v3.26.1
Fair Value Measurements
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Note 3 – Fair Value Measurements
The Company records its investments at fair value in accordance with U.S. GAAP. Fair value is the price that would be received upon the sale of an investment in an orderly transaction between market participants at the measurement date.
The investments fall into one of the following three categories within the fair value hierarchy:
 
 
•
 
Level 1—inputs reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 1 investments held by the Company typically consist of public stock positions held as a result of an initial public offering of a formerly private investment as well as short-term investments held as money market funds. Management does not adjust the quoted price for such instruments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.
 
 
•
 
Level 2—inputs include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active.
Level 2 investments held by the Company typically consist of public stock positions held as a result of an initial public offering of a direct investment, which are subject to sales restrictions, or the valuation is adjusted to reflect illiquidity and/or
non-transferability.
 
 
 
•
 
Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement.
Level 3 investments held by the Company typically consist of privately-held equity or debt securities. When observable prices are not available, management uses valuation techniques for which sufficient and reliable data is available and applied on a consistent basis. The valuation of nonmarketable privately-held investments requires significant judgment by management due to the absence of quoted market values, inherent lack of liquidity, changes in market conditions and the long-term nature of such assets.
Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by management. Management considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by multiple, independent sources that are actively involved in the relevant market. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to management’s perceived risk of that investment. The Adviser, as the valuation designee pursuant to Rule
2a-5
under the 1940 Act, determines in good faith the fair value of the Company’s investment portfolio for which market quotations are not readily available. In addition to using the above inputs in investment valuations, the Adviser will apply a valuation policy approved by the Company’s Board of Trustees (the “Board”) that is consistent with Accounting Standards Codification Topic 820, Fair Value Measurement (“ASC 820”).
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 the Company’s 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 the Company 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.
The following table presents the investments carried at fair value on the Consolidated Statements of Assets and Liabilities as of June 30, 2026 and December 31, 2025 by the ASC 820 valuation hierarchy (as described above) (in thousands):
 
    
As of June 30, 2026
Investments
   
Level 1
   
Level 2
   
Level 3
   
Total
First Lien Loans
        —        —      $ 124,593       $ 124,593 
Short-Term Investments
      $ 953        —        —      $ 953 
    
 
 
       
 
 
       
 
 
       
 
 
  
Total Investments
      $  953          —      $  124,593       $  125,546 
    
 
 
       
 
 
       
 
 
       
 
 
  
 
    
As of December 31, 2025
Investments
   
Level 1
   
Level 2
   
Level 3
   
Total
First Lien Loans
          —          —      $   95,185       $   95,185 
The classification of an investment as Level 3 is based upon the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 financial investments typically include, in addition to unobservable or Level 3 inputs, observable inputs (that is, inputs that are actively quoted and can be validated to market sources).
 
 
Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur. For the six months ended June 30, 2026 and 2025, there were no transfers into or out of Level 3. The following tables reconcile the beginning and ending balances of investments classified within Level 3 for the three and six months ended June 30, 2026 and 2025 (in thousands):
 
    
For the Three

Months Ended
June 30, 2026
    
For the Six

Months Ended
June 30, 2026
  
    
First Lien Loans
    
First Lien Loans
  
Balance, at beginning of period
    $ 114,982     $ 95,185  
Purchases of investments
      10,063       30,668  
Accretion of discount
      68       125  
Proceeds from repayment and sales of investments
      (621 )      (1,530 ) 
Realized gain (loss)
      6       14  
Net change in unrealized appreciation/(depreciation)
      (133 )      (194 ) 
Payment-in-kind
interest capitalized
      228       325  
  
 
 
    
 
 
  
Balance, at end of period
    $ 124,593     $ 124,593  
  
 
 
    
 
 
  
Net change in unrealized appreciation/(depreciation) included in the Consolidated Statements of Operations that continue to be held as of June 30, 2026
    $ (133 )    $ (152 )
  
 
 
    
 
 
  
 
    
For the Three

Months Ended
June 30, 2025
    
For the Six

Months Ended
June 30, 2025
  
    
First Lien Loans
    
First Lien Loans
  
Balance, at beginning of period
    $ 19,712     $ 17,915  
Purchases of investments
      40,752       42,541  
Accretion of discount
      22       34  
Proceeds from repayment and sales of investments
      (146 )      (182 ) 
Realized gain (loss)
      (64 )      (63 ) 
Net change in unrealized appreciation/(depreciation)
      158       189  
Payment-in-kind
interest capitalized
      8       8  
  
 
 
    
 
 
  
Balance, at end of period
    $ 60,442     $ 60,442  
  
 
 
    
 
 
  
Net change in unrealized appreciation/(depreciation) included in the Consolidated Statements of Operations that continue to be held as of June 30, 2025
    $ 158     $ 189  
  
 
 
    
 
 
  
 
 
The following tables provide a summary of valuation techniques and quantitative inputs and assumptions used for investments categorized in Level 3 of the fair value hierarchy as of June 30, 2026 and December 31, 2025 (in thousands).
 
    
Fair Value as of
          
Significant
Unobservable
     
Range
    
Weighted
  
    
June 30, 2026
     
Valuation Techniques
   
Inputs
     
Low
    
High
    
Average*
  
First Lien Loans
    $ 4,345      Market Approach (Recent Arm’s Length Transaction)      Discount to Par Value        1.00 %      1.50 %      1.00 % 
     120,248      Income Approach      Market Interest Rate        7.94 %      16.75 %      9.72 % 
  
 
 
               
Total investments
    $ 124,593               
  
 
 
               
    
Fair Value as of
          
Significant
Unobservable
     
Range
    
Weighted
  
    
December 31, 2025
     
Valuation Techniques
   
Inputs
     
Low
    
High
    
Average*
  
First Lien Loans
    $ 4,478      Market Approach (Recent Arm’s Length Transaction)      Discount to Par Value        1.00 %      1.50 %      1.39 % 
     90,707      Income Approach      Market Interest Rate        7.79 %      15.50 %      9.29 % 
  
 
 
               
Total investments
    $ 95,185               
  
 
 
               
 
*
Inputs are weighted based on the fair value of the investments included in the range.
The valuation techniques used in Level 3 of the fair value hierarchy utilize unobservable inputs in determining the fair value of the Company’s investments. For the Market Approach (Recent Arm’s Length Transaction), investments are valued based on recent transactions, adjusted as necessary for any changes in unobservable inputs, market conditions and other similar transactions. In certain cases the fair value may be based on a pending transaction with an expected close date after the Consolidated Statements of Assets and Liabilities date.
For the Income Approach, the fair value is determined based on an analysis of the contractual yield earned on the investment with a comparable market rate. The comparable market rate is the significant unobservable input used in the fair value measurement of the Company’s investments under the Income Approach.
While management believes its valuation methods are appropriate and consistent with those used by other market participants, the use of different methodologies or assumptions to estimate the fair value of investments in first lien loans could result in a different estimate of fair value at the reporting date. Those fair value estimates may differ significantly from the values that would have been determined had a readily available market for such investments existed, or had such investments been liquidated or sold to
non-affiliated
investors, and these differences could be material to the consolidated financial statements.
The significant unobservable inputs used in the fair value measurement of the Company’s investments in first lien loans are discounts to par and market interest rates. Significant increases in discount rates in isolation would result in a significantly lower fair value measurement. Significant decreases in transaction prices in isolation would result in a significantly lower fair value measurement.
 
 
Financial Instruments Disclosed but Not Carried at Fair Value
At June 30, 2026 and December 31, 2025, the carrying amount of the Company’s secured borrowings approximated their fair value. The fair values of the Company’s debt obligations are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Given the interest rates on the Company’s secured borrowings are based on underlying indices that reset periodically, the carrying values of the secured borrowings approximate fair value. Secured borrowings are categorized as Level 3 within the fair value hierarchy.
The following table presents the carrying value and fair value of the Company’s Promissory Note and Wells Fargo Credit Facility (each as defined below in Note 5 - Borrowings) disclosed but not carried at fair value as of June 30, 2026 and December 31, 2025 (in thousands):
 
    
June 30, 2026
           
December 31, 2025
  
    
 Carrying Value 
     
 Fair Value 
    
 
     
 Carrying Value 
     
 Fair Value 
  
Promissory Note
      —        —        $ 50,000      $ 50,000   
Wells Fargo Credit Facility
    $ 69,250      $ 69,250        $ 43,750      $ 43,750  
Total
    $ 69,250      $ 69,250        $ 93,750      $ 93,750  
                                     
The carrying value of other financial assets and liabilities approximates their fair value based on the short-term nature of these items.