Portfolio Investments |
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| Schedule of Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Investments | Portfolio Investments As of September 30, 2026, we had investments in 85 portfolio companies and other portfolio investments, which had an amortized cost of $5,944,319 and a fair value of $5,944,478. As of June 30, 2026, we had investments in 91 portfolio companies, which had an amortized cost of $6,315,369 and a fair value of $6,342,558. The original cost basis of debt and equity securities acquired, including follow-on investments for existing portfolio companies, payment-in-kind interest, and structuring fees, totaled $90,477 and $91,567 during the three months ended September 30, 2026 and September 30, 2025, respectively. Debt repayments and considerations from sales of equity securities of approximately $257,372 and $234,660 were received during the three months ended September 30, 2026 and September 30, 2025, respectively. Throughout the remainder of this footnote, we aggregate our portfolio investments by type of investment, which may differ slightly from the nomenclature used by the constituent instruments defining the rights of holders of the investment, as disclosed on our Consolidated Schedules of Investments (“SOI”). The following investments are included in each category: •First Lien Revolving Line of Credit includes our debt investments in first lien revolvers as well as our debt investments in delayed draw term loans. •First Lien Debt includes our debt investments listed on the SOI such as first lien term loans (including “unitranche” loans, which are loans that combine both senior and subordinated debt and “last out” loans which are loans that have a secondary payment priority behind “first out” first-lien loans). •Second Lien Revolving Line of Credit includes our debt investments in second lien revolvers as well as our debt investments in delayed draw term loans. •Second Lien Debt includes our debt investments listed on the SOI as second lien term loans. •Unsecured Debt includes our debt investments listed on the SOI as unsecured. •Subordinated Structured Notes includes our investments in the “equity” security class of CLO funds such as income notes, preference shares, and subordinated notes. •Equity, unless specifically stated otherwise, includes our investments in preferred stock, common stock, membership interests, net profits interests, net operating income interests, net revenue interests, overriding royalty interests, escrows receivable, and warrants. The following table shows the composition of our investment portfolio as of September 30, 2026 and June 30, 2026:
(1) First lien debt includes loans that the Company classifies as “unitranche” and loans classified as “first lien last out”. The total amortized cost and fair value of the unitranche and/or last out loans were $63,005 and $58,579, respectively, as of September 30, 2026. The total amortized cost and fair value of the unitranche and/or last out loans were $219,582 and $155,717, respectively, as of June 30, 2026. The following table shows the fair value of our investments and derivative instruments disaggregated into the three levels of the ASC 820 valuation hierarchy as of September 30, 2026:
(1) First lien debt includes loans that the Company classifies as “unitranche”. The total amortized cost and fair value of the unitranche loan was $63,005 and $58,579, respectively, as of September 30, 2026. (2) All foreign currency forward contracts are designated in hedge relationships. The following table shows the fair value of our investments and derivative instruments disaggregated into the three levels of the ASC 820 valuation hierarchy as of June 30, 2026.
(1) First lien debt includes loans that the Company classifies as “unitranche”. The total amortized cost and fair value of the unitranche loan were $219,582 and $155,717, respectively, as of June 30, 2026. (2) All foreign currency forward contracts are designated in hedge relationships. The following tables show the aggregate changes in the fair value of our Level 3 investments during the three months ended September 30, 2026:
(1)Transfers are assumed to have occurred at the beginning of the quarter during which the asset was transferred. During the three months ended September 30, 2026, three of our first lien notes and one of our second lien notes transferred out of Level 2 into Level 3 because inputs to the valuation became unobservable. During the three months ended September 30, 2026, one of our second lien notes and six first lien loans transferred to two first lien loans and two equity positions. (2) First lien debt includes loans that the Company classifies as “unitranche” and a loan classified as “first lien last out”. The total amortized cost and fair value of the unitranche and/or last out loans were $63,005 and $58,579, respectively, as of September 30, 2026. The total amortized cost and fair value of the unitranche and/or last out loans were $219,582 and $155,717, respectively, as of June 30, 2026. (3) Includes reorganizations and restructuring of investments. (4) Reduction to cost value of our Subordinated Structured Notes investments represents the difference between distributions received, or entitled to be received, for the three months ended September 30, 2026, of $1,837 and no effective yield interest income was recognized on our Subordinated Structured Notes. The following tables show the aggregate changes in the fair value of our Level 3 investments during the three months ended September 30, 2025:
(1) Transfers are assumed to have occurred at the beginning of the quarter during which the asset was transferred. During the three months ended September 30, 2025, one of our first lien notes and one of our second lien notes transferred out of Level 3 to Level 2 because inputs to the valuation became observable. During the three months ended September 30, 2025, two of our first lien notes and one of our second lien notes transferred out of Level 2 to Level 3 because inputs to the valuation became unobservable. (2) First lien debt includes a loan that the Company classifies as “unitranche” and a loan classified as “first lien last out.” The total amortized cost and fair value of the unitranche and/or last out loans were $202,687 and $146,873, respectively, as of September 30, 2025. The total amortized cost and fair value of the unitranche and/or last out loans were $201,585 and $166,464, respectively, as of June 30, 2025. (3) Includes reorganizations and restructuring of investments. (4) Reduction to cost value of our Subordinated Structured Notes investments represents the difference between distributions received, or entitled to be received, for the three months ended September 30, 2025, of $15,371 and the effective yield interest income recognized on our Subordinated Structured Notes of $0. For the three months ended September 30, 2026 and September 30, 2025, respectively the net change in unrealized (losses) gains on the investments that use Level 3 inputs was $31,685 and $45,245 for investments still held as of September 30, 2026 and September 30, 2025, respectively. The following table shows industries that comprise of greater than 10% of our portfolio at fair value as of September 30, 2026 and June 30, 2026:
As of September 30, 2026, portfolio investments located in Mississippi comprised 16.6% of our portfolio at fair value, with a cost of $500,776 and a fair value of $983,900 while portfolio investments located in California comprised 13.4% of our portfolio at fair value, with a cost of $1,134,558 and a fair value of $797,419. The ranges of unobservable inputs used in the fair value measurement of our Level 3 investments as of September 30, 2026 were as follows:
(1)Represents the implied discount rate based on our internally generated single-cash flow model that is derived from the fair value estimated by the corresponding multi-path cash flow model utilized by the independent valuation firm. (2)Represents PSEC’s 94.99% share of the escrow and earnout receivables from the sale of Valley Electric Company, Inc. (3)The weighted average information is generally derived by assigning each disclosed unobservable input a proportionate weight based on the fair value of the related investment. The ranges of unobservable inputs used in the fair value measurement of our Level 3 investments as of June 30, 2026 were as follows:
(1)Represents the implied discount rate based on our internally generated single-cash flow model that is derived from the fair value estimated by the corresponding multi-path cash flow model utilized by the independent valuation firm. (2)Represents Residual Profit Interests in Real Estate Investments. (3)The weighted average information is generally derived by assigning each disclosed unobservable input a proportionate weight based on the fair value of the related investment. Investments for which market quotations are readily available are valued at such market quotations. In order to validate market quotations, management and the independent valuation firm look at a number of factors to determine if the quotations are representative of fair value, including the source and nature of the quotations. These investments are classified as Level 1 or Level 2 in the fair value hierarchy. The fair value of debt investments specifically classified as Level 2 in the fair value hierarchy are generally valued by an independent pricing agent or more than one principal market maker, if available, otherwise a principal market maker or a primary market dealer. We generally value over-the-counter securities by using the prevailing bid and ask prices from dealers during the relevant period end, which were provided by an independent pricing agent and screened for validity by such service. Certain derivative instruments are valued as Level 2 assets or liabilities using pricing information obtained from third-party pricing services, including IHS Markit. These valuations are based on prevailing market data as of the measurement date and are derived using models that apply well-recognized financial principles. Significant inputs to the valuation models include observable market data such as interest rate curves, forward curves, credit spreads, foreign exchange rates, volatilities, and other market-corroborated inputs. Management and the independent valuation firm evaluate the methodologies and inputs to assess whether the resulting values are representative of fair value. In determining the range of values for debt instruments where market quotations are not readily available, and are therefore classified as Level 3 in the fair value hierarchy, except CLOs and debt investments in controlling portfolio companies, management and the independent valuation firm estimated corporate and security credit ratings and identified corresponding yields to maturity for each loan from relevant market data. A discounted cash flow technique was then applied using the appropriate yield to maturity as the discount rate, to determine a range of values. In determining the range of values for debt investments of controlled companies and equity investments, the enterprise value was determined by applying a market approach such as using earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples, net income and/or book value multiples for similar guideline public companies and/or similar recent investment transactions and/or an income approach, such as the discounted cash flow technique. The enterprise value technique may also be used to value debt investments which are credit impaired. For stressed debt and equity investments, asset recovery analysis was used. In determining the range of values for our investments in CLOs, the independent valuation firm uses a discounted multi-path cash flow model. The valuations were accomplished through the analysis of the CLO deal structures to identify the risk exposures from the modeling point of view as well as to determine an appropriate call date (i.e., expected maturity). These risk factors are sensitized in the multi-path cash flow model using Monte Carlo simulations, to generate probability-weighted (i.e., multi-path) cash flows for the underlying assets and liabilities. These cash flows are discounted using appropriate market discount rates, and relevant data in the CLO market and certain benchmark credit indices are considered, to determine the value of each CLO investment. In addition, we generate a single-path cash flow utilizing our best estimate of expected cash receipts, and assess the reasonableness of the implied discount rate that would be effective for the value derived from the corresponding multi-path cash flow model. These investments are classified as Level 3 in the fair value hierarchy. The significant unobservable input used to value our investments based on the yield technique and discounted cash flow technique is the market yield (or applicable discount rate) used to discount the estimated future cash flows expected to be received from the underlying investment, which includes both future principal and interest/dividend payments. Increases or decreases in the market yield (or applicable discount rate) would result in a decrease or increase, respectively, in the fair value measurement. Management and the independent valuation firms consider the following factors when selecting market yields or discount rates: risk of default, rating of the investment and comparable company investments, and call provisions. The significant unobservable inputs used to value our investments based on the EV analysis may include market multiples of specified financial measures such as EBITDA, revenue, net income, or book value of identified guideline public companies, implied valuation multiples from precedent M&A transactions, and/or discount rates applied in a discounted cash flow technique. The independent valuation firm identifies a population of publicly traded companies with similar operations and key attributes to that of the portfolio company. Using valuation and operating metrics of these guideline public companies and/or as implied by relevant precedent transactions, a range of multiples of the latest twelve months EBITDA, or other measure such as net income or book value, is typically calculated. The independent valuation firm utilizes the determined multiples to estimate the portfolio company’s EV generally based on the latest twelve months EBITDA of the portfolio company (or other meaningful measure). Increases or decreases in the multiple would result in an increase or decrease, respectively, in EV which would result in an increase or decrease in the fair value measurement of the debt of controlled companies and/or equity investment, as applicable. In certain instances, a discounted cash flow analysis may be considered in estimating EV, in which case, discount rates based on a weighted average cost of capital and application of the capital asset pricing model may be utilized. The significant unobservable inputs used to value our private REIT investments based on the discounted cash flow analysis is the discount rate and terminal capitalization rate applied to projected cash flows of the underlying properties. Increases or decreases in the discount rate and terminal capitalization rate would result in a decrease or increase, respectively, in the fair value measurement. Changes in market yields, discount rates, capitalization rates or EBITDA (or other) multiples, each in isolation, may change the fair value measurement of certain of our investments. Generally, an increase in market yields, discount rates or capitalization rates, or a decrease in EBITDA (or other) multiples may result in a decrease in the fair value measurement of certain of our investments. 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 our investments may fluctuate from period to period. Additionally, the fair value of our 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 we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it. 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 in the currently assigned valuations. Changes in Valuation Techniques During the three months ended September 30, 2026, the valuation methodology for First Brands Group (“First Brands”) for the First Lien Term Loan, First Lien Term Loan 2, Second Lien Term Loan, and First Lien DIP Term Loan B changed from relying on market quotes to relying solely on a liquidation analysis, following the conversion of First Brand’s Chapter 11 bankruptcy proceedings to Chapter 7 on August 24, 2026, as these tranches are junior to the First Lien DIP Term Loan A and are not expected to receive recovery outside litigation. As a result, the fair value of our investments in the First Lien Term Loan, First Lien Term Loan 2, Second Lien Term Loan, and First Lien DIP Term Loan B decreased to $— as of September 30, 2026. On September 30, 2026, we wrote down the cost basis of the First Lien Term Loan, First Lien Term Loan 2, Second Lien Term Loan, First Lien DIP Term Loan A, and First Lien DIP Term Loan B to fair value and recognized realized losses of $4,371, $2,938, $37,000, $4,684 and $17,470, respectively. During the three months ended September 30, 2026, the valuation methodology for BCPE North Star US Holdco 2, Inc. (“Dessert Holdings”) for the Second Lien Term Loan changed from the yield analysis to a take-out scenario, given Dessert Holdings’ near-term refinancing of its credit facilities. As a result, the fair value of our investment in the Second Lien Term Loan increased to $69,388 as of September 30, 2026, a premium of $301 from its amortized cost, compared to the $317 unrealized premium recorded at June 30, 2026. During the three months ended September 30, 2026, the valuation methodology for Discovery Point Retreat, LLC for the First Lien Delayed Draw Term Loan changed from the yield analysis to a combination of the enterprise value waterfall and Black-Scholes Option Pricing Method, consistent with the Series A Preferred Stock, given the loan’s convertibility into Series A Preferred Stock, and being in the money based on enterprise value. The fair value of our investment in the First Lien Delayed Draw Term Loan was $987, as of September 30, 2026, which is equal to its amortized cost, consistent with the fair value having equaled its amortized cost at June 30, 2026. During the three months ended September 30, 2026, the valuation methodology for Wellful, Inc. (“Nutrisystem”) for the Second Out First Lien Term Loan changed from relying solely on the yield analysis to a combination of the yield analysis and market quotes, since market quotes were more active in the current period. The fair value of our investment in the Second Out First Lien Term Loan increased to $15,132 as of September 30, 2026, a discount of $3,210 from its amortized cost, compared to the $3,580 unrealized discount recorded at June 30, 2026. Credit Quality Indicators and Undrawn Commitments As of September 30, 2026, $3,528,378 of our loans to portfolio companies, at fair value, bear interest at floating rates and, if applicable, have LIBOR or SOFR floors ranging from 0.5% to 5.0%. As of September 30, 2026, $1,085,233 of our loans to portfolio companies, at fair value, bear interest at fixed rates ranging from 5.75% to 30.0%. As of June 30, 2026, $3,701,239 of our loans to portfolio companies, at fair value, bore interest at floating rates and, if applicable, have LIBOR or SOFR floors ranging from 0.5% to 5.5%. As of June 30, 2026, $1,172,098 of our loans to portfolio companies, at fair value, bore interest at fixed rates ranging from 5.75% to 30.0%. As of September 30, 2026 and June 30, 2026, the cost basis of our loans on non-accrual status amounted to $107,345 and $298,227 respectively, with fair value of $9,354 and $42,531, respectively. The fair values of these investments represent approximately 0.2% and 0.7% of our total assets at fair value as of September 30, 2026 and June 30, 2026, respectively. Undrawn committed revolvers and delayed draw term loans to our portfolio companies incur commitment and unused fees ranging from 0.00% to 3.00%. As of September 30, 2026 and June 30, 2026, we had $57,612 and $64,611, respectively, of undrawn revolver and delayed draw term loan commitments to our portfolio companies of which $51,717 and $52,446 are considered at the Company’s sole discretion. The fair value of our undrawn committed revolvers and delayed draw term loans was zero as of September 30, 2026 and June 30, 2026 as they were all floating rate instruments that repriced frequently. National Property REIT Corp. Prospect owns 100% of the equity of NPH Property Holdings, LLC (“NPH”), a consolidated holding company which owns 100% of the common equity of NPRC. NPRC is a Maryland corporation and a qualified REIT for federal income tax purposes. NPRC was formed to hold for investment, operate, finance, lease, manage, and sell a portfolio of real estate assets and engage in any and all other activities as may be necessary, incidental or convenient to carry out the foregoing. NPRC acquires real estate assets, including, but not limited to, industrial, commercial, multi-family, self-storage, and student housing properties. NPRC may acquire real estate assets directly or through joint ventures by making a majority equity investment in a property-owning entity. Additionally, through its wholly-owned subsidiaries, NPRC invests in online consumer loans and rated secured structured notes (“RSSN”). During the three months ended September 30, 2026, we provided $15,017 of debt financing to NPRC to fund real estate capital expenditures and provide working capital. During the three months ended September 30, 2026, we received partial repayments of $0 of our loans previously outstanding with NPRC and its wholly owned subsidiary. During the three months ended September 30, 2025, we provided $25,568 of debt financing to NPRC to fund real estate capital expenditures and provide working capital. During the three months ended September 30, 2025, we received partial repayments of $22,604 of our loans previously outstanding with NPRC and its wholly owned subsidiary. As of September 30, 2026, our investment in NPRC and its wholly owned subsidiaries had an amortized cost of $911,906 and a fair value of $1,071,107, primarily related to NPRC’s real estate portfolio. The real estate portfolio was comprised of forty-four multi-family properties, four senior living properties, and two commercial properties. The following table shows the location, acquisition date, purchase price, and mortgage outstanding due to other parties for each of the properties held by NPRC as of September 30, 2026:
As of June 30, 2026, our investment in NPRC and its wholly owned subsidiaries had an amortized cost of $896,889 and a fair value of $1,081,596. The real estate portfolio was comprised of forty-four multi-family properties, two student housing properties, four senior living properties, and two commercial properties. The following table shows the location, acquisition date, purchase price, and mortgage outstanding due to other parties for each of the properties held by NPRC as of June 30, 2026:
Unconsolidated Significant Subsidiaries Our investments are generally in small and mid-sized companies in a variety of industries. In accordance with Regulation S-X 3-09 and Regulation S-X 4-08(g), we must determine which of our unconsolidated controlled portfolio companies are considered “significant subsidiaries,” if any, as defined in Rule 1-02(w)(2) for BDC’s and closed end investment companies. Regulation S-X 3-09 requires separate audited financial statements of an unconsolidated subsidiary in an annual report. Regulation S-X 4-08(g) requires summarized financial information in an annual report. Pursuant to Regulation S-X 10-01(b), Interim Financial Statements, summarized interim income statement information is required for an unconsolidated subsidiary within a quarterly report if the unconsolidated subsidiary would otherwise require separate audited financial statements within an annual report pursuant to Regulation S-X 3-09. For the three months ended September 30, 2026 and September 30, 2025, NPRC was deemed to be a significant subsidiary due to income. The following table shows summarized income statement information for NPRC for the periods included in this quarterly report:
During the three months ended September 30, 2026 and September 30, 2025, First Tower Finance Company LLC (“First Tower Finance”) was deemed a significant subsidiary due to income. The following table shows First Tower Finance summarized income statement information for the periods included within this quarterly report:
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