Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2025

Summary of Company's Assets Measured at Fair Value by Investment Type on a Recurring Basis

The Company’s assets measured at fair value by investment type on a recurring basis as of June 30, 2025 were as follows (in thousands):


	Fair Value Measurements at Reporting Date Using
	Quoted Prices		Significant
	in Active		Other			Significant
	Markets for		Observable			Unobservable
	Identical Assets		Inputs			Inputs		Measured at
Assets	(Level 1)		(Level 2)			(Level 3)		Net Asset Value(1)		Total
Secured Loans	$	—	$	—		$	1,491,803	$	—	$	1,491,803
Equipment Financings		—		—			342,620		—		342,620
Warrants		—		—			63,660		—		63,660
Equity		—		—			64,048		16,199		80,247
Total Investments at fair value		—		—			1,962,131		16,199		1,978,330
Cash and cash equivalents		26,251		—			—		—		26,251
Derivative Instruments		—		(317	)		—		—		(317	)
Total Investments including cash and cash equivalents and derivative instruments	$	26,251	$	(317	)	$	1,962,131	$	16,199	$	2,004,264

(1)

In accordance with ASC 820, the Company's equity investments in Senior Credit Corp 2022 LLC, EPT 16 LLC and AZ-VC Fund I, LLC are measured using the net asset value per share (or its equivalent) as a practical expedient for fair value, and thus have not been classified in the fair value hierarchy.

The Company’s assets measured at fair value by investment type on a recurring basis as of December 31, 2024 were as follows (in thousands):


	Fair Value Measurements at Reporting Date Using
	Quoted Prices		Significant
	in Active		Other		Significant
	Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs		Measured at
Assets	(Level 1)		(Level 2)		(Level 3)		Net Asset Value(1)		Total
Secured Loans	$	—	$	—	$	1,286,668	$	—	$	1,286,668
Equipment Financings		—		—		315,463		—		315,463
Warrants		—		—		51,454		—		51,454
Equity		—		—		56,584		15,401		71,985
Total Investments at fair value		—		—		1,710,169		15,401		1,725,570
Cash and cash equivalents		9,627		—		—		—		9,627
Total Investments including cash and cash equivalents	$	9,627	$	—	$	1,710,169	$	15,401	$	1,735,197

(1)

In accordance with ASC 820, the Company's equity investments in Senior Credit Corp 2022 LLC and EPT 16 LLC are measured using the net asset value per share (or its equivalent) as a practical expedient for fair value, and thus have not been classified in the fair value hierarchy.

Summary of Significant Unobservable Inputs Used to Measure The Fair Value Of The Level 3 Portfolio Investments

The following table provides a summary of the significant unobservable inputs used to measure the fair value of the Level 3 portfolio investments as of June 30, 2025.


	Fair Value as of
	June 30, 2025		Valuation Techniques/	Unobservable		Weighted
Investment Type	(in thousands)		Methodologies	Inputs (1)	Range	Average (2)

Debt investments	$	1,370,192	Discounted Cash Flows	Hypothetical Market Yield	3.6% - 38.1%		15.8	%

		434,409	Cost approximates fair value (6)	n/a	n/a	n/a

		16,937	Scenario Analysis	Probability Weighting of Alternative Outcomes	5.0% - 90.0%	n/a

Debt investment in the JV		12,885	Enterprise Value (7)	n/a	n/a	n/a

Equity investments		64,048	Market Approach	Revenue Multiple (3)	0.3x - 29.6x		2.8	x
				Volatility (5)	39.5% - 102.8%		54.2	%
				Risk-Free Interest Rate	3.7% - 4.1%		3.8	%
				Estimated Time to Exit (in years)	0.8 - 3.8		2.3

Warrants		63,660	Market Approach	Revenue Multiple (3)	0.2x - 29.6x		3.5	x
				Company Specific Adjustment (4)	n/a	n/a
				Volatility (5)	37.7% - 132.5%		59.4	%
				Risk-Free Interest Rate	3.7% - 4.1%		3.8	%
				Estimated Time to Exit (in years)	0.8 - 4.5		2.4

Total Level 3 Investments	$	1,962,131

(1)

The significant unobservable inputs used in the fair value measurement of the Company’s debt securities are hypothetical market yields and premiums/(discounts). The hypothetical market yield is defined as the exit price of an investment in a hypothetical market to hypothetical market participants where buyers and sellers are willing participants. The significant unobservable inputs used in the fair value measurement of the Company’s equity and warrant securities are revenue multiples and portfolio company specific adjustment factors. Additional inputs used in the option pricing model (“OPM”) include industry volatility, risk free interest rate and estimated time to exit. Significant increases (decreases) in the inputs in isolation would result in a significantly higher (lower) fair value measurement, depending on the materiality of the investment. For some investments, additional consideration may be given to data from the last round of financing, merger or acquisition events near the measurement date.

(2)

Weighted averages are calculated based on the fair value of each investment.

(3)

Represents amounts used when the Company has determined that market participants would use such multiples when pricing the investments.

(4)

Represents amounts used when the Company has determined market participants would take into account these discounts when pricing the investments.

(5)

Represents the range of industry volatility used by market participants when pricing the investment.

(6)

Includes debt investments originated within the past three months, for which cost approximates fair value, unless events have occurred during the period that would indicate a different valuation is warranted.

(7)

The Company determined the value of its subordinated note of Senior Credit Corp 2022 LLC based on the total assets less the total liabilities senior to the subordinated notes held at Senior Credit Corp 2022 LLC in an amount not exceeding par under the Enterprise Value technique.

The following table provides a summary of the significant unobservable inputs used to fair value the Level 3 portfolio investments as of December 31, 2024.


	Fair Value as of
	December 31, 2024			Valuation Techniques/	Unobservable		Weighted
Investment Type	(in thousands)			Methodologies	Inputs (1)	Range	Average (2)

Debt investments	$		1,206,947	Discounted Cash Flows	Hypothetical Market Yield	9.6% - 56.3%		16.3	%

			369,600	Cost approximates fair value (6)	n/a	n/a	n/a

			12,699	Scenario Analysis	Probability Weighting of Alternative Outcomes	1.0% - 100.0%	n/a

Debt investment in the JV			12,885	Enterprise Value (7)	n/a	n/a	n/a

Equity investments			56,584	Market Approach	Revenue Multiple (3)	0.5x - 34.9x		3.4	x
					Volatility (5)	40.1% - 118.8%		55.4	%
					Risk-Free Interest Rate	4.2% - 4.3%		4.3	%
					Estimated Time to Exit (in years)	1.0 - 4.5		2.8

Warrants			51,454	Market Approach	Revenue Multiple (3)	0.2x - 34.9x		4.1	x
					Company Specific Adjustment (4)	n/a	n/a
					Volatility (5)	35.4% - 127.9%		61.0	%
					Risk-Free Interest Rate	4.2% - 4.4%		4.3	%
					Estimated Time to Exit (in years)	0.7 - 5.0		2.4

Total Level 3 Investments		$	1,710,169

(1)

The significant unobservable inputs used in the fair value measurement of the Company’s debt securities are hypothetical market yields and premiums/(discounts). The hypothetical market yield is defined as the exit price of an investment in a hypothetical market to hypothetical market participants where buyers and sellers are willing participants. The significant unobservable inputs used in the fair value measurement of the Company’s equity and warrant securities are revenue multiples and portfolio company specific adjustment factors. Additional inputs used in the OPM include industry volatility, risk free interest rate and estimated time to exit. Significant increases (decreases) in the inputs in isolation would result in a significantly higher (lower) fair value measurement, depending on the materiality of the investment. For some investments, additional consideration may be given to data from the last round of financing, merger or acquisition events near the measurement date.

(2)

Weighted averages are calculated based on the fair value of each investment.

(3)

Represents amounts used when the Company has determined that market participants would use such multiples when pricing the investments.

(4)

Represents amounts used when the Company has determined market participants would take into account these discounts when pricing the investments.

(5)

Represents the range of industry volatility used by market participants when pricing the investment.

(6)

(7)

Under the enterprise value technique, the significant unobservable inputs used in the fair value measurement of the Company's investment in debt or equity securities are: (i) EBITDA, (ii) revenue or (iii) asset multiple; as applicable. Increases or decreases in the valuation multiples in isolation may result in a higher or lower fair value measurement, respectively.

Summary of Changes In Fair Value of Company's Level 3 Debt

The following table provides a summary of changes in the fair value of the Company’s Level 3 debt, including loans and equipment financings (collectively “Debt”), equity and warrant portfolio investments for the six months ended June 30, 2025 (in thousands):


	Type of Investment
	Debt			Equity			Warrants			Total
Fair Value as of December 31, 2024	$	1,602,131		$	56,584		$	51,454		$	1,710,169
Purchases, net of deferred fees		569,505			1,468			8,278			579,251
Non-cash conversions (1)		—			69			(69	)		—
Proceeds from sales and paydowns		(349,517	)		(666	)		(1,915	)		(352,098	)
Accretion of OID, EOT, and PIK payments		23,406			—			—			23,406
Net realized gain/(loss)		(9,292	)		(3	)		(908	)		(10,203	)
Net change in unrealized appreciation/(depreciation)		(1,810	)		6,596			6,820			11,606
Fair Value as of June 30, 2025	$	1,834,423		$	64,048		$	63,660		$	1,962,131

Net change in unrealized appreciation/(depreciation) on Level 3 investments still held as of June 30, 2025	$	(12,849	)	$	6,596		$	5,517		$	(736	)

(1)

The non-cash conversion includes an exercise of a warrant to an equity position.

(2)

During the six months ended June 30, 2025, there were no transfers into or out of Level 3.

The following table provides a summary of changes in the fair value of the Company’s Level 3 Debt, equity, warrant and escrow receivables portfolio investments for the year ended December 31, 2024 (in thousands):


	Type of Investment
	Debt			Equity			Warrants			Escrow Receivables			Total
Fair Value as of December 31, 2023	$	1,222,077		$	15,150		$	31,201		$	2,441		$	1,270,869
Purchases, net of deferred fees		1,180,013			6,709			20,774			—			1,207,496
Non-cash conversion (1)		(25,674	)		31,802			(6,128	)		—			—
Transfers into/(out of) of Level 3 (2)		(28,315	)		—			—			—			(28,315	)
Proceeds from sales and paydowns		(759,113	)		(11,477	)		8,006			(2,441	)		(765,025	)
Accretion of OID and EOT payments		39,574			—			—			—			39,574
Net realized gain/(loss)		(21,294	)		7,826			(9,962	)		—			(23,430	)
Net change in unrealized appreciation/(depreciation)		(5,137	)		6,574			7,563			—			9,000
Fair Value as of December 31, 2024	$	1,602,131		$	56,584		$	51,454		$	—		$	1,710,169

Net change in unrealized appreciation/(depreciation) on Level 3 investments still held as of December 31, 2024	$	(24,105	)	$	4,631		$	1,996		$	—		$	(17,478	)

(1)

The non-cash conversion includes the exercise of debt and warrant positions to equity positions during the period.

(2)

Transfers out of Level 3 during the year ended December 31, 2024, were related to the conversion of debt to equity in one publicly-traded portfolio company. During the year ended December 31, 2024, there were no transfers into Level 3.

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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