derived from such prices. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The levels used for classifying investments are not necessarily an indication of the risk associated with investing in these securities. The three levels of the fair value hierarchy are as

follows:

•

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. An active market is defined as a market in which transactions for the financial instrument occur with sufficient pricing information on an ongoing basis. Equity securities, including preferred stock, that are traded on major securities exchanges and publicly traded equity options are generally valued using Level 1 inputs.

•

Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices. Level 2 inputs include: (i) quoted prices for similar instruments in active markets; (ii) quoted prices for identical or similar instruments in markets that are not active; (iii) inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs); and (iv) inputs other than quoted prices that are observable for the instrument. Loans and debt securities where there is an observable secondary trading market and through which pricing inputs are available through pricing services or broker quotes generally are valued using Level 2 inputs. Instruments valued using Level 2 inputs will be priced based on

bid-ask

prices that can be observed in the marketplace. It is not required that fair value always be a predetermined point in the

bid-ask

range. The policy is to allow for

mid-market

pricing and adjusting to the point within the

bid-ask

range that meets the best estimate of fair value.

•

Level 3: Unobservable inputs for the asset or liability. The inputs into the determination of fair value are based upon the best information available and may require significant management judgment or estimation. Tightly held bank debt positions, where there are no broker quotes available, would be valued using Level 3 inputs such as internally generated pricing models.

certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value

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measurement. The Adviser’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfer occurs.

The Company evaluates the source of the inputs, including any markets in which its investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. When an investment is valued based on prices provided by reputable dealers or pricing services (that is, broker quotes), the Company subjects those prices to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment.

The estimate of fair value will be undertaken in good faith and will be based on the consistent application of a variety of factors in accordance with this policy, with the objective being to determine the approximate value that would be received upon the current sale of the instrument or paid to transfer the instrument in an orderly transaction between market participants at the measurement date. Due to the inherent uncertainty in the valuation process, however, the Company’s estimate of fair value may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material. Additionally, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations assigned. See “

Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations

.”

Deferred Financing Costs

Deferred financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. As of March 31, 2024 and December 31, 2023, the Company had deferred financing costs of $3.9 million and $4.3 million, respectively. These amounts are amortized and included in interest expense in the Consolidated Statement of Operations over the life of the borrowings.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits and highly liquid investments (e.g., money market funds, U.S. treasury notes) with original maturities of three months or less. The Company’s cash and cash equivalents are held at the Company’s custodian. Cash equivalents are carried at amortized cost which approximates fair value. Cash equivalents are classified as Level 1 in the GAAP valuation hierarchy. The Company deposits its cash and cash equivalents with financial institutions and, at times, these deposits may exceed the Federal Deposit Insurance Corporation insured limit. As of March 31, 2024 and December 31, 2023, all of the Company’s $103.0 million and $67.7 million

cash and cash equivalents, respectively, were held in Dreyfus Treasury Obligations Cash Management (“Dreyfus Cash Management”), which is a money market fund registered under the 1940 Act and managed in accordance with the requirements of Rule

2a-7

thereunder. Dreyfus Cash Management had a

7-day

yield

of 5.2% and 5.3% as of March 31, 2024 and December 31, 2023, respectively.

Income Taxes

The Company intends to elect to be treated as a RIC under the Code beginning with the tax year ended December 31, 2023. So long as the Company maintains its status as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its stockholders (“Stockholders”) as dividends. Rather, any tax liability related to income earned and distributed by the Company would represent obligations of the Company’s investors and would not be reflected in the consolidated financial statements of the Company.

The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are

“more-likely-than-not”

to be sustained by the applicable tax authority. Tax positions not deemed to meet the

“more-likely-than-not”

threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to,

on-going

analyses of tax laws, regulations and interpretations thereof.

To qualify for and maintain qualification as a RIC, the Company must, among other things, meet certain

source-of-income

and asset diversification requirements. In addition, to qualify for RIC tax treatment, the Company must distribute to its Stockholders, for each taxable year, at least 90% of the sum of (i) its “investment company taxable income” for that year (without regard to the deduction for dividends paid), which is generally its ordinary income plus the excess, if any, of its realized net short-term capital gains over its realized net long-term capital losses and (ii) its net

tax-exempt

income.

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In addition, based on the excise tax distribution requirements, the Company is subject to a 4% nondeductible federal excise tax on undistributed income unless the Company distributes in a timely manner in each taxable year an amount at least equal to the sum of (i) 98% of its ordinary income for the calendar year, (ii) 98.2% of capital gain net income (both long-term and short-term) for the

one-year

period ending October 31 in that calendar year and (iii) any income realized, but not distributed, in prior years. For this purpose, however, any ordinary income or capital gain net income retained by the Company that is subject to corporate income tax is considered to have been distributed. The Company will accrue excise tax on estimated undistributed taxable income as required.

Distributions

To the extent that the Company has taxable income available, the Company intends to make quarterly distributions to its Stockholders. Distributions to Stockholders are recorded on the record date. All distributions will be paid at the discretion of the Board and will depend on the Company’s earnings, financial condition, maintenance of the Company’s tax treatment as a RIC, compliance with applicable BDC regulations and such other factors as the Board may deem relevant from time to time.

The Company has adopted a dividend reinvestment plan that provides for reinvestment of dividends and other distributions on behalf of Stockholders, unless a Stockholder elects to receive cash distributions. As a result, if the Board of Directors authorizes, and the Company declares, a cash dividend or other distribution, then the Stockholders who have not ‘opted out’ of the dividend reinvestment plan will have their cash distribution automatically reinvested in additional shares of the Company’s Common Stock, rather than receiving the cash distribution.

Stockholders who receive dividends and other distributions in the form of stock are generally subject to the same U.S. federal, state and local tax consequences as Stockholders who elect to receive their distributions in cash. Since a participating Stockholder’s cash distributions will be reinvested, however, such Stockholder will not receive cash with which to pay any applicable taxes on reinvested distributions. A Stockholder’s basis for determining gain or loss upon the sale of stock received in a dividend or other distribution from the Company will generally be equal to the total dollar amount of the distribution payable to the Stockholder. Any stock received in a dividend or other distribution will have a new holding period for tax purposes commencing on the day following the day on which the shares are credited to the Stockholder’s account.

Organizational and Offering Costs

Organizational and offering costs consist primarily of legal fees and other costs of organizing the Company. Organizational costs to establish the Company were expensed on the Company’s Consolidated Statement of Operations as incurred. Costs associated with the offering of common shares of the Company are capitalized as deferred offering costs and included on the Consolidated Statement of Assets and Liabilities and amortized over a twelve-month period.

Under the Investment Advisory Agreement and the Administration Agreement (each as defined below), the Company, is responsible for bearing its organizational and offering costs as well as other costs and expenses of its operations and transactions. The Company’s initial organizational

costs of $3.1 million

were expensed as incurred during the year ended December 31, 2023, which the Adviser has elected to pay, subject to conditional reimbursement by the Company as described below in Note 3, pursuant to the Expense Support Agreement (as defined below). For the three months ended March 31, 2024, the Company expensed offering costs of $0.4 million, which the Adviser has elected to pay, subject to conditional reimbursement by the Company pursuant to the Expense Support Agreement (as defined below). The total amount owed to the Company from the Adviser (including expenses payable under the Administration Agreement as defined below and described in Note 3) is included in expense reimbursement receivable in the Consolidated Statement of Assets and Liabilities and the total amount owed to affiliates is included in due to affiliate in the Consolidated Statement of Assets and Liabilities.

New Accounting Pronouncement

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848)”, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition. ASU 2020-04 and ASU 2021-01 are effective for all entities through December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which deferred the sunset day of this guidance to December 31, 2024. There has been no material impact of these standards on the Company’s financial position, results of operations or cash flows.

3. SIGNIFICANT AGREEMENTS AND RELATED PARTY TRANSACTIONS

Investment Advisory Agreement

On September 6, 2023, the Company entered into an investment advisory agreement with the Adviser (the “Investment Advisory Agreement”), pursuant to which, among other things, the Adviser will manage the investment and reinvestment of the assets of the Company. Unless earlier terminated, the Investment Advisory Agreement will remain in effect for a period of two years from the date it first becomes effective and will remain in effect from

year-to-year

thereafter if approved annually by a majority of the Board of Directors or by the holders or a majority of the outstanding voting securities of the Company (as such term is defined in

the 1940 Act)

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and, in

each case, a majority of the members of the Board of Directors who are not “interested persons” as defined in the 1940 Act of the Company or the Adviser (the “Independent Directors”). In accordance with the 1940 Act, without payment of penalty, the Company may terminate the Investment Advisory Agreement upon 60 days’ written notice. In addition, without payment of penalty, the Adviser may generally terminate the Investment Advisory Agreement upon 60 days’ written notice.

Under the Investment Advisory Agreement, the Company will pay the Adviser a fee for its investment advisory and management services consisting of two components: a management fee (the “Management Fee”) and an incentive fee (the “Incentive Fee”). The cost of both the Management Fee and the Incentive Fee will ultimately be borne by the investors.

Management Fee

The Management Fee is payable quarterly in arrears. The Management Fee is payable at an annual rate of 0.75% (1.00% in the event of a listing of the Company’s shares of Common Stock on a national securities exchange (an “Exchange Listing”)) of the average value of gross assets (excluding cash and cash equivalents but including assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters.

The Management Fee for any partial quarter will be appropriately prorated and adjusted for any share issuances or repurchases of the Common Stock during the relevant calendar quarter. For the quarter ended December 31, 2023, our first quarter-end following the commencement of operations, the Management Fee was calculated based on the value of our gross assets as of such

quarter-end.

For the three months ended March 31, 2024, the Management Fee was $0.2 million, all of which was unpaid as of March 31, 2024.

Incentive Fee

The Company pays to the Adviser an Incentive Fee that consists of two parts: an “Investment Income Incentive Fee” and a “Capital Gains Incentive Fee”. The Investment Income Incentive Fee is calculated and payable on a quarterly basis, in arrears, and equals

% (

17.5

% in the event of an Exchange Listing) of

“Pre-Incentive

Fee Net Investment Income” for the immediately preceding calendar quarter, subject to a quarterly preferred return of

1.5

% (i.e.,

6.0

% annualized), or “Hurdle,” measured on a quarterly basis and a

“catch-up”

feature.

“Pre-Incentive

Fee Net Investment Income” means interest income, dividend income and any other income (including any accrued income that the Company has not yet received in cash and any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter minus the Company’s operating expenses accrued during the calendar quarter (including the Management Fee, administrative expenses and any interest expense and dividends paid on issued and outstanding preferred stock, but excluding the Incentive Fee).

Pre-Incentive

Fee Net Investment Income for the immediately preceding calendar quarter, expressed as a rate of return on the value of the Company’s net assets at the beginning of the immediately preceding calendar quarter, is compared to a “Hurdle Amount” equal to the product of (i) the Hurdle rate of

1.50% per quarter (6.0

% annualized) and (ii) the Company’s net assets (defined as total assets less indebtedness and before taking into account any Incentive Fees payable during the period) at the beginning of the immediately preceding calendar quarter.

The Company pays the Adviser an Investment Income Incentive Fee in each calendar quarter as follows:

•

No Investment Income Incentive Fee is payable to the Adviser in any calendar quarter in which the

Pre-Incentive

Fee Net Investment Income does not exceed the Hurdle Amount for such calendar quarter;

•

100% of the

Pre-Incentive

Fee Net Investment Income with respect to that portion of such

Pre-Incentive

Fee Net Investment Income, if any, that exceeds the Hurdle Amount but is less than 1.6667% (1.8182% in the event of an Exchange Listing) for that calendar quarter is payable to the Adviser. The Company refers to this portion of its

Pre-Incentive

Fee Net Investment Income as the

“catch-up”;

and

•

10% (17.5% in the event of an Exchange Listing) of the Company’s

Pre-Incentive

Fee Net Investment Income, if any, that exceeds 1.6667% (1.8182% following an Exchange Listing) in any calendar quarter is payable to the Adviser.

The Capital Gains Incentive Fee is an annual fee that is determined

and payable, in arrears, as of the end of each calendar year (or upon termination of the Investment Advisory Agreement) in an amount equal to 10% (17.5% following an Exchange Listing) of realized capital gains, if any, determined on a cumulative basis from the commencement of the Company’s investment operations (based on the fair market value of each investment as of such date) through the end of such calendar year (or upon termination of the Investment Advisory Agreement), computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis from the commencement of the Company’s investment operations (based on the fair market value of each investment as of such date) through the end of such calendar year (or upon termination of the Investment Advisory Agreement), less the aggregate amount of any previously paid Capital Gains Incentive Fees.

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As of March 31, 2024 and for the three months then ended, the Company did not

accrue any Investment Income Incentive Fee or Capital Gains Incentive Fee.

Administration Agreement

The Company has entered into an administration agreement (the “Administration Agreement”) with 26North Direct Lending Administration LLC (the “Administrator”), an affiliate of the Adviser. The principal executive office of the Administrator is located at 600 Madison Avenue, 26

Floor, New York, NY 10022. The Administrator provides the administrative services necessary for the Company to operate pursuant to the Administration Agreement.

Under the terms of the Administration Agreement the Administrator performs (or oversees, or arranges for, the performance of) administrative services, which includes providing office facilities, equipment, clerical, accounting, bookkeeping and record keeping services; conducting relations with

sub-administrators,

custodians, depositories, transfer agents, dividend disbursing agents, other stockholder servicing agents, accountants, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable; making reports to the Board of Directors of its performance of services; and furnish advice and recommendations with respect to such other aspects of the business and affairs of the Company as it shall determine to be desirable; maintaining financial, accounting and other records of the Company; preparing reports to Stockholders and reports and other materials filed with the SEC or any other regulatory authority; managing the payment of expenses; providing significant managerial assistance to those portfolio companies to which the Company is required to provide such assistance; assisting the Company in determining and publishing (as necessary or appropriate) our net asset value; overseeing the preparation and filing of our tax returns and the performance of administrative and professional services rendered by others, which could include employees of the Adviser or its affiliates. The Company will reimburse the Administrator (and/or one or more of its affiliates) for services performed for the Company pursuant to the terms of the Administration Agreement. In addition, pursuant to the terms of the Administration Agreement, the Administrator may delegate certain of its obligations under the Administration Agreement to an affiliate and/or to a third party and the Company will reimburse the Administrator (or relevant affiliate(s)) for any services performed for the Company by such affiliate or third party. To the extent that the Administrator outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without profit to the Administrator.

Unless earlier terminated, the Administration Agreement will remain in effect for a period of two years from the date it first became effective, and will remain in effect from year to year if approved annually by the Board of Directors or by the holders of a majority of the outstanding voting securities of the Company (as such term is used in the 1940 Act) and, in each case, a majority of the Independent Directors. The Company may terminate the Administration Agreement, without payment of any penalty, upon 60 days’ written notice.

For the three months ended March 31, 2024, the Company has incurred expenses payable under the Administration Agreement of $0.5 million, which the Adviser has elected to pay, subject to conditional reimbursement by the Company as described below, pursuant to the Expense Support Agreement (as defined below).

The Administrator, on behalf of the Company and at the Company’s expense, may retain one or more service providers that may or may not also be affiliates of 26North to serve as

sub-administrator,

custodian, accounting agent, investor services agent, transfer agent or other service provider for the Company. Any fees the Company pays, or indemnification obligations the Company undertakes, in respect of the Administrator and those other service providers that are 26North affiliates, will be set at arm’s length and approved by the Independent Directors. The Administrator entered into a

sub-administration

agreement with SEI Global Services, Inc. (“SEI”) pursuant to which SEI receives compensation for its services.

Expense Support and Conditional Reimbursement Agreement

The Company has entered into an Expense Support and Conditional Reimbursement Agreement (the “Expense Support Agreement”) with the Adviser, pursuant to which the Adviser may elect to pay certain Company expenses on the Company’s behalf (“Expense Payments”), provided that no portion of the payment will be used to pay any interest expense or distribution and/or stockholder servicing fees. Any Expense Payment that the Adviser commits to pay must be paid by the Adviser to the Company in any combination of cash or other immediately available funds no later than

forty-five

days after such commitment is made in writing, and/or offset against amounts due from the Company to the Adviser or its affiliates. These payments are subject to conditional reimbursement by the Company as described below.

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Following any calendar quarter in which Available Operating Funds (as defined below) exceed the cumulative distributions accrued to the Company’s Stockholders based on distributions declared with respect to record dates occurring in such calendar quarter (the amount of such excess referred to as “Excess Operating Funds”), the Company will pay such Excess Operating Funds, or a portion thereof, to the Adviser until such time as all Expense Payments made by the Adviser to the Company within three years prior to the last business day of such calendar quarter have been reimbursed; provided, that the Company shall have commenced operations prior to making any such payments. Any payments required to be made by the Company under the Expense Support Agreement are referred to as a “Reimbursement Payment.” “Available Operating Funds” means the sum of (i) the Company’s net investment company taxable income (including net short-term capital gains reduced by net long-term capital losses), (ii) the Company’s net capital gains (including the excess of net long-term capital gains over net short-term capital losses) and (iii) dividends and other distributions paid to the Company on account of investments in portfolio companies (to the extent such amounts listed in clause (iii) are not included under clauses (i) and (ii) above).

No Reimbursement Payment for any applicable calendar quarter shall be made if: (1) the Effective Rate of Distributions Per Share declared by the Company at the time of such proposed Reimbursement Payment is less than the Effective Rate of Distributions Per Share at the time the Expense Payment was made to which such Reimbursement Payment relates, or (2) the Company’s Operating Expense Ratio at the time of such proposed Reimbursement Payment is greater than the Operating Expense Ratio at the time the Expense Payment was made to which such Reimbursement Payment relates. “Effective Rate of Distributions Per Share” means the annualized rate (based on a

365-day

year) of regular cash distributions per share exclusive of returns of capital and declared special dividends or special distributions, if any. The “Operating Expense Ratio” is calculated by dividing all of the Company’s operating costs and expenses incurred, as determined in accordance with generally accepted accounting principles for investment companies, less organizational and offering expenses, base management and incentive fees owed to the Adviser, and interest expense, by the Company’s net assets.

As of March 31, 2024, the amount of expense support payments provided by the Adviser was $7.9 million. For the three months ended March 31, 2024, the amount of expense support payments provided by the Adviser was $1.5 million. For the three months ended March 31, 2024, the Company did not repay expense support to the Adviser. The Company may or may not reimburse remaining expense support in the future.

Co-Investment

Activity

On November 15, 2023, the Company and certain of its affiliates were granted an exemptive order by the SEC (the “Order”) to

co-invest

alongside other funds managed and controlled by the Adviser and its affiliates, in a manner consistent with the Company’s investment objective, policies and restrictions as well as applicable regulatory requirements. The Company relies on the Order to

co-invest

with other funds managed and accounts by the Adviser or its affiliates in a manner consistent with the Order. Pursuant to the Order, the Company generally is permitted to

co-invest

with certain of its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Company’s Independent Directors make certain conclusions in connection with a

co-investment

transaction, including that (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to the Company and the Stockholders and do not involve overreaching of the Company or the Stockholders on the part of any person concerned, (2) the transaction is consistent with the interests of the Stockholders and is consistent with the Company’s investment objective and strategies, and (3) the investment by the Company’s affiliates would not disadvantage the Company, and the Company’s participation would not be on a basis different from or less advantageous than that on which its affiliates are investing.

Trademark License Agreement

The Company has entered into a Trademark License Agreement (the “License Agreement”) with 26North Partners LP, pursuant to which the Company has been granted a

non-exclusive

license to use the names “26N” and “26North.” Under the License Agreement, the Company has a right to use the 26N and 26North names for so long as the Adviser or one of its affiliates remains the investment adviser. Other than with respect to this limited license, the Company will have no legal right to the “26N” or “26North” name or logo.

Resource Sharing Agreement

The Adviser has entered into a Resource Sharing Agreement (the “Resource Sharing Agreement”) with 26North, pursuant to which 26North will provide the Adviser with experienced investment professionals and access to the resources of 26North so as to enable the Adviser to fulfill its obligations under the Investment Advisory Agreement. Through the Resource Sharing Agreement, the Adviser intends to capitalize on the significant deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of 26North’s investment professionals.

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4. INVESTMENTS

The

following tables summarize the composition of the Company’s investment portfolio at cost and fair value (amounts in thousands):


	March 31, 2024				December 31, 2023
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
First Lien Senior Secured	$	115,130	$	114,847	$	52,628	$	52,566

Total investments	$	115,130	$	114,847	$	52,628	$	52,566

The industry composition of investments at fair value was as follows:


	March 31, 2024			December 31, 2023
Diversified Financial Services		43.2	%		47.4	%
IT Services		28.8	%		52.6	%
Software		28.0	%		0.0	%

Total		100.0	%		100.0	%

The geographic composition of investments at cost and fair value was as follows:


	March 31, 2024			December 31, 2023
United States		100.0	%		100.0	%

Total		100.0	%		100.0	%

5. FAIR VALUE MEASUREMENTS

The following is a summary of the Company’s assets categorized within the fair value hierarchy as of March 31, 2024 and December 31, 2023 (amounts in thousands):


	March 31, 2024
Assets	Level 1		Level 2		Level 3		Total
First Lien Secured	$	—	$	—	$	114,847	$	114,847
Cash and Cash Equivalents		102,982		—		—		102,982

Total Portfolio Investments, Cash and Cash Equivalents	$	102,982	$	—	$	114,847	$	217,829


	December 31, 2023
Assets	Level 1		Level 2		Level 3		Total
First Lien Secured	$	—	$	—	$	52,566	$	52,566
Cash and Cash Equivalents		67,664		—		—		67,664

Total Portfolio Investments, Cash and Cash Equivalents	$	67,664	$	—	$	52,566	$	120,230

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The below tables present a summary of changes in fair value of Level 3 assets by investment type for the three months ended March 31, 2024 and for the period October 1 to December 31, 2023 (amount in thousands):


Three Months Ended March 31, 2024:	First Lien Senior Secured			Total
Fair value, beginning of period	$	52,566		$	52,566
Purchase of investments (including PIK, if any)		62,453			62,453
Proceeds from principal repayments and sales of investments		—			—
Amortization of premium/accretion of discount, net		49			49
Net realized gain (loss) on investments		—			—
Net change in unrealized appreciation (depreciation) on investments		(221	)		(221	)
Transfers out of Level 3		—			—
Transfers to Level 3		—			—

Fair value, end of period	$	114,847		$	114,847

Net change in unrealized appreciation (depreciation) on non-controlled/ non-affiliated company investments still held at March 31, 2024	$	(221	)	$	(221	)


Period Ended December 31, 2023:	First Lien Senior Secured			Total
Fair value, beginning of period	$	—		$	—
Purchase of investments (including PIK, if any)		52,597			52,597
Proceeds from principal repayments and sales of investments		—			—
Amortization of premium/accretion of discount, net		31			31
Net realized gain (loss) on investments		—			—
Net change in unrealized appreciation (depreciation) on investments		(62	)		(62	)
Transfers out of Level 3		—			—
Transfers to Level 3		—			—

Fair value, end of period	$	52,566		$	52,566

Net change in unrealized appreciation (depreciation) on non-controlled/ non-affiliated company investments still held at December 31, 2023	$	(62	)	$	(62	)

The tables below present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets as of March 31, 2024 and December 31, 2023, respectively (amounts in thousands). These ranges represent the significant unobservable inputs that were used in the valuation of each type of instrument, but they do not represent a range of values for any one instrument.


Asset Class	Fair Value as of 3/31/24		Valuation Techniques		Significant Unobservable Inputs		Range of Significant Unobservable Inputs		Weighted Average (1)

First Lien Senior Secured	$	114,847		Income Approach		Discount Rate		11.65% - 12.40%		11.88	%

	$	114,847


Asset Class	Fair Value as of 12/31/23		Valuation Techniques		Significant Unobservable Inputs		Range of Significant Unobservable Inputs		Weighted Average (1)

First Lien Senior Secured	$	52,566		Income Approach		Discount Rate		11.17% - 11.36%		11.26	%

	$	52,566

(1)	Weighted average is calculated by weighing the significant unobservable input by the relative fair value of each investment in the category.

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6. BORROWINGS

In accordance with the 1940 Act, with certain limitations, the Company is allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 150% after such borrowing. As of March 31, 2024 and December 31

2023, the Company’s asset coverage ratio was 287.6% and 234.5%, respectively.

The Company’s outstanding debt obligations as of March 31, 2024 were as follows (amounts in thousands):


	Aggregated Principal Committed		Outstanding Principal		Unused Portion (1)		Maturity Date
JPM Facility	$	200,000	$	77,730	$	122,270		10/18/2028

Total	$	200,000	$	77,730	$	122,270

The Company’s outstanding debt obligations as of December 31, 2023 were as follows (amounts in thousands):


	Aggregated Principal Committed		Outstanding Principal		Unused Portion (1)		Maturity Date
JPM Facility	$	200,000	$	52,250	$	147,750		10/18/2028

Total	$	200,000	$	52,250	$	147,750

(1)	The unused portion is the amount upon which commitment fees are based, if any.


	For the Three Months Ended March 31, 2024

Stated interest expense	$	521
Unused/undrawn fees		241
Amortization of deferred financing costs		214

Total interest expense	$	976

Average borrowings	$	25,508
Weighted average interest rate (1)		11.98	%
Amortization of deferred financing costs		3.36	%

Total borrowing costs		15.34	%

(1)	Calculated as the sum of stated interest expense and unused/undrawn fees divided by the average borrowings during the period. This number represents an annualized amount.

Revolving Credit Facility

October 18, 2023 the Company entered into, through the Financing SPV, a Loan and Security Agreement by and among the Company, the Financing SPV, JPMorgan Chase Bank, National Association, as lender and administrative agent for the lender parties providing for a senior secured revolving credit facility to the Financing SPV of $200 million (the “JPM Facility”). The JPM Facility size is increasable to up to $800 million subject to the satisfaction of various conditions, including availability under the borrowing base, which is based on a combination of unfunded Capital Commitments and other loan collateral including the Financing SPV’s portfolio investments. 26North Direct Lending LP serves as the portfolio manager under the JPM Facility (in such capacity, the “Facility Portfolio Manager”). U.S. Bank Trust Company National Association serves as collateral agent and U.S. Bank National Association serves as securities intermediary. Proceeds from borrowings under the JPM Facility are to be used to facilitate investments and for the timely payment of the Financing SPV’s expenses, and to make certain permitted distributions to the Company.

The

JPM Facility is a revolving credit facility with a revolving period ending October 18, 2026 (or upon the occurrence of certain events as specified therein) and has a scheduled maturity date of October 18, 2028. Advances under the JPM Facility are available in U.S. dollars and other permitted currencies. The interest charged on the JPM Facility is based on SOFR, SONIA, SARON, EURIBOR or CDOR, as applicable (or, if SOFR is not available, a benchmark replacement or a “base rate” (which is the greater of the prime

rate

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and

the federal funds rate plus 0.50%), as applicable), plus a margin of (1) 2.75% prior to the earlier of (x) the first day on which the Company has drawn more than

one-third

of its Capital Commitments and (y) April 18, 2025 and (2) 2.85% thereafter. Under the JPM Facility, the Financing SPV will pay an undrawn fee of (i) during the first nine months of the JPM Facility, 0.50% per annum and (ii) thereafter, 0.75% per annum, in each case, on the average daily unused amount of the financing commitments until the end of the revolving period, subject to minimum utilization requirements.

The obligations of the Financing SPV to the lenders under the JPM Facility are secured by a first priority security interest in the unfunded Capital Commitments to the Company and the related proceeds and all of the Financing SPV’s portfolio investments and other assets.

In connection with the JPM Facility, the Financing SPV has made certain customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The JPM Facility contains customary events of default for similar financing transactions, including if a change of control of the Financing SPV occurs. Upon the occurrence and during the continuation of an event of default, the lenders under the JPM Facility may declare the outstanding advances and all other obligations under the JPM Facility immediately due and payable. The occurrence of an event of default (as described above) triggers a requirement that the Financing SPV obtain the consent of the lenders under the applicable JPM Facility prior to entering into any sale or disposition with respect to portfolio investments.

As of March 31, 2024, to the Company’s knowledge, each of the Company, the Financing SPV and the Facility Portfolio Manager was in compliance with all covenants and other requirements applicable to it under the JPM Facility.

7. COMMITMENTS AND CONTINGENCIES

Capital Commitments

The Company had aggregate capital commitments and undrawn capital commitments from investors as follows (amounts in thousands):


	March 31, 2024							December 31, 2023
	Capital Commitments		Unfunded Capital Commitments		% of Capital Commitments Funded			Capital Commitments		Unfunded Capital Commitments		% of Capital Commitments Funded
Common Stock	$	1,443,918	$	1,298,896		10.04	%	$	1,403,018	$	1,332,727		5.01	%

Portfolio Company Commitments

The Company may enter into investment commitments to fund investments through signed commitment letters which in certain circumstances may be disclosed by the Company. In many circumstances, borrower acceptance and final terms are subject to transaction-related contingencies. These are disclosed as commitments upon execution of a final agreement. As of March 31, 2024, the Company believed that it had adequate financial resources to satisfy its unfunded commitments. As of March 31, 2024 and December 31, 2023, the Company had the following unfunded commitments by investment types (amounts in thousands):


				Unfunded Commitment Balances
	Commitment Type	Commitment Expiration Date		March 31, 2024		December 31, 2023
Azurite Intermediate Holdings, Inc.	First Lien Senior Secured Delayed Draw Term Loan		3/19/2031	$	12,973	$	—
Azurite Intermediate Holdings, Inc.	First Lien Senior Secured Revolving Loan		3/19/2031		2,076		—
CPEX Purchaser, LLC	First Lien Senior Secured Delayed Draw Term Loan		03/01/2030		3,727		—
CPEX Purchaser, LLC	First Lien Senior Secured Revolving Loan		03/01/2030		9,818		—
Icefall Parent, Inc.	First Lien Senior Secured Revolving Loan		01/25/2030		2,375		—
Penn TRGRP Holdings LLC	First Lien Senior Secured Delayed Draw Term Loan		09/27/2024		875		1,258
Penn TRGRP Holdings LLC	First Lien Senior Secured Revolving Loan		09/27/2030		3,881		3,881

Total				$	35,725	$	5,139

Other Commitments and Contingencies

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. At March 31, 2024, management is not aware of any pending or threatened litigation.

8. NET ASSETS

Subscriptions and Drawdowns

The Company has the authority to issue 1,000,000,000 shares of Common Stock of beneficial interest at $0.001 per share par value.

During the three month

ended March 31, 2024, the Company entered into subscription agreements (the “Subscription Agreements”) with investors providing for the private placement of the Company’s shares of Common Stock. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase the Company’s shares of Common Stock up to the amount of their respective Capital Commitment on an

as-needed

basis each time the Company delivers a drawdown notice to its investors. As of March 31, 2024, the Company had received Capital Commitments totaling $1,443.9 million ($1,298.9 million remaining undrawn), of which $102.5 million ($92.1 million remaining undrawn) are from affiliates of the Adviser.

The following table summarizes the total shares of Common Stock issued and proceeds related to capital drawdowns for the three months ended March 31, 2024:


Common Stock Issuance Date	Number of Shares of Common Stock Issued		Aggregate Offering Proceeds

March 25, 2024 (1)		2,989,257	$	74,731

Total		2,989,257	$	74,731

(1)	On March 15, 2024, the Company issued a capital call and delivered capital drawdown notices totaling $74.7 million, of which $3.5 million was still outstanding as of March 31, 2024 and recorded as a subscription receivable on the Consolidated Statements of Assets and Liabilities.

9. DISTRIBUTIONS AND DIVIDEND REINVESTMENT

During the three months ended March 31, 2024

, no distributions

were declared or paid by the Company.

With respect to distributions, the Company has adopted an “opt out” dividend reinvestment plan for Stockholders. As a result, in the event of a declared

ash distribution or other distribution, each Stockholder that has not “opted out” of the dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares of Common Stock rather than receiving cash distributions. Stockholders who receive distributions in the form of shares of Common Stock will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.

10. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:


	For the Three Months Ended March 31, 2024

Net increase (decrease) in net assets resulting from operations	$	833
Weighted average shares of common stock outstanding (basic and diluted)		3,041,581
Earnings (loss) per share	$	0.27

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11. FINANCIAL HIGHLIGHTS


	For the Three Months Ended March 31, 2024
Per share data:
Net asset value, beginning of period	$	25.00
Net investment income (loss) (1)		0.35
Net realized and unrealized gain (loss) (2)		(0.21	)

Net increase (decrease) in net assets from operations		0.14
Distributions declared ( 3 )		—

Total increase (decrease) in net assets		0.14

Net asset value, end of period	$	25.14

Shares Outstanding, end of period		5,800,895
Total Return ( 4 )		0.56	%
Ratios
Ratio of net expenses to average net assets ( 5 )		9.48	%
Ratio of net investment income (loss) to average net assets ( 5 )		5.56	%
Portfolio turnover rate ( 6 )		0.00	%
Supplemental Data
Net Assets, end of period	$	145,855
Weighted average shares outstanding		3,041,581
Total capital commitments, end of period	$	1,443,918
Average debt outstanding	$	25,508
Asset coverage ratio		287.6	%
Ratio of total contributed capital to total committed capital, end of period		10.04	%

(1)	The per share data was derived by using the weighted average shares outstanding during the period.

(2)	For the three months ended March 31, 2024, the amount shown does not correspond with the aggregate amount for the period as it includes the effect of the timing of capital transactions.

(3)	The per share data for distributions was derived by using the actual shares outstanding at the date of the relevant transactions (refer to Note 8).

(4)	Total return is calculated as the change in NAV per share during the period, plus distributions per share, if any, divided by the NAV per share at the beginning of the period. Total return is for the period indicated and has not been annualized.

(5)

Amounts are annualized except for organizational costs and expense support amounts relating to organizational costs. For the three months ended March 31, 2024, the ratio of total operating expenses to average net assets was

15.60%, on an annualized basis, excluding the effect of expense support/(recoupment) by the Adviser which represented 6.12% of average net assets.

(6)	Portfolio turnover rate is calculated using the lesser of total sales or total purchases over the average of the investments at fair value for the period reported.

12. SUBSEQUENT EVENTS

The Company’s management evaluated subsequent events through the date of the issuance of the consolidated financial statements. There have been no subsequent events that occurred during such period that would require disclosure in, or would be required to be recognized in, the consolidated financial statements as of March 31, 2024, except as discussed as below.

As of April 3, 2024

the Company received all of the remaining outstanding amount

of $3.5 million

related to the capital call issued on March 15, 2024.

On April 23, 2024, the Company accepted additional Capital Commitments

of $8.9

million. As of May 10, 2024, the Company had total Capital Commitments of

$1,452.8 million.

On May 7, 2024

our Board declared a quarterly dividend of $0.30 per share payable on June 13, 2024 to

Stockholders

of record as of May 31, 2024

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information in this section contains forward-looking statements that involve risks and uncertainties. Please see “Risk Factors” and “Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements. You should read the following discussion in conjunction with the consolidated financial statements and related notes and other financial information appearing elsewhere in this Report.

The following discussion is designed to provide a better understanding of our financial statements, including a brief discussion of our business, key factors that impacted our performance and a summary of our operating results. The following discussion should be read in conjunction with the consolidated financial statements and the notes thereto included or incorporated by reference in Item 6 of this Report. Historical results and percentage relationships among any amounts in the financial statements are not necessarily indicative of trends in operating results for any future periods.

Overview of Our Business

We were formed on October 13, 2022 as a Maryland corporation. On October 11, 2023, we commenced operations and on October 18, 2023, we made our first portfolio company investment. We are externally managed by our Adviser, 26North Direct Lending LP, an investment adviser that is registered with the SEC under the Advisers Act. As an externally managed BDC, we do not have any employees, and our investment and management functions are provided by an outside investment adviser and administrator under an advisory agreement and administration agreement. Instead of directly compensating employees, we pay the Adviser for investment and management services pursuant to the terms of the Investment Advisory Agreement. 26North Direct Lending Administration LLC serves as our Administrator. The Administrator provides the administrative services necessary for us to operate pursuant to the Administration Agreement. The Administrator has entered into a sub-administration agreement with SEI pursuant to which SEI receives compensation for its services.

Our investment objective is to generate current income and, to a lesser extent, capital appreciation. We invest primarily in directly originated senior secured loans to middle market companies domiciled in the United States. The Company’s portfolio consists primarily of direct originations of (i) first lien senior secured debt and unitranche debt (including last out portions of such loans) and, to a lesser extent, (ii) second lien senior secured debt and unsecured debt, including mezzanine debt. In connection with its debt investments, the Company is permitted to receive equity warrants or make select equity co-investments. We generally consider middle market companies to consist of companies with between $25 million and $100 million of annual EBITDA, although the Company may from time to time invest in larger or smaller companies.

Although we invest primarily in middle market companies domiciled in the United States, we also may from time to time invest, to a lesser extent, in companies domiciled outside of the United States (subject to compliance with BDC requirements to invest at least 70% of our assets in United States companies).

As of March 31, 2024 and December 31, 2023, the weighted average yield on the principal amount of our outstanding debt investments was approximately 11.9% and 12.5%, respectively.

Portfolio Composition

The total value of our investment portfolio was $114.8 million as of March 31, 2024, as compared to $52.6 million as of December 31, 2023. As of March 31, 2024, we had investments in five portfolio companies with an aggregate cost of $115.1 million. As of December 31, 2023, we had investments in two portfolio companies with an aggregate cost of $52.6 million. As of March 31, 2024 and December 31, 2024, the number of our portfolio companies that represented greater than 10% of the total fair value of our investment portfolio was four and two, respectively.

As of March 31, 2024, our investment portfolio consisted of the following investments (amounts in thousands):


	Amortized Cost		Percentage of Total Portfolio			Fair Value		Percentage of Total Portfolio
Senior debt and 1st lien notes	$	115,130		100	%	$	114,847		100	%

	$	115,130		100	%	$	114,847		100	%

As of December 31, 2023, our investment portfolio consisted of the following investments (amounts in thousands):


	Amortized Cost		Percentage of Total Portfolio			Fair Value		Percentage of Total Portfolio
Senior debt and 1st lien notes	$	52,628		100	%	$	52,566		100	%

	$	52,628		100	%	$	52,566		100	%

Investment Activity

During the three months ended March 31, 2024, we made three new investments totaling $62.1 million and made investments in existing portfolio companies of $0.4 million. During the three months ended March 31, 2024, we had no investment realization activity.

Total portfolio investment activity for the three months ended March 31, 2024 was as follows (amounts in thousands):


	Senior Debt and 1^st Lien Notes			Total
Fair value, beginning of period	$	52,566		$	52,566
New investments		62,453			62,453
Accretion of loan premium/discount net		49			49
Unrealized appreciation (depreciation)		(221	)		(221	)

Fair value, end of period	$	114,847		$	114,847

Our Adviser monitors on an ongoing basis, the financial trends of each portfolio company to determine if it is meeting its respective business plan and to assess the appropriate course of action for each company. Our Adviser has several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following: (i) assessment of success in adhering to the portfolio company’s business plan and compliance with covenants; (ii) periodic or regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor to discuss financial position, requirements and accomplishments; (iii) comparisons to our other portfolio companies in the industry, if any; (iv) attendance at and participation in board meetings or presentations by portfolio companies; and (v) review of monthly and quarterly financial statements and financial projections of portfolio companies.

As part of the monitoring process, our Adviser also employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Adviser grades the credit risk of all investments on a scale of 1 to 4 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (i.e., at the time of origination or acquisition), although it may also take into account in certain circumstances the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors. The grading system for our investments is as follows:

•

Grade 1 investments involve the least amount of risk to our initial cost basis. The trends and risk factors for this investment since origination or acquisition are generally favorable, which may include the performance of the portfolio company or a potential exit;

•

Grade 2 investments involve a level of risk to our initial cost basis that is similar to the risk to our initial cost basis at the time of origination or acquisition. This portfolio company is generally performing as expected and the risk factors to our ability to ultimately recoup the cost of our investment are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a grade of 2;

•

Grade 3 investments indicate that the risk to our ability to recoup the initial cost basis of such investment has increased materially since origination or acquisition, including as a result of factors such as declining performance and non-compliance with debt covenants; however, payments are generally not significantly past due; and

•

Grade 4 investments indicate that the risk to our ability to recoup the initial cost basis of such investment has substantially increased since origination or acquisition, and the portfolio company likely has materially declining performance. For debt investments with an investment grade of 4, in most cases, most or all of the debt covenants are out of compliance and payments are substantially delinquent. For investments graded 4, it is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit.

Our Adviser grades the investments in our portfolio at least each quarter and it is possible that the grade of a portfolio investment may be reduced or increased over time. For investments with a grade of 3 or 4, the Adviser enhances its level of scrutiny over the monitoring of such portfolio company. The following table shows the composition of our portfolio (excluding investments in money market funds, if any) on the 1 to 4 grading scale as of March 31, 2024 and December 31, 2023 (amounts in thousands).


	March 31, 2024					December 31, 2023
Investment Performance Rating	Fair Value		Percentage of Total			Fair Value		Percentage of Total
Grade 1	$	—		0.0	%	$	—		0.0	%
Grade 2		114,847		100.0	%		52,566		100.0	%
Grade 3		—		0.0	%		—		0.0	%
Grade 4		—		0.0	%		—		0.0	%

Total Investments	$	114,847		100.0	%	$	52,566		100.0	%

Non-Accrual Assets

Generally, when interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. As of March 31, 2024, and December 31, 2023 we had no non-accrual assets.

Results of Operations

For the three months ended March 31, 2024

Comparative financial statements are not presented as we had yet to be capitalized as of March 31, 2023 and had neither incurred expenses nor generated revenues for the three months ended March 31, 2023. We were initially capitalized on September 7, 2023 and commenced our operations on October 11, 2023. The following table represents the operating results for the three months ended March 31, 2024 (amounts in thousands):


Total investment income	$	2,851
Net operating expenses		1,797

Net investment income before excise tax		1,054
Excise tax expense		—

Net investment income after excise tax		1,054
Net unrealized appreciation / (depreciation)		(221	)

Net increase in net assets resulting from operations	$	833

Net increases in net assets resulting from operations can vary substantially from period to period due to various factors, including recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, comparisons of net changes in net assets resulting from operations may not be meaningful (amounts in thousands).

Investment Income


	For the Three Months Ended March 31, 2024
Total interest income	$	2,655
Total other income		196

Total investment income	$	2,851

Investment income for the three months ended March 31, 2024 was driven by our deployment of capital and an increasing invested balance.

Operating Expenses (amounts in thousands)


	For the Three Months Ended March 31, 2024
Interest and other debt expenses	$	976
Professional fees		890
Administrative service expenses		512
Offering costs		393
Other general and administrative expenses		312
Management fees		170

Total expenses	$	3,253

Less: Expense support		(1,456	)

Net expenses	$	1,797

Professional Fees

Professional fees include legal, audit, tax, valuation, technology and other professional fees incurred related to the management of the Company. For the three months ended March 31, 2024, the Company incurred $0.9 million in professional fees.

Administrative Service Expenses

Administrative service expenses represent fees paid to the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of the cost of certain of our executive officers and other non-investment professionals that perform duties for us. See Note 3. Significant Agreements and Related Party Transactions to our Consolidated Financial Statements for additional information regarding the Administration Agreement and the administrative fees thereunder. For the three months ended March 31, 2024, the Company incurred $0.5 million of administrative service expenses.

Interest and Other Debt Expenses

Interest and other financing fees for the three months ended March 31, 2024 were attributable to borrowings under the JPM Facility (as discussed below under “Liquidity and Capital Resources”). For the three months ended March 31, 2024, the Company incurred $1.0 million in interest and other debt expenses.

Offering Costs

Costs associated with the offering of common shares of the Company are capitalized as deferred offering costs and included on the Consolidated Statement of Assets and Liabilities and amortized over a twelve-month period. For the three months ended March 31, 2024, the Company incurred $0.4 million in offering costs.

Other General and Administrative Expenses

Other general and administrative expenses include director fees, insurance, filing, research, our sub-administrator, subscriptions and other costs. For the three months ended March 31, 2024, the Company incurred $0.3 million in other general and administrative expenses.

Compensation of the Adviser

We pay the Adviser an investment advisory fee for its services under the Investment Advisory Agreement consisting of two components: a Management Fee and an Incentive Fee. The cost of both the Management Fee and the Incentive Fee is ultimately borne by the Stockholders.

Management Fee

The Management Fee is payable quarterly in arrears. The Management Fee is payable at an annual rate of 0.75% (1.00% in the event of an Exchange Listing) of the average value of our gross assets at the end of each of our two most recently completed calendar quarters. For purposes of calculating the Management Fee, “gross assets” means the total assets of the Company determined on a consolidated basis in accordance with GAAP, excluding cash and cash equivalents but including assets purchased with borrowed amounts.

The Management Fee for any partial quarter will be appropriately prorated and adjusted for any share issuances or repurchases of our Common Stock during the relevant calendar quarter. For the quarter ended December 31, 2023, our first quarter-end following the commencement of operations, the Management Fee was calculated based on the value of our gross assets as of such quarter-end.

See Note 3 to our Consolidated Financial Statements for additional information regarding the Investment Advisory Agreement and the fee arrangement thereunder. For the three months ended March 31, 2024, the Company incurred Management Fees of $0.2 million.

Incentive Fees

We pay to the Adviser an Incentive Fee that consists of two parts. The Investment Income Incentive Fee is calculated and payable on a quarterly basis, in arrears, and equals 10% (17.5% in the event of an Exchange Listing) of “Pre-Incentive Fee Net Investment Income” for the immediately preceding calendar quarter, subject to a quarterly preferred return of 1.5% (i.e., 6.0% annualized), or “Hurdle,” measured on a quarterly basis and a “catch-up” feature.

“Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any accrued income that the Company has not yet received in cash and any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter minus the Company’s operating expenses accrued during the calendar quarter (including the Management Fee, administrative expenses and any interest expense and dividends paid on issued and outstanding preferred stock, but excluding the Incentive Fee).

Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter, expressed as a rate of return on the value of our net assets at the beginning of the immediately preceding calendar quarter, is compared to a “Hurdle Amount” equal to the product of (i) the Hurdle rate of 1.50% per quarter (6.0% annualized) and (ii) our net assets (defined as total assets less indebtedness and before taking into account any Incentive Fees payable during the period) at the beginning of the immediately preceding calendar quarter.

The Capital Gains Incentive Fee is an annual fee that is determined and payable, in arrears, as of the end of each calendar year (or upon termination of the Investment Advisory Agreement) in an amount equal to 10% (17.5% following an Exchange Listing) of realized capital gains, if any, determined on a cumulative basis from the commencement of the Company’s investment operations (based on the fair market value of each investment as of such date) through the end of such calendar year (or upon termination of the Investment Advisory Agreement), computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis from the commencement of the Company’s investment operations (based on the fair market value of each investment as of such date) through the end of such calendar year (or upon termination of the Investment Advisory Agreement), less the aggregate amount of any previously paid Capital Gains Incentive Fees.

For the three months ended March 31, 2024, the Company did not accrue any Incentive Fees.

Net Unrealized Appreciation

Net unrealized appreciation for the three months ended March 31, 2024 was as follows (amounts in thousands):


Non-Control / Non-Affiliate investments	$	(221	)

Net unrealized appreciation / (depreciation) on investments	$	(221	)

For the three months ended March 31, 2024, we recorded net unrealized depreciation on our current portfolio of $0.2 million. The net unrealized depreciation on the Company’s current portfolio was a result of the fair value of the portfolio assets being equal to their original cost, given the recency of origination and stable portfolio performance since origination.

Liquidity and Capital Resources

We believe that our current cash on hand, our short-term investments, our available borrowing capacity under the JPM Facility, unfunded investor Capital Commitments and our anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations for at least the next twelve months.

Under the 1940 Act, we are required to meet an asset coverage ratio, defined under the 1940 Act as the ratio which the value of our total assets (less all liabilities and indebtedness not represented by senior securities) bears to the aggregate amount of our outstanding senior securities representing our indebtedness, of at least 150% after each issuance of senior securities. Our asset coverage ratio was 287.6% as of March 31, 2024.

Cash Flows

For the three months ended March 31, 2024, we experienced a net increase in cash in the amount of $35.3 million. During that period, our operating activities used $64.9 million in cash, consisting primarily of purchases of portfolio investments of $62.5 million. In addition, financing activities provided net cash of $100.2 million, consisting primarily of net borrowings under the JPM Facility of $25.5 million and proceeds from the issuance of Common Stock of $74.7 million. At March 31, 2024, we had $103.0 million of cash and cash equivalents on hand.

Financing Transactions

JPM Facility

On October 18, 2023 the Company entered into, through the Financing SPV, a Loan and Security Agreement by and among the Company, the Financing SPV, JPMorgan Chase Bank, National Association, as lender and administrative agent for the lender parties providing for a senior secured revolving credit facility to the Financing SPV of $200 million (the “JPM Facility”). The JPM Facility size is increasable to up to $800 million subject to the satisfaction of various conditions, including availability under the borrowing base, which is based on a combination of unfunded Capital Commitments and other loan collateral including the Financing SPV’s portfolio investments. Our Adviser serves as the portfolio manager (in such capacity, the “Facility Portfolio Manager”) under the JPM Facility. U.S. Bank Trust Company, National Association serves as collateral agent and U.S. Bank National Association serves as securities intermediary. Proceeds from borrowings under the JPM Facility are expected to be used to facilitate investments and for the timely payment of the Financing SPV’s expenses, and to make certain permitted distributions to the Company.

The JPM Facility is a revolving credit facility with a revolving period ending October 18, 2026 (or upon the occurrence of certain events as specified therein) and has a scheduled maturity date of October 18, 2028. Advances under the JPM Facility are available in U.S. dollars and other permitted currencies. The interest charged on the JPM Facility is based on SOFR, SONIA, SARON, EURIBOR or CDOR, as applicable (or, if SOFR is not available, a benchmark replacement or a “base rate” (which is the greater of the prime rate and the federal funds rate plus 0.50%), as applicable), plus a margin of (1) 2.75% prior to the earlier of (x) the first day on which the Company has drawn more than one-third of its Capital Commitments and (y) April 18, 2025 and (2) 2.85% thereafter. Under the JPM Facility, the Financing SPV will pay an undrawn fee of (i) during the first nine months of the JPM Facility, 0.50% per annum and (ii) thereafter, 0.75% per annum, in each case, on the average daily unused amount of the financing commitments until the end of the revolving period, subject to minimum utilization requirements.

As of March 31, 2024, we had U.S. dollar borrowings of $77.7 million outstanding under the JPM Facility with a weighted average interest rate of 8.07%.

As of March 31, 2024, our future fixed commitments for cash payments were as follows (amounts in thousands):


	Total		2024		2025-2026		2027-2028		2029-Future
JPM Facility borrowings	$	77,730	$	—	$	—	$	77,730	$	—
Interest and fees on JPM Facility borrowings (1)		49,553		6,398		22,001		19,865		—

Total	$	127,283	$	6,398	$	22,001	$	97,595	$	—

⁽¹⁾	Amounts represent (i) credit facility commitment fees calculated on the unused amount, which was $122.3 million as of March 31, 2024 and (ii) interest expense calculated at a rate of 8.07% of outstanding credit facility borrowings, which were $77.7 million as of March 31, 2024.

Distributions to Stockholders

We intend to elect to be treated as a RIC under the Code for our tax year ending December 31, 2023, and intend to make the required distributions to our Stockholders as specified therein. In order to maintain our tax treatment as a RIC and to obtain RIC tax benefits, we must meet certain minimum distribution, source-of-income and asset diversification requirements. If such requirements are met, then we are generally required to pay income taxes only on the portion of our taxable income and gains we do not distribute (actually or constructively) and certain built-in gains. We monitor our distribution requirements with the goal of ensuring compliance with the Code. We can offer no assurance that we will achieve results that will permit the payment of any level of cash distributions and our ability to make distributions will be limited by the asset coverage requirement and related provisions under the 1940 Act and contained in any applicable indenture and related supplements. In addition, in order to satisfy the annual distribution requirement applicable to RICs, we may declare a significant portion of our dividends in shares of our Common Stock instead of in cash. A Stockholder generally would be subject to tax on 100% of the fair market value of the dividend on the date the dividend is received by the Stockholder in the same manner as a cash dividend, even though a portion of the dividend was paid in shares of our Common Stock.

The minimum distribution requirements applicable to RICs require us to distribute to our Stockholders each year at least 90% of our investment company taxable income, or ICTI, as defined by the Code. Depending on the level of ICTI and net capital gain, if any, earned in a tax year, we may choose to carry forward income in excess of current year distributions into the next tax year and pay a 4% U.S. federal excise tax on such excess. Any such carryover income must be distributed before the end of the next tax year through a dividend declared prior to filing the final tax return related to the year which generated such income.

ICTI generally differs from net investment income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. We may be required to recognize ICTI in certain circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having OID (such as debt instruments issued with warrants), we must include in ICTI each year a portion of the OID that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. We may also have to include in ICTI other amounts that we have not yet received in cash, such as (i) PIK interest income and (ii) interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. Because any OID or other amounts accrued will be included in our ICTI for the year of accrual, we may be required to make a distribution to our Stockholders in order to satisfy the minimum distribution requirements, even though we will not have received and may not ever receive any corresponding cash amount. ICTI also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

No distributions were declared or paid by the Company during the three months ended March 31, 2024.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. We have identified investment valuation and revenue recognition as our most critical accounting estimates. On an ongoing basis, we evaluate our estimates, including those related to the

matters described below. These estimates are based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions or conditions. A discussion of our critical accounting policies follows.

Investments at Fair Value

One of the critical accounting estimates inherent in the preparation of our financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded. ASC 820 establishes a framework for measuring fair value in accordance with GAAP and required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, we consider our principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these levels are summarized below:

Level 1—Valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access.

Level 2—Valuations based on quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active or other observable inputs other than quoted prices.

Level 3—Valuations based on unobservable inputs for the asset or liability.

Transfers between levels, if any, will be recognized at the beginning of the quarter in which the transfer occurred. In addition to using the above inputs in investment valuations, the Adviser will apply a valuation policy approved by the Board of Directors that is consistent with ASC 820. Consistent with the valuation policy, the Adviser will evaluate the source of the inputs, including any markets in which our investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. When an investment is valued based on prices provided by reputable dealers or pricing services (that is, broker quotes), the Adviser will subject those prices to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment. For example, the Adviser, or the independent valuation firm(s), will review pricing support provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If we were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected herein.

In connection with a drawdown, the Board of Directors or a committee thereof will be required to make the determination that we are not selling shares of our Common Stock at a price below the then current net asset value of our Common Stock, exclusive of any distributing commission or discount (which net asset value shall be determined as of a time within 48 hours, excluding Sunday and holidays, next preceding the time of such determination). Records will be made contemporaneously with all determinations described in this section and these records will be maintained with other records that we are required to maintain under the 1940 Act.

Investment Valuation Process

The determination of the fair value involves subjective judgments and estimates. As part of the valuation process, the Adviser will take into account relevant factors in determining the fair value of our investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Adviser will consider whether the pricing indicated by the external event corroborates its valuation.

The Adviser will undertake a multi-step valuation process, which is expected to include, among other procedures, the following:

•

With respect to investments for which market quotations are readily available, those investments will typically be valued at the bid price of those market quotations;

•

With respect to investments for which market quotations are not readily available, the valuation process will begin with either (i) independent valuation firm(s) providing a preliminary valuation of such investment to the Adviser’s valuation committee or (ii) the Adviser preparing a preliminary valuation of such investment based on proprietary models; and

•

Preliminary valuation conclusions will be documented and discussed within the Adviser’s valuation committee.

Revenue Recognition

Interest and Dividend Income

Interest income is recorded on an accrual basis and includes the accretion of discounts, amortization of premiums and PIK interest. Discounts from and premiums to par value on investments purchased are accreted/amortized into interest income over the life of the respective security using the effective interest method. To the extent loans contain PIK provisions, PIK interest, computed at the contractual rates, is accrued and recorded as interest income and added to the principal balance of the loan. PIK interest income added to the principal balance is generally collected upon repayment of the outstanding principal.

Loans are generally placed on non-accrual status when interest and/or principal payments become materially past due and there is reasonable doubt that principal or interest will be collected in full. Recognition of interest income of that loan will be ceased until all principal and interest is current through payment or until a restructuring occurs, such that the interest income is deemed to be collectible. However, we remain contractually entitled to this interest. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon our judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest are paid or there is no longer any reasonable doubt that such principal or interest will be collected in full and, in our judgment, are likely to remain current. We may make exceptions to this policy if the loan has sufficient collateral value or is in the process of collection. Accrued interest is written-off when it becomes probable that the interest will not be collected, and the amount of uncollectible interest can be reasonably estimated.

Dividend income on preferred equity is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. To the extent preferred equity contains PIK provisions, PIK dividends computed at the contractual rates are accrued and recorded as dividend income and added to the principal balance of the preferred equity. PIK dividends added to the principal balance are generally collected upon redemption of the equity.

Other Income

Dividends earned on money market balances are recorded on an accrual basis. Such income is included in other income in the Consolidated Statement of Operations.

Investment Transactions

Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. Unrealized gains or losses primarily reflect the change in investment values, including the reversal of previously recorded unrealized gains or losses when gains or losses are realized.

Other income may include income such as consent, waiver, amendment, unused, and prepayment fees associated with our investment activities, as well as any fees for managerial assistance services rendered by the Company to its portfolio companies. Such fees are recognized as income when earned or the services are rendered.

Income Taxes

We intend to elect to be treated as a RIC for our tax year ending December 31, 2023 and to qualify annually thereafter as a RIC under Subchapter M of the Code. To maintain our RIC tax election, we must, among other requirements, meet certain annual source-of-income and quarterly asset diversification requirements. We also must annually satisfy the Annual Distribution Requirement.

If we fail to distribute in a timely manner an amount at least equal to the sum of (i) 98% of our ordinary income for the calendar year, (ii) 98.2% of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for the one-year period ending October 31 in that calendar year and (iii) certain undistributed amounts from previous years on which we paid no U.S. federal income tax (collectively, the “Excise Tax Distribution Requirements”), we will be subject to a 4% nondeductible U.S. federal excise tax on the amount by which we do not meet the Excise Tax Distribution Requirements. For this purpose, however, any ordinary income or capital gain net income retained by us that is subject to corporate income tax for the tax year ending in that calendar year will be considered to have been distributed by year-end (or earlier if estimated taxes are paid).

Off-Balance Sheet Arrangements

We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to fund investments and to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. Since commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The balance of unfunded commitments to extend financing as of March 31, 2024 and December 31, 2023 was as follows (amounts in thousands):


				Unfunded Commitment Balances
	Commitment Type	Commitment Expiration Date		March 31, 2024		December 31, 2023
Azurite Intermediate Holdings, Inc.	First Lien Senior Secured Delayed Draw Term Loan		3/19/2031	$	12,973	$	—
Azurite Intermediate Holdings, Inc.	First Lien Senior Secured Revolving Loan		3/19/2031		2,076		—
CPEX Purchaser, LLC	First Lien Senior Secured Delayed Draw Term Loan		03/01/2030		3,727		—
CPEX Purchaser, LLC	First Lien Senior Secured Revolving Loan		03/01/2030		9,818		—
Icefall Parent, Inc.	First Lien Senior Secured Revolving Loan		01/25/2030		2,375		—
Penn TRGRP Holdings LLC	First Lien Senior Secured Delayed Draw Term Loan		09/27/2024		875		1,258
Penn TRGRP Holdings LLC	First Lien Senior Secured Revolving Loan		09/27/2030		3,881		3,881

Total				$	35,725	$	5,139

Recent Developments

As of April 3, 2024, the Company received all of the remaining outstanding amount of $3.5 million related to the capital call issued on March 15, 2024.

On April 23, 2024, the Company accepted additional Capital Commitments of $8.9 million. As of May 10, 2024, the Company had total Capital Commitments of $1,452.8 million.

On May 7, 2024, the Board declared a quarterly dividend of $0.30 per share payable on June 13, 2024 to holders of record as of May 31, 2024.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to certain financial market risks, including valuation risk and interest rate fluctuations.

Valuation Risk

We have invested, and plan to continue to invest, in illiquid debt and equity securities of private companies. These investments will generally not have a readily available market price, and we will value these investments at fair value as determined in good faith by our Adviser, as the Board of Directors’ valuation designee, in accordance with our valuation policy and procedures established by our Board of Directors. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize amounts that are different from the amounts presented and such differences could be material. See Note 2 “Summary of Significant Account Policies” to our consolidated financial statements for more details on estimates and judgments made by us in connection with the valuation of our investments.

Interest Rate Risk

We are subject to financial market risks, including changes in interest rates. Because we have borrowed, and may from time to time borrow, money to make investments, our net investment income will depend in part upon the difference between the rate at which we borrow funds and the rate at which we invest these funds as well as our level of leverage. The interest charged on the JPM Facility is a floating rate based on SOFR, SONIA, SARON, EURIBOR or CDOR, as applicable (or, if SOFR is not available, a benchmark replacement or a “base rate”). As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income or net assets.

We regularly measure our exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate-sensitive assets to our interest rate-sensitive liabilities. Based on that review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates.

As of March 31, 2024, 100.0% of investments at fair value (excluding unfunded debt investments) represent floating-rate investments with a SOFR floor (includes investments bearing prime interest rate contracts) and none of our investments at fair value represent fixed-rate investments. Additionally, our senior secured revolving credit facilities are also subject to floating interest rates and are currently paid based on floating SOFR rates and prime interest rates.

The following table estimates the potential changes in net cash flow generated from interest income and expenses, should interest rates increase or decrease by 50, 100, 150 or 200 basis points. Interest income is calculated as revenue from interest generated from our portfolio of investments held on March 31, 2024. Interest expense is calculated based on the terms of our outstanding revolving credit facilities. For our floating rate credit facilities, we use the outstanding balance as of March 31, 2024. Interest expense on our floating rate credit facilities is calculated using the interest rate as of March 31, 2024, adjusted for the hypothetical changes in rates, as shown below. The base interest rate case assumes the rates on our portfolio investments remain unchanged from the actual effective interest rates as of March 31, 2024. These hypothetical calculations are based on a model of the investments in our portfolio, held as of March 31, 2024, and are only adjusted for assumed changes in the underlying base interest rates.

Actual results could differ significantly from those estimated in the table (amounts in thousands).


Basis Point Change	Increase (decrease) in interest income			Increase (decrease) in interest expense			Net increase (decrease) in investment income
Up 200 Basis Points	$	2,358		$	(1,555	)	$	803
Up 150 Basis Points		1,768			(1,166	)		602
Up 100 Basis Points		1,179			(777	)		402
Up 50 Basis Points		589			(389	)		200
Down 50 Basis Points		(589	)		389			(200	)
Down 100 Basis Points		(1,179	)		777			(402	)
Down 150 Basis Points		(1,768	)		1,166			(602	)
Down 200 Basis Points		(2,358	)		1,555			(803	)

Although we believe that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit market, credit quality, the size and composition of assets in our portfolio and other business developments that could affect our net income. Accordingly, we cannot assure you that actual results would not differ materially from the analysis above.

We may hedge against interest rate and foreign currency fluctuations by using standard hedging instruments such as futures, options and forward contracts or a credit facility subject to the requirements of the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in interest rates and foreign currencies, such activities may also limit our ability to participate in benefits of lower interest rates or higher exchange rates with respect to the portion of our portfolio of investments, if any, with fixed interest rates or denominated in foreign currencies.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Report, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and Treasurer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act). Based on that evaluation, our President and Chief Executive Officer and Treasurer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report. In designing and evaluating our

ITEM 6.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The exhibits filed as part of this Report are set forth on the Index to Exhibits, which is incorporated herein by reference.


3.1		Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 (File No. 000-56594) filed on October 19, 2023)

3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form 10 (File No. 000-56594) filed on September 7, 2023)

21.1		List of Subsidiaries*

31.1		Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2		Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.*

101.SCH		Inline XBRL Taxonomy Extension Schema Document.*

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document*

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.*

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.*

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.*

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*

*	Filed herewith.

The certifications attached as Exhibit 32.1 accompany this Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act, and are not to be incorporated by reference into any of the registrant’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report, irrespective of any general incorporation language contained in any such filing.


Part I. Financial Information
Item 1.	Financial Statements
	Consolidated Statements of Assets and Liabilities as of March 31, 2024 (Unaudited) and December 31, 2023	3
	Consolidated Statement of Operations for the three months ended March 31, 2024 (Unaudited)	4
	Consolidated Statement of Changes in Net Assets for the three months ended March 31, 2024 (Unaudited)	5
	Consolidated Statement of Cash Flows for the three months ended March 31, 2024 (Unaudited)	6
	Consolidated Schedules of Investments as of March 31, 2024 (Unaudited) and December 31, 2023	7
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	33
Item 4.	Controls and Procedures	34
Part II. Other Information
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	35

SIGNATURES		37


	March 31, 2024 (Unaudited)		December 31, 2023

Assets
Non-controlled/non-affiliated investments at fair value (amortized cost $115,130 and $52,628, respectively)	$	114,847	$	52,566
Cash and cash equivalents		102,982		67,664
Expense reimbursement receivable		7,890		6,434
Deferred financing costs		3,907		4,121
Subscription receivable		3,481		—
Interest and other income receivable from non-controlled/non-affiliated investments		950		522
Deferred offering costs		801		1,194
Prepaid assets		114		168

Total Assets	$	234,972	$	132,669

Liabilities
Debt		77,730		52,250
Other liabilities and accrued expenses		4,918		4,443
Accrued organizational costs		2,812		2,842
Accrued administrative services expense payable		2,524		2,012
Interest payable		556		468
Due to affiliate		407		273
Management fees payable		170		90

Total Liabilities	$	89,117	$	62,378

Commitments and contingencies (Note 7)
Net Assets
Common stock, $0.001 par value (1,000,000,000 shares authorized, 5,800,895 and 2,811,638 shares issued and outstanding, respectively)	$	6	$	3
Additional paid-in capital		145,016		70,288
Distributable earnings (loss)		833		—

Total Net Assets	$	145,855	$	70,291

Total Liabilities and Net Assets	$	234,972	$	132,669

Net asset value per share	$	25.14	$	25.00


	For the Three Months Ended March 31, 2024

Cash Flows From Operating Activities:
Net increase (decrease) in net assets resulting from operations	$	833

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used for) operating activities:
Purchases of investments		(62,453	)
Net change in unrealized (appreciation) depreciation on investments		221
Net accretion of discount		(49	)
Amortization of deferred financing costs		214
Amortization of deferred offering costs		393
Changes in operating assets and liabilities:
Expense reimbursement receivable		(1,456	)
Interest and other income receivable from non-controlled/non-affiliated investments		(428	)
Subscription receivable		(3,481	)
Prepaid assets		54
Accrued organizational costs		(30	)
Accrued administrative services expense payable		512
Other liabilities and accrued expenses		475
Interest payable		88
Due to affiliate		134
Management fees payable		80

Net cash provided by (used for) operating activities		(64,893	)
Cash Flows From Financing Activities:
Proceeds from issuance of common shares		74,731
Borrowings on debt		77,730
Payment of debt		(52,250	)

Net cash provided by (used for) financing activities		100,211
Net increase (decrease) in cash and cash equivalents		35,318

Cash and cash equivalents, beginning of period		67,664

Cash and cash equivalents, end of period	$	102,982

Supplemental disclosure of cash flow and non-cash activities:
Interest paid during the period	$	674


Date: May 10, 2024	26NORTH BDC, INC.

	By:	/s/ Brendan McGovern
		Brendan McGovern
		President and Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Jonathan Landsberg
		Jonathan Landsberg
		Treasurer and Chief Financial Officer
		(Principal Financial Officer)
		(Principal Accounting Officer)


	For the Three Months Ended March 31, 2024

Investment Income
From non-controlled/non-affiliated investments:
Interest income	$	2,655
Other income		196

Total Investment Income		2,851
Expenses
Interest and other debt expenses		976
Professional fees		890
Administrative service expenses		512
Offering costs		393
Other general and administrative expenses		312
Management fees		170

Total expenses	$	3,253

Less: Expense support (Note 3)		(1,456	)

Net expenses		1,797

Net investment income before excise tax		1,054
Excise tax expense		—

Net investment income after excise tax		1,054
Realized and unrealized gain (loss):
Net change in unrealized appreciation (depreciation):
Non-controlled/non-affiliated investments		(221	)

Net change in unrealized appreciation (depreciation)		(221	)

Net realized and unrealized gain (loss)		(221	)

Net Increase (Decrease) in Net Assets Resulting from Operations	$	833

Per share information - basic and diluted
Net investment income (loss) per share (basic and diluted)	$	0.35
Earnings (loss) per share (basic and diluted)	$	0.27
Weighted average shares of common stock outstanding (basic and diluted)		3,041,581


	Common Shares				Additional Paid-in Capital		Distributable Earnings (Loss)			Total Net Assets
	Shares		Par Value		Additional Paid-in Capital		Distributable Earnings (Loss)			Total Net Assets

Balance, December 31, 2023		2,811,638	$	3	$	70,288	$	—		$	70,291
Operations:
Net investment income		—		—		—		1,054			1,054
Net realized gain (loss) on investments		—		—		—		—			—
Net unrealized appreciation (depreciation)		—		—		—		(221	)		(221	)
Net increase (decrease) in net assets resulting from operations		—		—		—		833			833

Capital Share Transactions:
Common shares issued from reinvestment of distributions		—		—		—		—			—
Issuance of shares		2,989,257		3		74,728		—			74,731
Tax reclassification of stockholders’ equity in accordance with U.S. GAAP		—		—		—		—			—

Net increase (decrease) for the period		2,989,257		3		74,728		—			74,731

Balance, March 31, 2024		5,800,895	$	6	$	145,016	$	833		$	145,855