Transactions with Related Parties |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
| Transactions with Related Parties | Transactions with Related Parties MC Advisors, subject to the overall supervision of the Board, serves as the Fund's investment adviser pursuant to the Advisory Agreement, which the Fund entered into with MC Advisors on the BDC Election Date. Prior to the BDC Election Date, MC Management served as our investment adviser pursuant to the MC Management Advisory Agreement. Each of MC Management and MC Advisors is registered as an investment adviser under the Advisers Act. Prior to the BDC Election Date, the Fund was required to pay MC Management a fee for its services under the MC Management Advisory Agreement consisting of two components: a management fee and an incentive fee. The management fee and incentive fee calculations and structure under the MC Management Advisory Agreement were substantially identical to the management fee and incentive fee calculations and structure under the Advisory Agreement, as described below. The Fund pays MC Advisors a fee for its services under the Advisory Agreement consisting of two components: a management fee and an incentive fee. The cost of both the management fee and the incentive fee are ultimately borne by the shareholders. Management Fee: The management fee is payable monthly in arrears at an annual rate of 1.25% of the Fund's average total assets, which includes assets financed using leverage; provided, however, that no management fee will be charged on the value of the Fund's total assets that is below an asset coverage ratio of 200% calculated in accordance with Sections 18 and 61 of the 1940 Act. This has the effect of not charging management fees on the value of the portion of our total assets financed with borrowed funds or other forms of leverage in excess of regulatory leverage of 1:1 debt-to-equity. For purposes of calculating the management fee under the Advisory Agreement, the Fund's average total assets are calculated based on the Fund's total asset balances as of the beginning and end of the respective calendar month. During the period starting on the date of entry into the Advisory Agreement through December 31, 2026 (the "Advisory Fee Waiver Period"), MC Advisors has voluntarily agreed to waive a portion of the management fee such that, during the Advisory Fee Waiver Period, the management fee is payable monthly in arrears at an annual rate of 0.95% of the Fund’s average total assets, which includes assets financed using leverage; provided, however, that no management fee will be charged on the value of our total assets that is below an asset coverage ratio of 200% calculated in accordance with Sections 18 and 61 of the 1940 Act. Amounts waived by the Adviser during the Advisory Fee Waiver Period are not subject to recoupment by the Adviser. MC Management also voluntarily agreed to the same management fee waiver for the period prior to the BDC Election Date. Base management fees for the three months ended March 31, 2026 were $638, of which MC Advisors elected to voluntarily waive $153, resulting in net fees of $485. Incentive Fee: The incentive fee under the Advisory Agreement consists of two components that are independent of each other, with the result that one component may be payable even if the other is not. A portion of the incentive fee is based on a percentage of the Fund's income (part one incentive fees) and a portion is based on a percentage of the Fund's capital gains (part two incentive fees), each as described below. Incentive Fee Based on Income: The portion based on the Fund's income is based on Pre-Incentive Fee Net Investment Income Returns for the calendar quarter. “Pre-Incentive Fee Net Investment Income Returns” means, as the context requires, either the dollar value of, or percentage rate of return on the value of the Fund's net assets in accordance with GAAP at the end of the immediately preceding quarter from, dividends, cash interest or other distributions or other cash income and any third-party fees received from portfolio companies (such as upfront fees, commitment fees, origination fee, amendment fees, ticking fees and break-up fees, as well as prepayments premiums, but excluding fees for providing managerial assistance and fees earned by MC Advisors or an affiliate) accrued during the quarter, minus operating expenses for the quarter (including any management fee, taxes, any expenses payable under the Advisory Agreement (and, to the extent applicable, the MC Management Advisory Agreement) and the Administration Agreement, any expense of securitizations, and interest expense or other financing fees and any dividends paid on preferred shares, but excluding incentive fees and shareholder servicing and/or distribution fees). Pre-Incentive Fee Net Investment Income Returns includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero-coupon securities), accrued income that the Fund has not yet received in cash. Pre-Incentive Fee Net Investment Income Returns do not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. The impact of expense support payments and recoupments are also excluded from Pre-Incentive Fee Net Investment Income Returns. Pre-Incentive Fee Net Investment Income Returns, expressed as a rate of return on the value of the Fund's net assets at the end of the immediately preceding quarter, is compared to a “hurdle rate” of return of 1.50% per quarter (6.0% annualized). Under the Advisory Agreement, the Fund is required to pay MC Advisors an incentive fee quarterly in arrears with respect to Pre-Incentive Fee Net Investment Income Returns (part one incentive fees) in each calendar quarter as follows: •no incentive fee based on Pre-Incentive Fee Net Investment Income Returns in any calendar quarter in which the Fund’s Pre-Incentive Fee Net Investment Income Returns do not exceed the hurdle rate of 1.50% (6.0% annualized); •100% of the dollar amount of the Fund's Pre-Incentive Fee Net Investment Income Returns with respect to that portion of such Pre-Incentive Fee Net Investment Income Returns, if any, that exceeds the hurdle rate but is less than or equal to a rate of return of 1.7143% (7.04% annualized). The Fund refers to this portion of the Fund Pre-Incentive Fee Net Investment Income Returns (which exceeds the hurdle rate but is less than or equal to 1.7143%) as the “catch-up.” The “catch-up” is meant to provide MC Advisors with approximately 12.5% of our Pre-Incentive Fee Net Investment Income Returns as if a hurdle rate did not apply if this net investment income exceeds 1.7143% in any calendar quarter; and •12.5% of the dollar amount of the Fund’s Pre-Incentive Fee Net Investment Income Returns, if any, that exceed a rate of return of 1.7143% (7.04% annualized). This reflects that once the hurdle rate is reached and the catch-up is achieved, 12.5% of all Pre-Incentive Fee Net Investment Income Returns thereafter are allocated to MC Advisors. However, during the Advisory Fee Waiver Period, MC Advisors has voluntarily agreed to waive all or any portion of the incentive fee based on Pre-Incentive Fee Net Investment Income Returns it would be entitled to receive under the Advisory Agreement. Amounts waived by the Adviser during the Advisory Fee Waiver Period are not subject to recoupment by the Adviser. MC Management also voluntarily agreed to the same fee waiver of the incentive fee based on Pre-Incentive Fee Net Investment Income Return for the period prior to the BDC Election Date. Incentive Fee Based on Capital Gains: The second component of the incentive fee under the Advisory Agreement, the capital gains incentive fee (part two incentive fees), is payable at the end of each calendar year in arrears. The amount payable equals: •12.5% of cumulative realized capital gains from inception through the end of such calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, as calculated in accordance with GAAP, less the aggregate amount of any previously paid incentive fee on capital. Each year, the fee paid for the capital gains incentive fee is net of the aggregate amount of any previously paid capital gains incentive fee for all prior periods. The Fund will accrue, but will not pay, a capital gains incentive fee with respect to unrealized appreciation because a capital gains incentive fee would be owed to MC Advisors if the Fund were to sell the relevant investment and realize a capital gain. In no event will the capital gains incentive fee payable pursuant to the Advisory Agreement be in excess of the amount permitted by the Advisers Act, including Section 205 thereof. MC Management voluntarily agreed to waive all or any portion of the capital gains incentive fee payable to it under the MC Management Advisory Agreement for the period prior to the BDC Election Date. While the Advisory Agreement neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of an American Institute for Certified Public Accountants Technical Practice Aid for investment companies, the Fund includes unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to MC Advisors if the Fund's entire portfolio was liquidated at its fair value as of the balance sheet date even though MC Advisors is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized. The composition of the Fund’s incentive fees for the three months ended March 31, 2026 was as follows:
_________________________________________ (1)Based on pre-incentive fee net investment income. (2)Based upon net realized and unrealized gains and losses, or capital gains and losses. The Fund accrues, but does not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. If, on a cumulative basis, the sum of net realized gain (loss) plus net unrealized gain (loss) decreases during a period, the Fund will reverse any excess capital gains incentive fee previously accrued such that the amount of capital gains incentive fee accrued is no more than 12.5% of the sum of net realized gain (loss) plus net unrealized gain (loss). For the three months ended March 31, 2026, the Fund accrued capital gains incentive fees of $52 based on the unrealized appreciation of portfolio investments, none of which was payable to MC Advisors under the Advisory Agreement. (3)Represents part one incentive fees voluntarily waived by MC Advisors. Reimbursement under the Administration Agreement: The Fund has entered into the Administration Agreement with MC Management, under which MC Management will furnish the Fund with office facilities and equipment and provide the Fund clerical, bookkeeping and record keeping and other administrative services at such facilities. Under the Administration Agreement, MC Management will perform, or oversee the performance of, the Fund’s required administrative services, which include, among other things, being responsible for the financial records that the Fund is required to maintain and preparing reports to the Fund’s shareholders and reports filed with the SEC. MC Management will also assist the Fund in determining and publishing the Fund’s net asset value, oversee the preparation and filing of the Fund’s tax returns, disseminate reports to the Fund’s shareholders and generally oversee the payment of the Fund’s expenses and the performance of administrative and professional services rendered to the Fund by others. Under the Administration Agreement, the Fund will reimburse MC Management, subject to the review of the Board, for its allocable portion of MC Management’s overhead and other expenses incurred by MC Management in performing its obligations under the Administration Agreement, including the allocable portion of the compensation and other expenses of certain officers, including the Fund’s allocable portion of the cost of the chief financial officer and chief compliance officer and their respective staffs. To the extent that MC Management outsources any of its functions, the Fund will pay the fees associated with such functions on a direct basis, without incremental profit to MC Management. For the three months ended March 31, 2026 the Fund incurred $596 in administrative expenses (included within professional fees, administrative service fees, and general and administrative expenses on the consolidated statement of operations) under the Administration Agreement, of which $270 was related to MC Management overhead and salary allocation and paid directly to MC Management. As of March 31, 2026 and December 31, 2025, $270 and $226, respectively, of expenses were due to MC Management under this agreement and are included in accounts payable and accrued expenses on the consolidated statement of assets and liabilities. Expense Support Agreement: The Fund has entered into an expense support and conditional reimbursement agreement (the “Expense Support Agreement”) with MC Advisors. Pursuant to the Expense Support Agreement, MC Advisors is obligated to advance the Fund’s Operating Expenses (each, a “Required Expense Payment”) to the extent that such expenses exceed 1.00% (on an annualized basis) of the Fund’s average NAV. Under the Expense Support Agreement, “Operating Expenses” means all of the Fund’s operating costs and expenses incurred (including organization and offering expenses), as determined in accordance with generally accepted accounting principles for investment companies, less base management and incentive fees owed to MC Advisors, shareholder servicing and/or distribution fees, and borrowing costs. Any Required Expense Payment must be paid by MC Advisors to the Fund in any combination of cash or other immediately available funds, and/or offset against amounts due from the Fund to MC Advisors or its affiliates. Notwithstanding the foregoing, MC Advisors also paid $1,000 of the Fund’s organization and offering expenses on the Fund’s behalf without reimbursement or recoupment under the Expense Support Agreement or otherwise, which amount shall not be included in the calculation of “Operating Expenses” under the Expense Support Agreement. MC Advisors may elect to pay certain additional expenses on the Fund’s behalf (each, a “Voluntary Expense Payment” and together with a Required Expense Payment, the “Expense Payments”), provided that no portion of the payment will be used to pay any interest expense or distribution and/or shareholder servicing fees of the Fund. Any Voluntary Expense Payment that MC Advisors has committed to pay must be paid by MC Advisors to the Fund in any combination of cash or other immediately available funds no later than forty-five days after such commitment was made in writing, and/or offset against amounts due from the Fund to MC Advisors or its affiliates. Upon and following the initial issuance of Common Shares to investors that are not affiliated with MC Advisors, following any calendar month (such calendar month, the “Applicable Calendar Month”) in which Available Operating Funds (as defined below) exceed the cumulative distributions accrued to the Fund’s shareholders based on distributions declared with respect to record dates occurring in the Applicable Calendar Month (the amount of such excess being hereinafter referred to as “Excess Operating Funds”), the Fund will pay such Excess Operating Funds, or a portion thereof, to MC Advisors until such time as all Expense Payments made by MC Advisors to the Fund within three years prior to the last business day of the Applicable Calendar Month have been reimbursed. Any payments required to be made by the Fund under the Expense Support Agreement are referred to herein as a “Reimbursement Payment.” “Available Operating Funds” means the sum of (i) the Fund’s net investment income calculated in accordance with U.S. GAAP, (ii) the Fund’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 Fund 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 quarter shall be made if: (1) the Fund’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, or (2) the Fund’s Operating Expense Ratio exceeds 1.00% (on an annualized basis). The “Operating Expense Ratio” is calculated by dividing Operating Expenses by the Fund’s monthly average net assets. The Fund’s obligation to make a Reimbursement Payment shall automatically become a liability of the Fund on the last business day of the applicable calendar month, except to the extent MC Advisors has waived its right to receive such payment for the applicable month. For the three months ended March 31, 2026, the Fund recorded $365 in expense support on the consolidated statement of operations, which is subject to reimbursement in accordance with the Expense Support Agreement Trademark License Agreement: The Fund has entered into a trademark license agreement with Monroe Capital LLC under which Monroe Capital LLC has agreed to grant the Fund a non-exclusive, royalty-free license to use the name “Monroe Capital” for specified purposes in its business. Under this agreement, the Fund has the right to use the “Monroe Capital” name at no cost, subject to certain conditions, for so long as MC Advisors or one of its affiliates remains its investment adviser. Other than with respect to this limited license, the Fund has no legal right to the “Monroe Capital” name or logo. Trustees' Fees: As of March 31, 2026 and December 31, 2025, the Fund had accounts payable to members of the Board of $25 and zero, respectively, representing accrued and unpaid fees for their services. Purchases from Affiliates: On November 12, 2025, prior to the BDC Election Date, the Fund acquired an initial portfolio of investments from affiliates managed by MC Management for a total fair value of $159,226. The portfolio consisted of investments in 28 portfolio companies and included 28 senior secured loans and eight equity securities, that MC Management believed were consistent with the Fund’s investment objective and provided the Fund with a sound foundation for its business. The members of the Fund’s Board who are not “interested persons,” as that term is defined in Section 2(a)(19) of the 1940 Act of the Fund were apprised of the terms of the transaction and, based on information from MC Management regarding potential conflicts of interest in the trade and representations from MC Management that such terms were fair, appropriate, and in the best interest of each participating party, approved the transactions. In connection with such approval, MC Management informed the non-interested directors that the prices for the acquired assets reflected the market price that would be obtained by or from a third party and, in MC Management’s judgment, represented a reasonable price for such assets that would be paid in an arm’s length transaction.
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