EX-99.1 2 tm2421165d1_ex99-1.htm EXHIBIT 99.1

 

EXHIBIT 99.1

 

Morgan Stanley Direct Lending Fund Announces June 30, 2024 Financial Results and Declares Third Quarter 2024 Dividend of $0.50 per Share

 

NEW YORK, NY, August 8, 2024 — Morgan Stanley Direct Lending Fund (NYSE: MSDL) (“MSDL” or the “Company”), a business development company externally managed by MS Capital Partners Adviser Inc. (the “Adviser”), today announced its financial results for the second quarter ended June 30, 2024.

 

“In the second quarter of 2024, our first full quarter operating as a public company, MSDL generated strong operating results,” said Jeffrey Levin, President and Chief Executive Officer of Morgan Stanley Direct Lending Fund. “This performance was supported by continued credit stability in our portfolio of senior, sponsor-backed middle market loans.”

 

QUARTERLY HIGHLIGHTS

 

·Net investment income of $56.1 million, or $0.63 per share;

·Net asset value of $20.83 per share, as compared to $20.67 as of March 31, 2024;

·Debt-to-equity was 0.90x as of June 30, 2024, as compared to 0.81x as of March 31, 2024;

·New investment commitments of $673.9 million, fundings of $499.7 million and sales and repayments of $289.3 million, resulting in net funded deployment of $210.4 million; and

·The Company’s Board of Directors (the “Board”) declared a regular dividend of $0.50 per share, paid on July 25, 2024 to stockholders of record as of June 28, 2024.

 

SELECTED FINANCIAL HIGHLIGHTS

 

   For the Quarter Ended 
   June 30, 2024   March 31, 2024 
Net investment income per share  $0.63   $0.63 
Net realized and unrealized gains (losses) per share1  $0.03   $(0.05)
Earnings per share  $0.66   $0.59 
Regular dividend per share  $0.50   $0.50 

 

   As of 
($ in thousands, except per share information)  June 30, 2024   March 31, 2024 
Investments, at fair value  $3,514,286   $3,293,205 
Total debt outstanding, at principal  $1,675,474   $1,492,257 
Net assets  $1,861,961   $1,837,027 
Net asset value per share  $20.83   $20.67 
Debt to equity   0.90x    0.81x 
Net debt to equity   0.85x    0.77x 

 

1 Amount shown may not correspond for the period as it includes the effect of the timing of the distribution and the issuance of common stock.

 

RESULTS OF OPERATIONS

 

Total investment income for the second quarter ended June 30, 2024 was $104.2 million, compared to $99.1 million for the first quarter ended March 31, 2024. The increase was driven by deployment of capital and prepayment related income.

 

Total expenses for the quarter ended June 30, 2024 were $48.1 million, compared to $44.5 million for the quarter ended March 31, 2024. The increase in expenses quarter over quarter was attributable to higher interest and other financing expenses driven by an increase in weighted average debt outstanding.

 

 

 

 

Net investment income for the quarter ended June 30, 2024 was $56.1 million, or $0.63 per share, compared to $54.7 million, or $0.63 per share, for the quarter ended March 31, 2024.

 

For the quarter ended June 30, 2024, net change in unrealized appreciation on investments was $2.8 million.

 

PORTFOLIO AND INVESTMENT ACTIVITY

 

As of June 30, 2024, the Company’s investment portfolio had a fair value of approximately $3.5 billion, comprised of 192 portfolio companies across 34 industries, with an average investment size of $18.3 million, or 0.5% of our total portfolio on a fair value basis. The composition of the Company’s investments was the following:

 

   June 30, 2024   March 31, 2024 
($ in thousands)  Cost   Fair Value   % of Total
Investments at
Fair Value		   Cost   Fair Value   % of Total
Investments at
Fair Value		 
First Lien Debt  $3,356,586   $3,345,743    95.3%  $3,131,129   $3,115,404    94.6%
Second Lien Debt   122,416    103,144    2.9    136,708    118,107    3.6 
Other Debt Investments   9,289    8,467    0.2    3,430    2,163    0.1 
Equity   53,735    56,932    1.6    52,500    57,531    1.7 
Total  $3,542,035   $3,514,286    100.0%  $3,323,767   $3,293,205    100.0%

 

Investment activity for the three months ended June 30, 2024 and March 31, 2024, was as follows:

 

Investment Activity:  June 30, 2024   March 31, 2024 
New investment commitments, at par  $673,902   $232,120 
Investment fundings  $499,684   $168,357 
Number of new Investment commitments in portfolio companies   22    9 
Number of portfolio companies exited or fully repaid   8    3 

 

Total weighted average yield of investments in debt securities at amortized cost and fair value was 11.6% and 11.7%, respectively, as of June 30, 2024, compared to 11.9% and 12.0%, respectively, as of March 31, 2024. Floating rate debt investments as a percentage of total portfolio on a fair value basis was 99.6% as of June 30, 2024, compared to 99.9% as of March 31, 2024. As of June 30, 2024, portions of two portfolio companies were on non-accrual status, representing approximately 0.3% of total investments at amortized cost.

 

CAPITAL AND LIQUIDITY

 

As of June 30, 2024, the Company had total principal debt outstanding of $1,675.5 million, including $194.0 million outstanding in the Company’s BNP funding facility, $431.5 million outstanding in the Company’s Truist credit facility, $275.0 million outstanding in the Company’s senior unsecured notes due September 2025, $425.0 million outstanding in the Company’s senior unsecured notes due February 2027 and $350.0 million outstanding in the Company’s newly issued senior unsecured notes due May 2029. The combined weighted average interest rate on debt outstanding was 6.57% for the quarter ended June 30, 2024. As of June 30, 2024, the Company had $1,270.4 million of availability under its credit facilities and $93.0 million in unrestricted cash. Debt to equity was 0.90x and 0.81x as of June 30, 2024 and March 31, 2024, respectively.

 

OTHER DEVELOPMENTS

 

·On August 6, 2024, the Board declared a distribution of $0.50 per share, which is payable on October 25, 2024 to shareholders of record as of September 30, 2024.

 

 

 

 

·The Board previously declared a $0.10 per share special dividend to shareholders of record as of August 5, 2024.
·In July, Moody’s affirmed MSDL’s Baa3 (stable) rating.

 

CONFERENCE CALL INFORMATION

 

Morgan Stanley Direct Lending Fund will host a conference call on Friday, August 9, 2024 at 10:00 am ET to review its financial results and conduct a question-and-answer session. All interested parties are invited to participate in the live earnings conference call by using the following dial-in numbers or audio webcast link available on the MSDL Investor Relations website:

 

·Audio Webcast
·Conference Call
·Domestic: 323-994-2093
·International: 888-394-8218
·Passcode: 5963189

 

To avoid potential delays, please join at least 10 minutes prior to the start of the earnings call. An archived replay will also be available on the MSDL Investor Relations website.

 

About Morgan Stanley Direct Lending Fund

 

Morgan Stanley Direct Lending Fund (NYSE: MSDL) is a non-diversified, externally managed specialty finance company focused on lending to middle-market companies. MSDL has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. MSDL is externally managed by MS Capital Partners Adviser Inc., an indirect, wholly owned subsidiary of Morgan Stanley. MSDL is not a subsidiary of or consolidated with Morgan Stanley. For more information about Morgan Stanley Direct Lending Fund, please visit www.msdl.com.

 

Forward-Looking Statements

 

Statements included herein or on the webcast/conference call may constitute “forward-looking statements,” which relate to future events or MSDL’s future performance or financial condition. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results and conditions may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in MSDL’s filings with the U.S. Securities and Exchange Commission. MSDL undertakes no duty to update any forward-looking statements made herein or on the webcast/conference call.

 

Contacts

 

Investors

Michael Occi

msdl@morganstanley.com

 

Media

Alyson Barnes

212-762-0514

alyson.barnes@morganstanley.com

 

 

 

 

Consolidated Statements of Assets and Liabilities

(In thousands, except share and per share amounts)

 

   As of 
   June 30, 2024   December 31, 2023 
   (Unaudited)   (Audited) 
Assets        
Non-controlled/non-affiliated investments, at fair value (amortized cost of $3,542,035 and $3,226,776)  $3,514,286   $3,193,561 
Cash and cash equivalents (restricted cash of $2,000 and $0)   94,966    69,705 
Deferred financing costs   17,000    14,317 
Interest and dividend receivable from non-controlled/non-affiliated investments   27,594    28,884 
Subscription receivable   —    41 
Receivable for investments sold/repaid   136    173 
Prepaid expenses and other assets   1,917    53 
Total assets   3,655,899    3,306,734 
           
Liabilities          
Debt (net of unamortized debt issuance costs of $8,331 and $5,564)   1,664,423    1,496,032 
Payable for investment purchased   31,469    8 
Payable to affiliates (Note 3)   1,508    2,870 
Dividends payable   44,704    49,968 
Management fees payable   6,479    2,012 
Income based incentive fees payable   9,903    11,766 
Interest payable   20,664    18,823 
Accrued expenses and other liabilities   14,788    4,104 
Total liabilities   1,793,938    1,585,583 
           
Commitments and Contingencies (Note 7)          
           
Net assets          
Preferred stock, $0.001 par value (1,000,000 shares authorized; no shares issued and outstanding)   —    — 
Common stock, par value $0.001 (100,000,000 shares authorized; 89,407,009 and 83,278,831 shares issued and outstanding)   89    83 
Paid-in capital in excess of par value   1,831,835    1,712,609 
Total distributable earnings (loss)   30,037    8,459 
Total net assets  $1,861,961   $1,721,151 
Total liabilities and net assets  $3,655,899   $3,306,734 
Net asset value per share  $20.83   $20.67 

 

 

 

 

Consolidated Statements of Operations (unaudited)

(In thousands, except share amounts)

 

   For the Three Months Ended   For the Six Months Ended 
   June 30, 2024   June 30, 2023   June 30, 2024   June 30, 2023 
Investment Income:                    
From non-controlled/non-affiliated investments:                    
Interest income  $99,072   $86,573   $193,703   $168,290 
Payment-in-kind   2,850    622    5,494    1,063 
Dividend income   646    504    1,211    1,000 
Other income   1,620    1,195    2,881    2,180 
Total investment income   104,188    88,894    203,289    172,533 
                     
Expenses:                    
Interest and other financing expenses   29,302    27,907    56,562    54,574 
Management fees   8,639    7,446    16,869    14,750 
Income based incentive fees   11,554    10,138    22,890    19,519 
Professional fees   1,687    847    2,904    2,088 
Directors’ fees   128    88    274    168 
Administrative service fees   17    60    42    114 
General and other expenses   51    197    159    365 
Total expenses   51,378    46,683    99,700    91,578 
Management fees waiver (Note 3)   (2,160)   (5,584)   (5,257)   (11,062)
Incentive fees waiver (Note 3)   (1,651)   —    (2,862)   — 
Net expenses   47,567    41,099    91,581    80,516 
Net investment income (loss) before taxes   56,621    47,795    111,708    92,017 
Excise tax expense   500    —    936    — 
Net investment income (loss) after taxes   56,121    47,795    110,772    92,017 
                     
Net realized and unrealized gain (loss):                    
Net realized gain (loss) on non-controlled/non-affiliated investments   108    —    (5,517)   122 
Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliated investments   2,816    8,647    5,474    8,080 
Net realized and unrealized gain (loss)   2,924    8,647    (43)   8,202 
Net increase (decrease) in net assets resulting from operations  $59,045   $56,442   $110,729   $100,219 
                     
Net investment income (loss) per share (basic and diluted)  $0.63   $0.67   $1.25   $1.29 
Earnings per share (basic and diluted)  $0.66   $0.79   $1.25   $1.41 
Weighted average shares outstanding   89,271,839    71,337,323    88,315,183    71,101,563