Fair Value

6 Months Ended

Jun. 30, 2025

Note 6. Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs to valuations used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1. Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access.

Level 2. Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets or liabilities in non-active markets;

Pricing models whose inputs are observable for substantially the full term of the asset or liability; and

Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.

Level 3. Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s and, if applicable, an independent third-party valuation firm’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3).

Gains and losses for assets and liabilities categorized within the Level 3 tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).

A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Such reclassifications involving Level 3 assets and liabilities are reported as transfers in/out of Level 3 as of the end of the quarter in which the reclassifications occur. Within the fair value hierarchy tables below, cash and cash equivalents are excluded but could be classified as Level 1.

The following tables present the balances of assets measured at fair value on a recurring basis, as of June 30, 2025 and December 31, 2024:

Fair Value Measurements

As of June 30, 2025


	Level 1		Level 2		Level 3		Measured at Net Asset Value*		Total
Assets:
Senior Secured Loans	$	—	$	—	$	1,268,904	$	—	$	1,268,904
Equipment Financing		—		—		138,988		—		138,988
Preferred Equity		—		—		32,510		—		32,510
Common Equity/Equity Interests/Warrants		232		—		645,764		48,540		694,536
Total Investments	$	232	$	—	$	2,086,166	$	48,540	$	2,134,938

Fair Value Measurements

As of December 31, 2024


	Level 1		Level 2		Level 3		Measured at Net Asset Value*		Total
Assets:
Senior Secured Loans	$	—	$	—	$	1,117,118	$	—	$	1,117,118
Equipment Financing		—		—		181,016		—		181,016
Preferred Equity		—		—		31,682		—		31,682
Common Equity/Equity Interests/Warrants		257		—		626,470		49,091		675,818
Total Investments	$	257	$	—	$	1,956,286	$	49,091	$	2,005,634

* In accordance with ASC 820-10, certain investments that are measured using the net asset value per share (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities. The portfolio investment in this category is SSLP (as defined below). See Note 17 for more information on this investment, including its investment strategy and the Company’s unfunded equity commitment to SSLP. This investment is not redeemable by the Company absent an election by the members of the entity to liquidate all investments and distribute the proceeds to the members.

The following table provides a summary of the changes in fair value of Level 3 assets for the three and six months ended June 30, 2025, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets still held at June 30, 2025:

Fair Value Measurements Using Level 3 Inputs


	Senior Secured Loans			Equipment Financing			Preferred Equity			Common Equity/ Equity Interests/ Warrants		Total
Fair value, March 31, 2025	$	1,116,605		$	166,799		$	32,339		$	639,902	$	1,955,645
Total gains or losses included in earnings:
Net realized gain (loss)		365			(10	)		—			—		355
Net change in unrealized gain (loss)		1,382			(3,846	)		(615	)		5,449		2,370
Purchase of investment securities*		330,936			4,816			786			413		336,951
Proceeds from dispositions of investment securities		(180,384	)		(28,771	)		—			—		(209,155	)
Transfers in/out of Level 3		—			—			—			—		—
Fair value, June 30, 2025	$	1,268,904		$	138,988		$	32,510		$	645,764	$	2,086,166
Unrealized gains (losses) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net change in unrealized gain (loss)	$	1,620		$	(3,846	)	$	(615	)	$	5,449	$	2,608



	Senior Secured Loans			Equipment Financing			Preferred Equity			Common Equity/ Equity Interests/ Warrants		Total
Fair value, December 31, 2024	$	1,117,118		$	181,016		$	31,682		$	626,470	$	1,956,286
Total gains or losses included in earnings:
Net realized gain (loss)		395			(18	)		—			—		377
Net change in unrealized gain (loss)		(1,523	)		(10,339	)		(728	)		13,797		1,207
Purchase of investment securities*		519,136			7,550			1,556			5,497		533,739
Proceeds from dispositions of investment securities		(366,222	)		(39,221	)		—			—		(405,443	)
Transfers in/out of Level 3		—			—			—			—		—
Fair value, June 30, 2025	$	1,268,904		$	138,988		$	32,510		$	645,764	$	2,086,166
Unrealized gains (losses) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net change in unrealized gain (loss)	$	1,306		$	(10,339	)	$	(728	)	$	13,797	$	4,036

* Includes PIK capitalization and accretion of discount.

While the Company has not made an election to apply the fair value option of accounting to any of its current debt obligations, if the Company’s debt obligations were carried at fair value at June 30, 2025, the fair value of the Credit Facility, SPV Credit Facility, 2026 Unsecured Notes, 2027 Unsecured Notes, 2027 Series F Unsecured Notes, 2027 Series G Unsecured Notes and the 2028 Unsecured Notes (each as defined below) would be $657,210, $165,050, $73,313, $47,625, $129,938, $49,368 and $50,250, respectively. All debt obligations would be considered Level 3 liabilities and would be valued with market yield as the unobservable input.

The following table provides a summary of the changes in fair value of Level 3 assets for the year ended December 31, 2024, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets still held at December 31, 2024:

Fair Value Measurements Using Level 3 Inputs


	Senior Secured Loans			Equipment Financing			Preferred Equity		Common Equity/ Equity Interests/ Warrants			Total
Fair value, December 31, 2023	$	1,277,539		$	256,819		$	3,801	$	572,427		$	2,110,586
Total gains or losses included in earnings:
Net realized loss		(1,400	)		—			—		(668	)		(2,068	)
Net change in unrealized gain (loss)		(3,598	)		(12,646	)		49		17,726			1,531
Purchase of investment securities*		411,598			2,852			27,832		37,434			479,716
Proceeds from dispositions of investment securities		(567,021	)		(66,009	)		—		(449	)		(633,479	)
Transfers in/out of Level 3		—			—			—		—			—
Fair value, December 31, 2024	$	1,117,118		$	181,016		$	31,682	$	626,470		$	1,956,286
Unrealized gains (losses) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net change in unrealized gain (loss)	$	1,533		$	(12,646	)	$	49	$	16,751		$	5,687

* Includes PIK capitalization and accretion of discount

While the Company has not made an election to apply the fair value option of accounting to any of its current debt obligations,
if the Company’s debt obligations were carried at fair value at December 31, 2024, the fair value of the Credit Facility, SPV Credit
Facility, 2025 Unsecured Notes, 2026 Unsecured Notes, 2027 Unsecured Notes, 2027 Series F Unsecured Notes and 2027 Series G
Unsecured Notes (each as defined below) would be $482,043, $165,050, $84,575, $72,750, $46,875, $128,250 and $49,368, respectively.

Quantitative Information about Level 3 Fair Value Measurements

The Company typically determines the fair value of its performing debt investments utilizing a yield analysis. In a yield analysis, a price is ascribed for each investment based upon an assessment of current and expected market yields for similar investments and risk profiles. Additional consideration is given to current contractual interest rates, relative maturities and other key terms and risks associated with an investment. Among other factors, a significant determinant of risk is the amount of leverage used by the portfolio company relative to the total enterprise value of the company, and the rights and remedies of our investment within each portfolio company.

Significant unobservable quantitative inputs typically used in the fair value measurement of the Company’s Level 3 assets and liabilities primarily reflect current market yields, including indices, and readily available quotes from brokers, dealers, and pricing services as indicated by comparable assets and liabilities, as well as enterprise values, returns on equity and earnings before income taxes, depreciation and amortization (“EBITDA”) multiples of similar companies, and comparable market transactions for equity securities.

Quantitative information about the Company’s Level 3 asset and liability fair value measurements as of June 30, 2025 is summarized in the table below:

          
         Asset or
Liability

         Fair Value at
June 30, 2025

         Principal Valuation
Technique/Methodology

         Unobservable
Input

         Range (Weighted
Average)

Senior Secured Loans

Asset

1,263,102

Income Approach

Market Yield

9.4% – 21.6% (11.8%)

Asset

5,802

Recovery Analysis

Recoverable Amount

N/A

Equipment Financing

Asset

41,988

Income Approach

Market Yield

8.5% – 9.4% (9.3%)

97,000

Market Multiple(1)

Comparable Multiple

1.1x – 1.4x (1.3x)

Preferred Equity

Asset

30,510

Income Approach

Market Yield

9.0% – 9.0% (9.0%)

2,000

Recovery Analysis

Recoverable Amount

N/A

Common Equity/Equity
   Interests/Warrants

Asset

190,644

Market Multiple(2)

Comparable Multiple

5.5x – 12.3x (7.6x)

455,120

Market Approach

Return on Equity

8.9% – 23.5% (11.8%)

(1)

Includes $97,000 of investments valued using an implied multiple.

(2)

Includes $224 of investments valued using a Black-Scholes model, $639 of investments valued using a transaction price, $2,040 of investments valued using a recovery analysis and $187,741 of investments valued using an EBITDA multiple.

Quantitative information about the Company’s Level 3 asset and liability fair value measurements as of December 31, 2024 is summarized in the table below:

          
         Asset or
Liability

         Fair Value at December 31, 2024

         Principal Valuation
Technique/Methodology

         Unobservable Input

         Range (Weighted Average)

Senior Secured Loans

Asset

1,095,842

Income Approach

Market Yield

8.5% – 18.5% (11.8%)

Asset

21,276

Recovery Analysis

Recoverable Amount

N/A

Equipment Financing

Asset

73,416

Income Approach

Market Yield

8.5% – 9.0% (9.0%)

107,600

Market Multiple(1)

Comparable Multiple

1.2x – 1.5x (1.5x)

Preferred Equity

Asset

29,182

Income Approach

Market Yield

9.0% – 9.0% (9.0%)

2,500

Recovery Analysis

Recoverable Amount

N/A

Common Equity/Equity
   Interests/Warrants

Asset

175,000

Market Multiple(2)

Comparable Multiple

5.5x – 12.3x (9.1x)

451,470

Market Approach

Return on Equity

7.8% – 21.7% (11.3%)

(1)

Includes $107,600 of investments valued using an implied multiple.

(2)

Includes $293 of investments valued using a Black-Scholes model, $639 of investments valued using a transaction price, $2,040 of investments valued using a recovery analysis and $172,028 of investments valued using an EBITDA multiple.

Significant increases or decreases in any of the above unobservable inputs in isolation, including unobservable inputs used in deriving bid-ask spreads, if applicable, could result in significantly lower or higher fair value measurements for such assets and liabilities. Generally, an increase in market yields or decrease in EBITDA multiples may result in a decrease in the fair value of certain of the Company’s investments. Weighted averages in the above tables are calculated based on fair value of the underlying assets.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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+ Details