v3.25.2
Fair Value of Investments
 6 Months Ended
Jun. 30, 2025
Fair Value of Investments  
Fair Value of Investments

Note 9. Fair Value of Investments

Under ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between a willing buyer and a willing seller at the measurement date. For the Company’s portfolio securities, fair value is generally the amount that the Company might reasonably expect to receive upon the current sale of the security. The fair value measurement assumes that the sale occurs in the principal market for the security, or in the absence of a principal market, in the most advantageous market for the security. If no market for the security exists or if the Company does not have access to the principal market, the security should be valued based on the sale occurring in a hypothetical market.

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 – include quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 Valuations – include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 Valuations – include inputs that are unobservable and significant to the fair value measurement.

A financial instrument is categorized within the ASC Topic 820 valuation hierarchy based upon the lowest level of input to the valuation process that is significant to the fair value measurement. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized as Level 3 investments within the tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). Transfers between levels, if any, will be recognized at the beginning of the period in which the transfer occurred.

The Company’s investment portfolio includes certain debt and equity instruments of privately held companies for which quoted prices or other inputs falling within the categories of Level 1 and Level 2 are generally not available. In such cases, the Adviser determines the fair value of the Company’s investments in good faith primarily using Level 3 inputs. In certain cases, quoted prices or other observable inputs exist, and if so, the Adviser assesses the appropriateness of the use of these third-party quotes in determining fair value based on (i) the Adviser’s understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer and (ii) the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company.

The Company applies the practical expedient provided by the ASC Topic 820 relating to investments in certain entities that calculate NAV per share (or its equivalent). ASC Topic 820 permits an entity holding investments in certain entities that either are investment companies, or have attributes similar to an investment company, and calculate NAV per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment. Investments which are valued using NAV per share as a practical expedient are not categorized within the fair value hierarchy as per ASC Topic 820.

There is no single standard for determining fair value in good faith, as fair value depends upon the specific circumstances of each individual investment. The recorded fair values of the Company’s Level 3 investments may differ significantly from fair values that would have been used had an active market for the securities existed. 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 valuations currently assigned.

The following table presents the fair value hierarchy as of June 30, 2025.

 

 

 

 

 

 

 

 

June 30, 2025

 

 

 

 

 

($ in thousands)

 

 

Level 1

 

 

 

Level 2

 

 

 

Level 3

 

 

 

Total

 

First Lien Loans

 

$

 

—

 

 

$

 

51,779

 

 

$

 

2,283,935

 

 

$

 

2,335,714

 

Second Lien Loans

 

 

 

—

 

 

 

 

67,720

 

 

 

 

82,079

 

 

 

 

149,799

 

Unsecured Notes

 

 

 

—

 

 

 

 

8,502

 

 

 

 

103,973

 

 

 

 

112,475

 

Preferred Equity

 

 

 

—

 

 

 

 

—

 

 

 

 

38,583

 

 

 

 

38,583

 

Common Equity & Warrants

 

 

 

—

 

 

 

 

—

 

 

 

 

11,931

 

 

 

 

11,931

 

Subtotal

 

$

 

—

 

 

$

 

128,001

 

 

$

 

2,520,501

 

 

$

 

2,648,502

 

Investments Measured at NAV

 

$

 

—

 

 

$

 

—

 

 

$

 

—

 

 

$

 

5,164

 

Total

 

$

 

—

 

 

$

 

128,001

 

 

$

 

2,520,501

 

 

$

 

2,653,666

 

 

 

The following table presents the fair value hierarchy as of December 31, 2024.

 

 

 

December 31, 2024

 

($ in thousands)

 

 

Level 1

 

 

 

Level 2

 

 

 

Level 3

 

 

 

Total

 

First Lien Loans

 

$

 

—

 

 

$

 

33,634

 

 

$

 

2,175,758

 

 

$

 

2,209,392

 

Second Lien Loans

 

 

 

—

 

 

 

 

71,766

 

 

 

 

79,596

 

 

 

 

151,362

 

Unsecured Notes

 

 

 

—

 

 

 

 

3,435

 

 

 

 

87,940

 

 

 

 

91,375

 

Preferred Equity

 

 

 

—

 

 

 

 

—

 

 

 

 

36,226

 

 

 

 

36,226

 

Common Equity & Warrants

 

 

 

—

 

 

 

 

—

 

 

 

 

11,696

 

 

 

 

11,696

 

Subtotal

 

$

 

—

 

 

$

 

108,835

 

 

$

 

2,391,216

 

 

$

 

2,500,051

 

Investments Measured at NAV

 

$

 

—

 

 

$

 

—

 

 

$

 

—

 

 

$

 

4,191

 

Total

 

$

 

—

 

 

$

 

108,835

 

 

$

 

2,391,216

 

 

$

 

2,504,242

 

 

The following tables present changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three and six months ended June 30, 2025 and 2024:

 

 

Three Months Ended June 30, 2025

 

($ in thousands)

First Lien Loans

 

 

Second Lien Loans

 

 

Unsecured Note

 

 

Preferred Equity

 

 

Common Equity & Warrants

 

 

Total Investments

 

Fair value, beginning of period

$

2,263,619

 

 

$

80,945

 

 

$

101,708

 

 

$

37,257

 

 

$

11,800

 

 

$

2,495,329

 

Purchases of investments, net

 

173,248

 

 

 

281

 

 

 

2,048

 

 

 

1,251

 

 

 

-

 

 

 

176,828

 

Proceeds from sales and principal payments, net

 

(157,034

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(157,034

)

Realized gain (loss) on investments

 

1,923

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,923

 

Net change in unrealized appreciation/(depreciation)

 

371

 

 

 

829

 

 

 

162

 

 

 

56

 

 

 

131

 

 

 

1,549

 

Net accretion of discount and amortization of investments

 

1,808

 

 

 

24

 

 

 

55

 

 

 

19

 

 

 

-

 

 

 

1,906

 

Transfers in (out) of Level 3

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Ending balance

$

2,283,935

 

 

$

82,079

 

 

$

103,973

 

 

$

38,583

 

 

$

11,931

 

 

$

2,520,501

 

 

 

Three Months Ended June 30, 2024

 

($ in thousands)

First Lien Loans

 

 

Second Lien Loans

 

 

Unsecured Note

 

 

Preferred Equity

 

 

Common Equity & Warrants

 

 

Total Investments

 

Fair value, beginning of period

$

1,787,311

 

 

$

201,896

 

 

$

49,347

 

 

$

28,951

 

 

$

9,611

 

 

$

2,077,116

 

Purchases of investments, net

 

296,975

 

 

 

29,973

 

 

 

9,741

 

 

 

4,639

 

 

 

—

 

 

 

341,328

 

Proceeds from sales and principal payments, net

 

(125,846

)

 

 

(34,918

)

 

 

(19,691

)

 

 

—

 

 

 

—

 

 

 

(180,455

)

Realized gain (loss) on investments

 

2,290

 

 

 

(835

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,455

 

Net change in unrealized appreciation/(depreciation)

 

(2,120

)

 

 

2,281

 

 

 

(792

)

 

 

74

 

 

 

1,064

 

 

 

507

 

Net accretion of discount and amortization of investments

 

2,669

 

 

 

60

 

 

 

52

 

 

 

21

 

 

 

—

 

 

 

2,802

 

Transfers in (out) of Level 3

 

—

 

 

 

(11,863

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(11,863

)

Ending balance

$

1,961,279

 

 

$

186,594

 

 

$

38,657

 

 

$

33,685

 

 

$

10,675

 

 

$

2,230,890

 

 

 

 

Six Months Ended June 30, 2025

 

 

First Lien Loans

 

 

Second Lien Loans

 

 

Unsecured Note

 

 

Preferred Equity

 

 

Common Equity & Warrants

 

 

Total Investments

 

Fair value, beginning of period

$

2,175,756

 

 

$

79,596

 

 

$

87,941

 

 

$

36,227

 

 

$

11,696

 

 

$

2,391,216

 

Purchases of investments, net

 

339,411

 

 

 

1,960

 

 

 

15,744

 

 

 

2,238

 

 

 

13

 

 

 

359,366

 

Proceeds from sales and principal payments, net

 

(239,793

)

 

 

(4

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(239,797

)

Realized gain (loss) on investments

 

2,547

 

 

 

-

 

 

 

2

 

 

 

(1

)

 

 

-

 

 

 

2,548

 

Net change in unrealized appreciation/(depreciation)

 

871

 

 

 

466

 

 

 

170

 

 

 

75

 

 

 

222

 

 

 

1,804

 

Net accretion of discount and amortization of investments

 

5,143

 

 

 

61

 

 

 

116

 

 

 

44

 

 

 

-

 

 

 

5,364

 

Transfers in (out) of Level 3

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Ending balance

$

2,283,935

 

 

$

82,079

 

 

$

103,973

 

 

$

38,583

 

 

$

11,931

 

 

$

2,520,501

 

 

 

Six Months Ended June 30, 2024

 

 

First Lien Loans

 

 

Second Lien Loans

 

 

Unsecured Note

 

 

Preferred Equity

 

 

Common Equity & Warrants

 

 

Total Investments

 

Fair value, beginning of period

$

1,723,677

 

 

$

151,404

 

 

$

48,333

 

 

$

27,540

 

 

$

10,593

 

 

$

1,961,547

 

Purchases of investments, net

 

484,606

 

 

 

98,330

 

 

 

10,186

 

 

 

5,504

 

 

 

-

 

 

 

598,626

 

Proceeds from sales and principal payments, net

 

(258,139

)

 

 

(53,801

)

 

 

(19,691

)

 

 

-

 

 

 

-

 

 

 

(331,631

)

Realized gain (loss) on investments

 

4,260

 

 

 

(812

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,448

 

Net change in unrealized appreciation/(depreciation)

 

3,135

 

 

 

3,173

 

 

 

(268

)

 

 

601

 

 

 

82

 

 

 

6,723

 

Net accretion of discount and amortization of investments

 

3,740

 

 

 

162

 

 

 

97

 

 

 

40

 

 

 

-

 

 

 

4,039

 

Transfers in (out) of Level 3

 

-

 

 

 

(11,862

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(11,862

)

Ending balance

$

1,961,279

 

 

$

186,594

 

 

$

38,657

 

 

$

33,685

 

 

$

10,675

 

 

$

2,230,890

 

During the three and six months ended June 30, 2025, there were no transfers into Level 3 from Level 2 because of a decrease in observable inputs and no transfers into Level 2 from Level 3 because of an increase in observable inputs. During the three and six months ended June 30, 2024, there were no transfers into Level 3 from Level 2 and one transfer into Level 2 from Level 3 because of an increase in observable inputs.

The following table presents the net change in unrealized appreciation (depreciation) for the Level 3 investments held by the Company at the three and six months ended June 30, 2025 and 2024.

 

($ in thousands)
Net Change in Unrealized Appreciation (Depreciation)

Three Months Ended June 30, 2025

 

 

Three Months Ended June 30, 2024

 

 

Six Months Ended June 30, 2025

 

 

Six Months Ended June 30, 2024

 

First Lien Loans

$

371

 

 

$

(2,120

)

 

$

871

 

 

$

3,135

 

Second Lien Loans

 

829

 

 

 

2,281

 

 

 

466

 

 

 

3,173

 

Unsecured Notes

 

162

 

 

 

(792

)

 

 

170

 

 

 

(268

)

Preferred Equity

 

56

 

 

 

74

 

 

 

75

 

 

 

601

 

Common Equity & Warrants

 

131

 

 

 

1,064

 

 

 

222

 

 

 

82

 

Total

$

1,549

 

 

$

507

 

 

$

1,804

 

 

$

6,723

 

 

 

The following table presents quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of June 30, 2025. The table is not intended to be all-inclusive but instead captures the significant unobservable inputs relevant to the Adviser’s determination of fair value.

 

($ in thousands)

 

June 30, 2025

Investments

 

Fair Value

 

 

Valuation Technique

 

Unobservable Input

 

Range (weighted average)

First Lien Loans

 

$

1,933,105

 

 

Discounted Cash Flow

 

Discount Rate

 

8.3% - 14.1% (9.6%)

 

First Lien Loans

 

 

329,725

 

 

Market Transaction

 

Market Transaction

 

98.5% - 100.0% (99.2%)

 

First Lien Loans

 

 

21,105

 

 

Recovery Analysis

 

Recovery Rate

 

5.3x-5.3x (5.3x)

 

Second Lien Loan

 

 

82,079

 

 

Discounted Cash Flow

 

Discount Rate

 

8.6% - 19.8% (12.6%)

 

Unsecured Notes

 

 

103,369

 

 

Discounted Cash Flow

 

Discount Rate

 

7.0% - 15.5% (11.4%)

 

Unsecured Notes

 

 

604

 

 

Market Transaction

 

Market Transaction

 

$20,939.7-$20,939.7($20,939.7)

 

Preferred Equity

 

 

35,441

 

 

Discounted Cash Flow

 

Discount Rate

 

13.1% - 15.0% (14.3%)

 

Preferred Equity

 

 

3,142

 

 

Enterprise Value Analysis

 

EBITDA Multiple

 

19.5x

 

Common Equity & Warrants

 

 

11,931

 

 

Enterprise Value Analysis

 

EBITDA Multiple

 

7.0x – 22.5x (17.5x)

 

Total

 

$

2,520,501

 

 

 

 

 

 

 

 

 

The following table presents quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of December 31, 2024. The table is not intended to be all-inclusive but instead captures the significant unobservable inputs relevant to the Adviser’s determination of fair value.

 

($ in thousands)

 

December 31, 2024

Investments

 

Fair Value

 

 

Valuation Technique

 

Unobservable Input

 

Range (weighted average)

First Lien Loans

 

$

1,973,337

 

 

Discounted Cash Flow

 

Discount Rate

 

8.4% - 17.5% (10.1%)

 

First Lien Loans

 

 

181,212

 

 

Market Transaction

 

Market Transaction

 

98.5% - 99.5% (99.0%)

 

First Lien Loans

 

 

21,207

 

 

Recovery Analysis

 

Recovery Rate

 

6.5x

 

Second Lien Loan

 

 

64,671

 

 

Discounted Cash Flow

 

Discount Rate

 

9.0% - 21.2% (14.1%)

 

Second Lien Loan

 

 

14,925

 

 

Market Transaction

 

Market Transaction

 

99.5%

 

Unsecured Notes

 

 

53,726

 

 

Discounted Cash Flow

 

Discount Rate

 

8.0% - 16.1% (12.7%)

 

Unsecured Notes

 

 

34,215

 

 

Market Transaction

 

Market Transaction

 

98.0% - 100.0% (98.9%)

 

Preferred Equity

 

 

33,086

 

 

Discounted Cash Flow

 

Discount Rate

 

13.2% - 15.0% (14.4%)

 

Preferred Equity

 

 

3,140

 

 

Enterprise Value Analysis

 

EBITDA Multiple

 

20.5x

 

Common Equity & Warrants

 

 

11,696

 

 

Enterprise Value Analysis

 

EBITDA Multiple

 

6.5x – 25.0x (18.3x)

 

Total

 

$

2,391,216

 

 

 

 

 

 

 

 

 

Increases or decreases in unobservable inputs in isolation would result in a higher or lower fair value measurement for such assets. Generally, an increase in market yields may result in a decrease in the fair value of certain of the Company’s investments.