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PORTFOLIO INVESTMENTS AND FAIR VALUE
12 Months Ended
Dec. 31, 2024
PORTFOLIO INVESTMENTS AND FAIR VALUE  
PORTFOLIO INVESTMENTS AND FAIR VALUE

NOTE 6 — PORTFOLIO INVESTMENTS AND FAIR VALUE

In accordance with the authoritative guidance on fair value measurements and disclosures under U.S. GAAP, the Company discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 — Quoted prices in markets that are not considered to be active or financial instruments for which significant inputs are observable, either directly or indirectly; and

Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

The level of an asset or liability 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.

The Company considers whether the volume and level of activity for the asset or liability have significantly decreased and identifies transactions that are not orderly in determining fair value. Accordingly, if the Company determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value. Valuation techniques such as an income approach might be appropriate to supplement or replace a market approach in those circumstances.

At December 31, 2024, the Company had investments in 105 portfolio companies. The total cost and fair value of the investments were $961,788,706 and $953,497,688, respectively. The composition of the Company’s investments as of December 31, 2024 is as follows:

Cost

Fair Value

Senior Secured – First Lien(1)

$

884,322,462

$

856,096,255

Senior Secured – Second Lien

 

12,073,732

11,948,850

Unsecured Debt

 

6,755,866

6,612,493

Equity

 

58,636,646

78,840,090

Total Investments

$

961,788,706

$

953,497,688

(1)Includes unitranche investments, which accounted for 2.0% of the Company’s portfolio at fair value. Unitranche structures may combine characteristics of first lien senior secured as well as second lien and/or subordinated loans. The Company’s unitranche loans will expose it to the risks associated with the second lien and subordinated loans to the extent it invests in the “last-out” tranche.

At December 31, 2023, the Company had investments in 93 portfolio companies. The total cost and fair value of the investments were $902,143,550 and $874,460,683, respectively. The composition of the Company’s investments as of December 31, 2023 is as follows:

    

Cost

    

Fair Value

Senior Secured – First Lien(1)

$

793,819,152

$

774,789,320

Senior Secured – Second Lien

 

42,269,568

21,957,500

Unsecured Debt

 

6,138,183

5,956,280

Equity

 

59,916,647

71,757,583

Total Investments

$

902,143,550

$

874,460,683

(1)Includes unitranche investments, which accounted for 4.5% of the Company’s portfolio at fair value. Unitranche structures may combine characteristics of first lien senior secured as well as second lien and/or subordinated loans. The Company’s unitranche loans will expose it to the risks associated with second lien and subordinated loans to the extent it invests in the “last-out” tranche.

The Company’s investment portfolio may contain loans that are in the form of lines of credit or revolving credit facilities, which require the Company to provide funding when requested by portfolio companies in accordance with the terms of the underlying loan agreements. As of December 31, 2024 and December 31, 2023, the Company had 71 and 57 such investments with aggregate unfunded commitments of $41,286,752 and $37,021,242, respectively. The Company maintains sufficient liquidity (through cash on hand and available borrowings under the Credit Facility) to fund such unfunded loan commitments should the need arise.

The fair values of the Company’s investments disaggregated into the three levels of the fair value hierarchy based upon the lowest level of significant input used in the valuation as of December 31, 2024 were as follows:

    

Quoted Prices

    

    

    

in Active

Markets

Significant Other

Significant

for Identical

Observable

Unobservable

Securities

Inputs

Inputs

(Level 1)

(Level 2)

(Level 3)

Total

Senior Secured – First Lien

$

$

$

856,096,255

$

856,096,255

Senior Secured – Second Lien

 

 

 

11,948,850

 

11,948,850

Unsecured Debt

 

 

 

6,612,493

 

6,612,493

Equity

 

 

 

78,840,090

 

78,840,090

Total Investments

$

$

$

953,497,688

$

953,497,688

The fair values of the Company’s investments disaggregated into the three levels of the fair value hierarchy based upon the lowest level of significant input used in the valuation as of December 31, 2023 were as follows:

Quoted Prices

    

in Active

    

    

    

Markets

Significant Other

Significant

for Identical

Observable

Unobservable

Securities

Inputs

Inputs

(Level 1)

(Level 2)

(Level 3)

Total

Senior Secured – First Lien

$

$

$

774,789,320

$

774,789,320

Senior Secured – Second Lien

 

 

 

21,957,500

 

21,957,500

Unsecured Debt

 

 

 

5,956,280

 

5,956,280

Equity

 

 

 

71,757,583

 

71,757,583

Total Investments

$

$

$

874,460,683

$

874,460,683

The aggregate values of Level 3 portfolio investments changed during the year ended December 31, 2024 as follows:

    

Senior Secured

    

Senior Secured

    

    

    

Loans-First

Loans-Second

Unsecured

 

Lien

Lien

Debt

Equity

Total

Fair value at beginning of period

$

774,789,320

$

21,957,500

$

5,956,280

$

71,757,583

$

874,460,683

Purchases of investments

 

213,545,132

 

 

117,066

 

7,492,735

 

221,154,933

PIK interest

 

2,824,403

 

 

485,708

 

 

3,310,111

Sales and redemptions

 

(126,924,841)

 

(9,782,348)

 

 

(14,985,096)

 

(151,692,285)

Realized (losses) gains

 

(1,580,768)

 

(20,475,000)

 

 

6,212,362

 

(15,843,406)

Change in unrealized (depreciation) appreciation included in earnings(1)

 

(9,026,597)

 

20,187,185

 

40,312

 

8,369,509

 

19,570,409

Change in unrealized depreciation on foreign currency included in earnings

(169,778)

 

(1,778)

 

(7,003)

 

(178,559)

Amortization of premium and accretion of discount, net

 

2,639,384

 

61,513

 

14,905

 

 

2,715,802

Fair value at end of period

$

856,096,255

$

11,948,850

$

6,612,493

$

78,840,090

$

953,497,688

(1)Includes reversal of positions during the year ended December 31, 2024.

There were no Level 3 transfers during the year ended December 31, 2024.

The aggregate values of Level 3 portfolio investments changed during the year ended December 31, 2023 as follows:

    

Senior Secured

    

Senior Secured

    

    

    

Loans-First

Loans-Second

Unsecured

Lien

Lien

Debt

Equity

Total

Fair value at beginning of period

$

735,555,508

$

45,304,300

$

4,823,898

$

59,049,932

$

844,733,638

Purchases of investments

 

174,156,432

 

 

62,086

 

13,251,090

 

187,469,608

PIK interest

 

3,185,845

 

 

613,998

 

 

3,799,843

Sales and redemptions

 

(125,442,776)

 

(9,882,105)

 

(211,627)

 

(2,280,087)

 

(137,816,595)

Realized losses

 

(11,200,184)

 

(17,979,749)

 

 

(702,093)

 

(29,882,026)

Change in unrealized (depreciation) appreciation included in earnings(1)

 

(4,667,866)

 

4,373,111

 

651,997

 

2,434,910

 

2,792,152

Change in unrealized appreciation on foreign currency included in earnings

610,523

 

166

 

3,831

 

614,520

Amortization of premium and accretion of discount, net

 

2,591,838

 

141,943

 

15,762

 

 

2,749,543

Fair value at end of period

$

774,789,320

$

21,957,500

$

5,956,280

$

71,757,583

$

874,460,683

(1)Includes reversal of positions during the year ended December 31, 2023.

There were no Level 3 transfers during the year ended December 31, 2023.

The following is a summary of geographical concentration of the Company’s investment portfolio as of December 31, 2024:

% of Total

 

Investments at

Cost

Fair Value

Fair Value

Texas

 

$

159,028,754

 

$

154,041,942

 

16.15

%

California

 

160,285,777

 

152,583,692

 

16.00

%

Florida

 

108,434,730

 

104,718,969

 

10.98

%

Illinois

 

66,486,029

 

56,591,435

 

5.94

%

Pennsylvania

 

53,271,774

 

54,438,594

 

5.71

%

Arizona

 

43,552,887

 

46,839,063

 

4.91

%

New York

 

36,116,358

 

36,306,098

 

3.81

%

Ohio

 

33,645,676

 

35,847,804

 

3.76

%

Canada

 

32,107,256

 

32,375,749

 

3.40

%

Colorado

 

31,283,806

 

28,218,186

 

2.96

%

Wisconsin

 

27,935,159

 

23,352,084

 

2.45

%

District of Columbia

 

22,711,852

 

26,654,283

 

2.80

%

Georgia

 

12,391,680

 

23,345,077

 

2.45

%

North Carolina

 

20,946,327

 

22,314,018

 

2.34

%

Tennessee

 

20,490,429

 

20,703,772

 

2.17

%

Massachusetts

 

19,965,590

 

20,559,398

 

2.16

%

Missouri

 

18,590,476

 

18,712,569

 

1.96

%

Iowa

 

13,486,486

 

13,486,486

 

1.41

%

Idaho

 

11,763,648

 

11,830,192

 

1.24

%

New Jersey

 

11,181,815

 

11,754,323

 

1.23

%

Michigan

 

11,389,446

 

11,510,608

 

1.21

%

Louisiana

 

9,216,389

 

9,371,830

 

0.98

%

Virginia

 

9,293,896

 

9,373,367

 

0.98

%

Washington

 

8,193,234

 

8,216,962

 

0.86

%

Maryland

 

7,529,294

 

7,526,300

 

0.79

%

Minnesota

 

6,448,091

 

6,452,144

 

0.68

%

South Carolina

 

4,836,178

 

4,984,667

 

0.52

%

Indiana

 

743,770

 

920,343

 

0.10

%

United Kingdom

 

461,899

 

467,733

 

0.05

%

Total Investments

$

961,788,706

$

953,497,688

 

100.00

%

The following is a summary of geographical concentration of the Company’s investment portfolio as of December 31, 2023:

    

    

    

% of Total

 

Investments

 

Cost

Fair Value

at Fair Value

 

Texas

 

$

182,531,256

 

$

175,311,724

 

20.04

%

California

 

175,207,692

 

167,713,589

 

19.18

%

Florida

 

93,155,844

 

92,297,574

 

10.55

%

Pennsylvania

 

49,939,315

 

50,188,102

 

5.74

%

Illinois

 

58,633,617

 

49,834,429

 

5.70

%

Arizona

 

42,136,322

 

44,558,279

 

5.10

%

Ohio

 

31,805,370

 

34,370,277

 

3.93

%

Colorado

 

31,525,420

 

30,971,079

 

3.54

%

Wisconsin

 

27,452,444

 

26,190,771

 

3.00

%

Washington

 

24,321,085

 

24,540,695

 

2.81

%

Georgia

 

9,100,050

 

18,885,409

 

2.16

%

Maryland

 

16,676,194

 

16,718,728

 

1.91

%

New York

 

14,692,043

 

14,931,263

 

1.71

%

Indiana

 

14,235,403

 

14,488,700

 

1.66

%

North Carolina

 

13,891,930

 

14,532,532

 

1.66

%

District of Columbia

 

13,030,899

 

14,006,563

 

1.60

%

New Jersey

 

10,461,226

 

11,191,295

 

1.28

%

Michigan

 

10,664,100

 

10,736,783

 

1.23

%

Massachusetts

 

10,151,621

 

10,515,487

 

1.20

%

Tennessee

 

9,390,657

 

9,379,311

 

1.07

%

Missouri

 

8,862,512

 

8,850,162

 

1.01

%

Canada

 

8,700,383

 

8,813,132

 

1.01

%

Idaho

 

8,405,946

 

8,470,065

 

0.97

%

Minnesota

 

5,976,818

 

5,907,639

 

0.68

%

Louisiana

 

5,538,823

 

5,536,231

 

0.63

%

South Carolina

 

4,946,375

 

5,083,862

 

0.58

%

United Kingdom

 

20,710,205

 

437,002

 

0.05

%

Total Investments

$

902,143,550

$

874,460,683

 

100.00

%

The following is a summary of industry concentration of the Company’s investment portfolio as of December 31, 2024:

% of Total

 

Investments at

Cost

Fair Value

Fair Value

 

Services: Business

$

219,665,133

$

234,908,112

 

24.64

%

High Tech Industries

 

91,135,577

93,468,792

 

9.81

%

Healthcare & Pharmaceuticals

 

85,300,317

85,478,418

 

8.97

%

Media: Advertising, Printing & Publishing

 

71,318,416

72,291,584

 

7.58

%

Beverage & Food

 

64,052,951

68,902,142

 

7.23

%

Consumer Goods: Non-Durable

 

67,123,135

54,473,282

 

5.71

%

Services: Consumer

 

49,388,222

46,066,301

 

4.83

%

Capital Equipment

 

41,322,214

43,647,466

 

4.58

%

Consumer Goods: Durable

 

43,393,413

42,094,390

 

4.41

%

Chemicals, Plastics, & Rubber

 

36,693,101

36,907,602

 

3.87

%

Construction & Building

 

32,374,992

32,979,859

 

3.46

%

Aerospace & Defense

 

26,014,106

21,624,091

 

2.27

%

Environmental Industries

 

18,903,681

18,282,056

 

1.92

%

Transportation & Logistics

 

17,244,131

17,532,488

 

1.84

%

Retail

 

14,799,085

14,723,620

 

1.54

%

Media: Broadcasting & Subscription

 

12,170,577

14,314,711

 

1.50

%

Containers, Packaging, & Glass

 

18,007,571

12,911,794

 

1.35

%

Energy: Oil & Gas

 

11,353,959

10,728,031

 

1.13

%

Hotel, Gaming, & Leisure

 

7,113,661

8,142,050

 

0.85

%

FIRE: Real Estate

 

17,934,808

7,652,436

 

0.80

%

Media: Diversified & Production

 

5,822,637

5,934,853

 

0.62

%

Education

 

10,537,738

5,341,151

 

0.56

%

Finance

 

119,281

5,092,459

 

0.53

%

Total Investments

$

961,788,706

$

953,497,688

 

100.00

%

The following is a summary of industry concentration of the Company’s investment portfolio as of December 31, 2023:

    

    

    

% of Total

 

Investments

 

Cost

Fair Value

at Fair Value

 

Services: Business

$

198,018,290

$

207,963,749

 

23.78

%

Healthcare & Pharmaceuticals

 

100,724,952

102,915,887

 

11.77

%

High Tech Industries

 

90,795,799

91,992,012

 

10.52

%

Media: Advertising, Printing & Publishing

 

57,640,321

58,741,061

 

6.72

%

Consumer Goods: Non-Durable

 

63,145,301

52,938,611

 

6.05

%

Beverage, Food, & Tobacco

 

42,554,582

45,074,817

 

5.15

%

Consumer Goods: Durable

 

49,046,730

43,725,324

 

5.00

%

Capital Equipment

 

32,517,673

33,879,801

 

3.87

%

Services: Consumer

 

33,976,976

33,260,111

 

3.80

%

Construction & Building

 

30,319,119

30,486,411

 

3.49

%

Aerospace & Defense

 

46,745,104

24,541,921

 

2.81

%

Environmental Industries

 

24,219,811

22,997,844

 

2.63

%

Media: Broadcasting & Subscription

 

17,952,103

20,760,920

 

2.37

%

Transportation & Logistics

 

17,235,150

17,661,859

 

2.02

%

Chemicals, Plastics, & Rubber

 

18,338,366

17,569,176

 

2.01

%

Metals & Mining

 

16,580,562

16,625,000

 

1.90

%

Containers, Packaging, & Glass

 

17,432,252

15,539,555

 

1.78

%

Utilities: Oil & Gas

 

9,943,041

10,000,000

 

1.14

%

Education

 

10,251,179

8,367,469

 

0.96

%

FIRE: Real Estate

 

17,285,138

6,175,994

 

0.71

%

Media: Diversified & Production

 

5,662,174

5,763,247

 

0.66

%

Finance

 

569,039

5,736,868

 

0.66

%

Hotel, Gaming, & Leisure

 

890,968

 

0.10

%

Energy: Oil & Gas

 

1,189,888

852,078

 

0.10

%

Total Investments

$

902,143,550

$

874,460,683

 

100.00

%

The following provides quantitative information about Level 3 fair value measurements as of December 31, 2024:

Description:

    

Fair Value

    

Valuation Technique

    

Unobservable Inputs

    

Range (Average)(1)(3)

First lien debt

$

778,177,769

 

Income approach(2)

 

HY credit spreads

-3.39% to 8.32% (-0.54%)

 

 

Risk free rates

-1.18% to 2.44% (0.19%)

Market approach(2)

 

Market multiples

4.6x to 26.3x (13.3x)(4)

$

77,918,486

Transaction value

Transaction price

N/A

Second lien debt

$

11,948,850

Income approach(2)

 

HY credit spreads

-0.72% to -0.32% (-0.46%)

 

 

Risk free rates

-0.35% to 0.14% (-0.04%)

 

Market approach(2)

 

Market multiples

5.3 to 11.8x (9.4x)(4)

Unsecured debt

$

6,581,668

Income approach(2)

 

HY credit spreads

0.18% to 0.18% (0.18%)

 

 

Risk free rates

-0.18% to -0.18% (-0.18%)

$

30,825

 

Transaction value

Transaction price

N/A

Equity investments

$

64,002,282

 

Market approach(5)

 

EBITDA multiple

3.5x to 18.3x (10.4x)

$

14,837,808

Transaction value

Transaction price

N/A

Total Long Term Level 3 Investments

$

953,497,688

 

  

 

  

  

(1)Weighted average based on fair value as of December 31, 2024.
(2)Inclusive of but not limited to (a) the market approach, which is used to determine sufficient enterprise value, and (b) the income approach, which is based on discounting future cash flows using an appropriate market yield.
(3)The Company calculates the price of the loan by discounting future cash flows, which include forecasted future BSBY, SOFR, or SONIA rates based on the published forward curve at the valuation date, using an appropriate yield calculated as of the valuation date. This yield is calculated based on the loan’s yield at the original investment and is adjusted as of the valuation date based on: changes in comparable credit spreads, changes in risk free interest rates (per swap rates), and changes in credit quality (via an estimated shadow rating). Significant movements in any of these factors would result in a significantly lower or higher fair value measurement. As an example, the “Range (Average)” for a first lien debt instruments in the table above indicates that the change in the HY spreads between the date a loan closed and the valuation date ranged from (3.39)% ((339) basis points) to 8.32% (832 basis points). The weighted average of all changes was (0.54)% ( (54) basis points).
(4)Median of LTM (last twelve months) EBITDA multiples of comparable companies.
(5)The primary significant unobservable input used in the fair value measurement of the Company’s equity investments is the EBITDA multiple (the “Multiple”). Significant increases (decreases) in the Multiple in isolation would result in a significantly higher (lower) fair value measurement. To determine the Multiple for the market approach, the Company considers current market trading and/or transaction multiple, portfolio company performance (financial ratios) relative to public and private peer companies and leverage levels, among other factors. Changes in one or more of these factors can have a similar directional change on other factors in determining the appropriate Multiple to use in the market approach.

The following provides quantitative information about Level 3 fair value measurements as of December 31, 2023:

 

 

Description:

    

Fair Value

    

Valuation Technique

    

Unobservable Inputs

    

Range (Average)(1)(3)

First lien debt

$

774,789,320

 

Income/Market

 

HY credit spreads

-3.00% to 8.11% (-0.23%)

 

approach(2)

 

Risk free rates

-1.62% to 2.03% (0.04%)

 

Market multiples

5.2x to 22.5x (11.0x)(4)

Second lien debt

$

21,957,500

Income/Market

 

HY credit spreads

-0.97% to -0.33% (-0.63%)

 

approach(2)

 

Risk free rates

-0.51% to 0.31% (-0.23%)

 

 

Market multiples

6.5x to 17.5x (10.9x)(4)

Unsecured debt

$

5,956,280

Income/Market

 

HY credit spreads

4.98% to 4.98% (4.98%)

 

approach(2)

 

Risk free rates

4.47% to 4.47% (4.47%)

 

 

Market multiples

9.5x to 9.5x (9.5x)(4)

Equity investments

$

71,757,583

 

Market approach(5)

 

Underwriting multiple/

 

EBITDA multiple

3.5x to 23.2x (12.1x)

Total Long Term Level 3 Investments

$

874,460,683

 

  

 

  

  

(1)Weighted average based on fair value as of December 31, 2023.
(2)Inclusive of but not limited to (a) the market approach, which is used to determine sufficient enterprise value, and (b) the income approach, which is based on discounting future cash flows using an appropriate market yield.
(3)The Company calculates the price of the loan by discounting future cash flows, which include forecasted future SOFR rates based on the published forward SOFR curve at the valuation date, using an appropriate yield calculated as of the valuation date. This yield is calculated based on the loan’s yield at the original investment and is adjusted as of the valuation date based on: changes in comparable credit spreads, changes in risk free interest rates (per swap rates), and changes in credit quality (via an estimated shadow rating). Significant movements in any of these factors would result in a significantly lower or higher fair value measurement. As an example, the “Range (Average)” for a first lien debt instruments in the table above indicates that the change in the HY spreads between the date a loan closed and the valuation date ranged from  (3.00)% ((300) basis points) to 8.11% (811 basis points). The average of all changes was (0.23)% ((23) basis points).
(4)Median of LTM (last twelve months) EBITDA multiples of comparable companies.
(5)The primary significant unobservable input used in the fair value measurement of the Company’s equity investments is the Multiple. Significant increases (decreases) in the Multiple in isolation would result in a significantly higher (lower) fair value measurement. To determine the Multiple for the market approach, the Company considers current market trading and/or transaction multiple, portfolio company performance (financial ratios) relative to public and private peer companies and leverage levels, among other factors. Changes in one or more of these factors can have a similar directional change on other factors in determining the appropriate Multiple to use in the market approach.