Q4 2024 FS KKR Capital Corp Earnings Call

And only mode. During the remarks by F. S case management at.

At the conclusion of the Companys remarks, we will begin the question and answer session at which time I will give you the instructions on entering the queue. Please.

Please note that this conference is being recorded.

At this time and our client him head of Investor Relations will proceed with the introductions with Clinton you might may begin.

Speaker Change: Thank you good morning, and welcome to Fs KKR capital Corp's fourth quarter and full year 2024 earnings conference call.

Speaker Change: Please note that Fs KKR capital Corp may be referred to as FSA, The fund or the company throughout the call.

Speaker Change: Today's conference call is being recorded and an audio replay of the call will be available for 30 days.

Speaker Change: Replay information is included in our press release that <unk> issued yesterday.

Speaker Change: In addition, <unk> posted on its website a presentation containing supplemental financial information with respect to its portfolio and financial performance for the quarter ended December 31 2024.

Good morning, ladies and gentlemen, welcome to the KKR capital Corp's fourth quarter and full year 'twenty 'twenty four earnings conference call.

Speaker Change: A link to todays webcast and the presentation is available on the Investor Relations section of the company's website under events and presentation.

Your lines will be in a listen only mode. During the remarks by at this case management ACA.

Speaker Change: Please note that this call is the property of SK any unauthorized rebroadcast of this call in any form is strictly prohibited.

Conclusion of the Companys remarks, we will begin the question and answer session at which time I will give you the instructions on entering the queue.

Speaker Change: Today's conference call includes forward looking statements and are subject to risks and uncertainties that can affect F. S K or the economy generally.

Please note that this conference is being recorded.

Speaker Change: At this time and acquaint him head of Investor Relations will proceed with the introductions with Clinton you might may begin.

Speaker Change: We ask that you refer to <unk>, most recent filings with the SEC for important factors and risks that could cause actual results or outcomes to differ materially from these statements.

Speaker Change: Thank you good morning, and welcome to FMC kick their capital Corp's fourth quarter and full year 2024 earnings conference call.

Speaker Change: <unk> does not undertake to update its forward looking statements unless required to do so by law.

Speaker Change: Please note that F. S. KKR capital Corp, maybe you referred to as S. K the fund or the company throughout the call.

Speaker Change: In addition, this call will include certain non-GAAP financial measures for such measures reconciliations to the most directly comparable GAAP measures can be found in <unk> fourth quarter earnings release that was filed with the SEC on February 26th 2025.

Speaker Change: Today's conference call is being recorded and audio replay of the call will be available for 30 days.

Speaker Change: Replay information is included in our press release issued yesterday.

non-GAAP information should be considered supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.

Speaker Change: In addition, FX gas posted on its website a presentation containing supplemental financial information with respect to its portfolio and financial performance for the quarter ended December 31 2024.

Speaker Change: In addition, these non-GAAP financial measures may not be the same as similarly named measures reported by other companies.

Speaker Change: Oh I used to todays webcast and the presentation is available on the Investor Relations section of the company's website under events and presentation.

Speaker Change: To obtain copies of the company's latest SEC filings. Please visit <unk> website.

Speaker Change: Speaking on today's call will be Michael Forman, Chief Executive Officer and Chairman.

Speaker Change: Please note that this call is the property of S. Guy any unauthorized rebroadcast of this call in any form is strictly prohibited.

Speaker Change: Dan Pietrzak, Chief investment Officer, and co President and Steven Lilly Chief Financial Officer.

Speaker Change: Today's conference call includes forward looking statements and are subject to risks and uncertainties that could affect of SK or the economy generally.

Speaker Change: Also joining us on the call today are our co chief operating officers drew O'toole and Ryan Wilson.

Michael Forman: I'll now turn the call over to Michael.

Speaker Change: We ask that you refer to other Skus most recent filings with the SEC for important factors and risks that could cause actual results or outcomes to differ materially from these statements.

Michael Forman: Thank you Anna and good morning, everyone. Thank you all for joining us for <unk> fourth quarter and full year 2024 earnings conference call.

Speaker Change: That's S. K does not undertake to update its forward looking statements unless required to do so by law.

Michael Forman: My opening comments. This morning will cover two specific topics our accomplishments during 2024 and our goals for 2025. During 2024, we were highly focused on four specific objectives first our goal is to improve credit quality and overall portfolio still.

Speaker Change: In addition, this call will include certain non-GAAP financial measures for.

Speaker Change: For such measures reconciliations to the most directly comparable GAAP measures can be found in <unk> fourth quarter earnings release that was filed with the SEC on February 26 2025.

Michael Forman: To that end during the year, we reduced our non accrual investments by 58% to 33, 7% on a cost basis and two 2% on a fair value basis.

Speaker Change: non-GAAP information should be considered supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.

Speaker Change: In addition, these non-GAAP financial measures may not be the same as similarly named measures reported by other companies.

Michael Forman: Our goal is to remain extremely disciplined from an origination standpoint, even if that discipline been passing on certain transactions.

Speaker Change: To obtain copies of the company's latest SEC filings. Please visit <unk> website.

Michael Forman: During 2024, our investment team deployed $4 7 billion of capital into compelling new transactions.

Speaker Change: Speaking on today's call will be Michael Gorman, Chief Executive Officer and Chairman.

Speaker Change: Dan Pietrzak, Chief investment Officer, and co President and Steven Lilly Chief Financial Officer.

We're entering 2025 with significant available liquidity.

Michael Forman: This is a competitive strength as we expect M&A activity to increase perhaps materially during 2025 and beyond.

Drew O'Toole: Joining us on the call today are our co Chief operating Officer drew O'toole and Ryan.

Speaker Change: I'll now turn the call over to Michael.

Third our goal is to provide shareholders with an annual distribution of $2 90 per share. We achieved this goal as our base in supplemental distributions totaled $2 80 per share and we paid <unk> <unk> per share in special distributions during the first half of the year.

Michael Gorman: Thank you Anna and good morning, everyone. Thank you all for joining us for <unk> fourth quarter and full year 2024 earnings conference call.

Michael Gorman: My opening comments. This morning will cover two specific topics our accomplishment during 2024 and our goals for 2025. During 2024, we were highly focused on four specific objectives.

Michael Forman: Fourth our goal is to maintain our strong balance sheet. During the second quarter, we issued $600 million of unsecured notes maturing in 2029 and during the fourth quarter, we issued $700 million of unsecured notes maturing in 2013.

Michael Gorman: First our goal is to improve credit quality and overall portfolio stability to that end during the year, we reduced our non accrual investments by 58% to 33, 7%.

Michael Forman: For 2025, our goals are as follows first we expect our investment team will continue to utilize its deep relationships to originate attractive well structured investments, which will be accretive to the quality of our investment portfolio.

Michael Gorman: Cost basis, and two 2% on a fair value basis.

Michael Gorman: Second our goal is to remain extremely disciplined from an origination standpoint, even affect discipline been passing on certain transactions.

Michael Forman: We recognize that we're starting from a position of strength given our relatively low leverage as of year end.

Michael Gorman: 2024, our investment team deployed $4 $7 billion of capital into compelling new transactions.

Michael Forman: Second based upon our current view of interest rates for the year, we expect to provide shareholders with $2 80, a total distributions.

Michael Gorman: We are entering 2025 with significant available liquidity.

Michael Gorman: This is a competitive strength as we expect M&A activity to increase perhaps materially during 2025 and beyond.

Michael Forman: Through a combination of our quarterly base distribution of <unk> 64 per share at our cordele quarterly supplemental distributions, which is equated to <unk> <unk> per share for the last several quarters.

Michael Gorman: Third our goal is to provide shareholders with an annual distribution of $2 90 per share. We achieved this call as our basin supplemental distributions totaled $2 80 per share and we paid 10 cents per share in special distributions during the first half of the year.

Michael Forman: And while we recognize that the recent decline in interest rates will reduce our net investment income we believe our healthy balance our spillover income will enable us to continue rewarding shareholders by returning to them. The additional earnings we generated during the recent higher interest rate period.

Michael Gorman: Fourth our goal is to maintain our strong balance sheet. During the second quarter, we issued $600 million of unsecured notes maturing in 2029 and during the fourth quarter, we issued $700 million of unsecured notes maturing in 2013.

Michael Forman: Third we expect to continue proactively ladder, the right side of our balance sheet to maintain and over time enhance our investment grade ratings.

Michael Forman: Turning to our fourth quarter results SK generated net investment income totaling 61 per share and adjusted net investment income totaling 66 per share.

Michael Gorman: For 2025, our goals are as follows first we expect our investment team will continue to utilize its deep relationships to originate attractive well structured investments, which will be accretive to the quality of our investment portfolio.

Michael Forman: As compared to our public guidance of approximately 63.

Michael Gorman: We recognize that we are starting from a position of strength given our relatively low leverage as of year end.

Michael Forman: Per share and 68 per share respectively.

Michael Forman: The difference in our reported financial results as compared to our guidance relates to a few new investment opportunities, which closed after year end.

Michael Gorman: Second based upon our current view of interest rates for the year, we expect to provide shareholders with $2 80, a total distributions.

Michael Forman: In keeping with my earlier comments, our board has declared a first quarter distribution of <unk> 70 per share consisting of our base distribution of <unk> 64 per share and a supplemental distribution of six cents per share.

Michael Gorman: Through a combination of our quarterly base distribution of <unk> 64 per share at our cordele quarterly supplemental distribution, which is equated to <unk> <unk> per share for the last several quarters.

Dan: And with that I'll turn the call over to Dan.

Michael Gorman: And while we recognize that the recent decline in interest rates will reduce our net investment income we believe our healthy balance of spillover income will enable us to continue rewarding shareholders by returning to them. The additional earnings we generated during the recent higher interest rate period.

Dan: Thanks, Michael as.

Speaker Change: As Michael indicated 2024 was a strong year of execution for our credit platform.

Dan: And for <unk>.

Dan: Proud of the performance, we delivered which is a testament to the hard work dedication and strategic focus of our entire team.

Michael Gorman: Third we expect to continue proactively ladder, the right side of our balance sheet to maintain and over time enhance our investment grade ratings.

Dan: Since the establishment of the <unk> K care advisor almost seven years ago, we have originated over $27 billion of new investments, which have generated an unlevered IRR of nine 6% since inception.

Michael Gorman: Turning to our fourth quarter results SK generated net investment income totaling 61 per share and adjusted net investment income totaling 66 per share.

Dan: Additionally, our strong 2024 performance enabled us to deliver shareholders, a 12, 1% yield on our average net asset value and share her shareholders were further rewarded with a total return of 23%.

Michael Gorman: As compared to our public guidance of approximately <unk> 63 per share at <unk> 68 per share respectively.

Dan: Turning to the state of the economy and the lending environment. The current macroeconomic environment for many is a balancing act between the desire for growth lingering inflationary pressures and recent unexpected interest rate adjustments.

Michael Gorman: The difference in our reported financial results as compared to our guidance relates to a few new investment opportunities, which closed at year end.

Michael Gorman: In keeping with my earlier comments, our board has declared a first quarter distribution of <unk> 70 per share consisting of our base distribution of <unk> 64 per share and a supplemental distribution of six cents per share.

Dan: Current administrations issuance of a significant number of executive orders and swift moves across multiple geopolitical and international economic fronts.

Dan: And with that I'll turn the call over to Dan.

Dan: Including the ongoing threat of senescence significant tariffs with large trading partners have somewhat tempered enthusiasm for a quick start to the year from an M&A standpoint.

Dan: Thanks, Michael.

Dan: As Michael indicated 2024 was a strong year of execution for our credit platform and.

Dan: And for <unk>.

Dan: Instead companies are taking steps to quantify what effects.

Dan: Router the performance, we delivered which is a testament to the hard work dedication and strategic focus of our entire team.

Dan: Potential policies may have on their businesses.

Dan: As a result, while our expectation still call for a robust increase in M&A activity over the next few years, we caution investors that a significant increase in M&A activity may take longer to materialize than certain industry observers are forecasting.

Dan: Since the establishment of the <unk> K care advisor almost seven years ago, we have originated over $27 billion of new investments, which have generated an unlevered IRR of nine 6% since inception.

Dan: Additionally, our strong 2024 performance enabled us to deliver shareholders at 12, 1% yield on our average net asset value and share her shareholders were further rewarded with a total return of 23%.

Dan: That being said I would note that our early stage pipeline has been building meaningfully supporting our view of a continued increase in deal activity during 2025 and beyond.

Dan: Turning to the state of the economy and the lending environment. The current macroeconomic environment for many is a balancing act between the desire for growth lingering inflationary pressures and recent unexpected interest rate adjustments.

Dan: Against this backdrop, we continue to see strong tailwind in the direct lending market.

Dan: The current level of interest rates has created a very balanced scenario, where interest burdens for our portfolio companies have been reduced from the highs of 2023.

Dan: The current administration's issuance of a significant number of executive orders and swift moves across multiple geopolitical and international economic fronts.

Dan: While simultaneously the current rate environment is still producing attractive levels of income driven total return for investors.

Dan: Including the ongoing threat, so significant tariffs with large trading partners.

Dan: Credit defaults have remained largely contained across the industry and borrowers continue to generate revenue and earnings growth.

Dan: Somewhat tempered enthusiasm for a quick start to the year from an M&A standpoint.

Dan: All of this points to direct lending market fundamentals remaining strong and we believe the scales will continue moving in the favor of private credit providers.

Dan: Instead companies are taking steps to quantify what effects. These potential policies may have on their businesses.

Dan: As a result, while our expectations still call for a robust increase in M&A activity over the next few years, we caution investors that a significant increase in M&A activity may take longer to materialize than certain industry observers are forecasting.

Dan: Turning to our investment activity during the fourth quarter, we originated $891 million of new investments compared to one.

Dan: $146 billion of exits.

Dan: There were no sales from <unk> to our joint venture this quarter.

Dan: We continue to benefit from incumbency across our portfolio as the majority of our new investments were focused on add on financings to existing portfolio companies and long term care relationships.

Dan: That being said I would note that our early stage pipeline has been building meaningfully supporting our view of a continued increase in deal activity during 2025 and beyond.

Dan: New originations consisted of approximately 63% in first lien loans, 36% in asset based finance investments and 1% in equity or other investments.

Dan: Against this backdrop, we continue to see strong tailwind in the direct lending market.

Dan: The current level of interest rates has created a very balanced scenario, where interest burdens for our portfolio companies have been reduced from the highs of 2023.

Dan: Our new direct lending investments had a weighted average EBITDA of approximately $206 million five four turns of leverage through our security and a weighted average coupon of approximately so for plus 516 basis points.

Dan: While simultaneously the current rate environment is still producing attractive levels of income driven total return for investors.

Dan: Credit defaults have remained largely contained across the industry and borrowers continue to generate revenue and earnings growth.

Dan: We continue to focus on the upper end of the middle market as the weighted average EBITDA of our portfolio companies was $239 million as of December 31, 2024.

Dan: All of this points to direct lending market fundamentals remaining strong and we believe the scales will continue moving in the favor of private credit providers.

Dan: And our portfolio companies reported a weighted average year over year EBITDA growth rate of approximately 16% across companies in which we have invested in since April of 2018.

Dan: Turning to our investment activity during the fourth quarter, we originated $891 million of new investments compared to 141 $46 billion of exits.

Dan: Interest coverage levels have rebounded to one seven times compared to one six times last quarter at one five times during the fourth quarter of 2023.

Dan: There were no sales from FSA to our joint venture this quarter.

Dan: We continue to benefit from incumbency across our portfolio as the majority of our new investments were focused on add on financings to existing portfolio companies and long term care relationships.

Dan: As of the end of the fourth quarter non accruals represented three 7% of our portfolio on a cost basis, and two 2% of our portfolio on a fair value basis.

Dan: This compares to three 8% of our portfolio on a cost basis, and one 7% of our portfolio on a fair value basis as of September 32024.

Dan: New originations consisted of approximately 63% in first lien loans, 36% in asset based finance investments and 1% in equity or other investments.

Dan: We also believe it is helpful to provide the market with information based on the <unk> assets originated by KKR credit.

Dan: Our new direct lending investments out of the weighted average EBITDA of approximately $206 million five four turns of leverage through our security and a weighted average coupon of approximately so for plus 516 basis points.

Dan: Non accruals relating to the 89% of our total portfolio, which has been originated by KKR credit in the Fs KKR advisor or 2% on a cost basis, and 80 basis points on a fair value basis as of the end of the fourth quarter.

Dan: We continue to focus on the upper end of the middle market as the weighted average EBITDA of our portfolio companies was $239 million as of December 31, 2024.

This compares to two 2% on a cost basis, and 50 basis points on a fair value basis as of the end of the third quarter.

Dan: And our portfolio companies reported a weighted average year over year EBITDA growth rate of approximately 16% across companies in which we have invested in since April of 2018.

Dan: Yes.

Dan: During the fourth quarter, two investments were added to nonaccrual status and one investment was removed.

Dan: Our first lien senior secured position and Alacrity solutions group was added to non accrual contributing $22 million of costs and $16 million of fair value.

Dan: Interest coverage levels have rebounded to one seven times compared to one six times last quarter at one five times during the fourth quarter of 2023.

Dan: In addition, our preferred equity investment in Cuba Corp was added to non accrual contributing $56 million of cost and $42 million of fair value.

Dan: As of the end of the fourth quarter non accruals represented three 7% of our portfolio on a cost basis, and two 2% of our portfolio on a fair value basis.

Dan: Also during the quarter certain parts of our debt position in Miami Beach Medical groups were written off in conjunction with the company's chapter 11 process.

Dan: This came in Paris to three 8% of our portfolio on a cost basis, and one 7% of our portfolio on a fair value basis as of September 32024.

Dan: We expect to receive certain additional proceeds in relation to our remaining debt exposure as the investment is winding down post the sale of the company.

Dan: We also believe it is helpful to provide the market with information based on the assets originated by KKR credit.

Dan: In terms of other portfolio updates worldview.

Dan: Non accruals relating to the 89% of our total portfolio, which has been originated by KKR credit in the Fs KKR advisor or 2% on a cost basis, and 80 basis points on a fair value basis as of the end of the fourth quarter.

Dan: Worldwide, the pet product provider, which we discussed on our last earnings call was restructured during the fourth quarter.

Dan: The sponsor contributed approximately $42 million of additional capital into the business with $30 million being used to repay the term loan at par.

Dan: This compares to two 2% on a cost basis, and 50 basis points on a fair value basis as of the end of the third quarter.

Dan: As a result of the restructuring SK received $19 million of first lien senior secured take back debt committed $1 $7 million to a new <unk> and received equity in the business.

Dan: Yes.

Dan: During the fourth quarter, two investments were added to non accrual status and one investment was removed.

Dan: Cross <unk> and other funds KKR now has 35% equity ownership and three board seats.

Dan: Our first lien senior secured position and Alacrity solutions group was added to non accrual contributing $22 million of costs and $16 million of fair value.

Dan: Lastly, we are pleased to note that Maverick natural resources, our legacy position, which has been in the portfolio. Since 2014 has announced the sale to diversified energy.

Dan: In addition, our preferred equity investment in Cuba Corp was added to non accrual contributing $56 million of cost and $42 million of fair value.

Dan: As a result, <unk> $37 million investment will be monetized.

Dan: Also during the quarter certain parts of our debt position in Miami Beach Medical groups were written off in conjunction with the company's chapter 11 process.

Dan: We expect the transaction will close in the coming quarters subject to customary closing conditions.

And with that I'll turn the call over to Steven.

Dan: We expect to receive certain additional proceeds in relation to our remaining debt exposure as the investment is winding down post the sale of the company.

Steven: Thanks, Dan.

Steven: As of December 31, 2020 for our investment portfolio had a fair value of $13 5 billion.

Dan: In terms of other portfolio updates.

Steven: <unk> 214 portfolio companies.

Dan: Worldwide, the pet product provider, which we discussed on our last earnings call was restructured during the fourth quarter.

Steven: At the end of the fourth quarter, our 10 largest portfolio companies represented approximately 21% of the fair value of our investment portfolio compared to 22% as of the end of the third quarter.

Dan: The sponsor contributed approximately $42 million of additional capital into the business with $30 million being used to repay the term loan at par.

We continue to focus on senior secured investments as our portfolio consisted of approximately 58% first lien loans.

Dan: As a result of the restructuring FCA received $19 million of first lien senior secured take back debt committed $1 $7 million to a new <unk> and received equity in the business.

Steven: 64% senior secured debt as of December 31.

Steven: In addition, our joint venture represented approximately 10% of the fair value of our portfolio as.

Dan: <unk> <unk> and other funds take care now has 35% equity ownership and three board seats.

Steven: As a result, when investors consider our entire portfolio looking through to the investments in our joint venture in first lien loans total approximately 67% of our total portfolio and senior secured investments total approximately 73% of our portfolio as of December 31.

Dan: Lastly, we are pleased to note that Maverick natural resources, our legacy position, which has been in the portfolio. Since 2014 has announced a sale to a diversified energy.

Dan: As a result, <unk> $37 million investment will be monetized.

Steven: The weighted average yield on accruing debt investments was 11% as of December 31, 2024, a decrease of 50 basis points compared to 11, 5%.

Dan: We expect the transaction will close in the coming quarters subject to the customary closing conditions.

Steven: And with that I'll turn the call over to Steven.

Steven: Thanks, Dan.

Steven: September 30.

Steven: As of December 31, 2020 for our investment portfolio had a fair value of $13 5 billion.

Steven: The decrease primarily is attributable to the decline in base rates and incremental spread compression.

Steven: As a reminder, the calculation of weighted average yield is adjusted to exclude the accretion associated with the merger that scale.

Steven: <unk> 214 portfolio companies.

Steven: At the end of the fourth quarter, our 10 largest portfolio companies represented approximately 21% of the fair value of our investment portfolio compared to 20% as of the end of the third quarter.

Steven: From an operational perspective.

Steven: Our total investment income decreased by $34 million quarter over quarter.

Steven: We continue to focus on senior secured investments as our portfolio consisted of approximately 58% first lien loans.

Steven: $407 million.

Steven: Primarily due to the decline in base rates and the delayed closing of certain new investments until the first quarter of this year.

Steven: 64% senior secured debt as of December 31.

Steven: The delay in investment closings resulted in lower fee income quarter over quarter, and also lower leverage as of quarter end.

Steven: In addition, our joint venture represented approximately 10% of the fair value of our portfolio.

Steven: As a result, when investors consider our entire portfolio looking through to the investments in our joint venture in first lien loans total approximately 67% of our total portfolio and senior secured investments total approximately 73% of our portfolio as of December 31.

Steven: The primary components of our total investment income during the quarter were as follows.

Steven: Total interest income was $324 million.

Steven: A decrease of $32 million quarter over quarter.

Steven: Dividend and fee income totaled $83 million.

Steven: Decrease of $2 million quarter over quarter.

Steven: The weighted average yield on accruing debt investments was 11% as of December 31, 2024, a decrease of 50 basis points compared to 11, 5% as of September 30.

Steven: Our total dividend and fee income during the quarter is summarized as follows.

Steven: $53 million of recurring dividend income from our joint venture.

Steven: Other dividends from various portfolio companies totaling approximately $23 million during the quarter.

Steven: The decrease primarily attributable to the decline in base rates and incremental spread compression.

Steven: Fee income totaling approximately 7 million.

Steven: As a reminder, the calculation of weighted average yield is adjusted to exclude the accretion associated with the merger of SK <unk>.

Steven: During the quarter.

Our interest expense totaled $116 million, a decrease of $2 million quarter over quarter, and our weighted average cost of debt was five 4% as of December 31.

Steven: From an operational perspective, our total investment income decreased by $34 million quarter over quarter to $407 million.

Steven: Management fees totaled $53 million.

Steven: Primarily due to the decline in base rates and the delayed closing of certain new investments until the first quarter of this year.

Steven: A decrease of $1 million quarter over quarter and.

Steven: And incentive fees totaled $35 million a.

Steven: A decrease of $9 million quarter over quarter.

Steven: The delay in investment closings resulted in lower fee income quarter over quarter, and also lower leverage as of quarter end.

Steven: Other expenses totaled $9 million during the fourth quarter, a decrease of $1 million.

Steven: A detailed bridge and our net asset value per share on a quarter over quarter basis is as follows.

Steven: The primary components of our total investment income during the quarter were as follows.

Steven: Our ending third quarter 2024, net asset value per share of $23 82.

Steven: Total interest income was $324 million.

Steven: A decrease of $32 million quarter over quarter.

Steven: Was increased by GAAP net investment income of <unk> 61 per share.

Steven: Dividend and fee income totaled $83 million.

Steven: Decrease of $2 million quarter over quarter.

Steven: And was decreased by <unk> <unk> per share due to a decrease in the overall value of our investment portfolio.

Steven: Our total dividend and fee income during the quarter is summarized as follows 50.

Steven: $53 million of recurring dividend income from our joint venture.

Steven: Our net asset value per share was reduced by our <unk> 70 per share total quarterly distributions paid during the quarter.

Steven: Other dividends from various portfolio companies totaling approximately $23 million during the quarter.

Steven: For some of these activities results in our December 31, 2024, net asset value per share of $23 64.

Steven: Fee income totaling approximately $7 million during the quarter.

Steven: Our interest expense totaled $116 million, a decrease of $2 million quarter over quarter, and our weighted average cost of debt was five 4% as of December 31.

Steven: From a forward looking guidance perspective, we expect first quarter 2025, GAAP net investment income to approximate 66 cents per share and.

Steven: And we expect our adjusted net investment income to approximate 64 per share.

Steven: Management fees totaled $53 million.

Steven: A decrease of $1 million quarter over quarter and.

Steven: Detailed first quarter guidance is as follows.

And incentive fees totaled $35 million a.

Steven: Our recurring interest income on a GAAP basis is expected to approximate $310 million.

Steven: A decrease of $9 million quarter over quarter.

Steven: Other expenses totaled $9 million during the fourth quarter, a decrease of $1 million.

Steven: We expect recurring dividend income associated with our joint venture to approximate $46 million.

Steven: A detailed bridge and our net asset value per share on a quarter over quarter basis is as follows.

Steven: We expect other fee and dividend income to approximate $41 million during the first quarter.

Steven: Our ending third quarter 2024, net asset value per share of $23 82.

From an expense standpoint, we expect our management fees to approximate $53 million, we expect incentive fees to approximate $38 million, we expect our interest expense to approximate $112 million and we expect other G&A expenses to approximate $9 million.

Steven: Was increased by GAAP net investment income of <unk> 61 per share and.

Steven: <unk> decreased by nine <unk> per share due to a decrease in the overall value of our investment portfolio.

Steven: Our net asset value per share was reduced by our 70 per share total quarterly distributions paid during the quarter.

Steven: And as Michael indicated during his remarks.

Steven: But some of these activities results in our December 31, 2024, net asset value per share of $23 64.

Steven: Currently expect our distributions during the year will total at least $2 80 per share comprised of $2 56 per share a base distributions and 24 per share of supplemental distributions.

Steven: From a forward looking guidance perspective, we expect first quarter 2025, GAAP net investment income to approximate 66 cents per share.

Steven: Turning to our capital structure during the fourth quarter, we issued $700 million of.

Steven: Six one to five 5% unsecured notes due 2030.

Steven: And we expect our adjusted net investment income to approximate 64 per share.

Steven: Which subsequently were swapped to floating rate.

Steven: Detailed first quarter guidance is as follows.

Steven: Interest rate swap agreements at an average of sofa plus.

Steven: Our recurring interest income on a GAAP basis is expected to approximate $310 million.

Steven: Plus 2122, 7%.

Steven: Proceeds were used to repay outstanding debt on our revolver.

Steven: We expect recurring dividend income associated with our joint venture to approximate $46 million.

Steven: We continue to proactively manage our liability structure coming maturities and.

Steven: We expect other fee and dividend income to approximate $41 million during the first quarter.

Steven: And we expect we will access the unsecured market on an opportunistic basis during 2025.

Steven: From an expense standpoint, we expect our management fees to approximate $53 million, we expect incentive fees to approximate $38 million, we expect our interest expense to approximate $112 million and we expect other G&A expenses to approximate $9 million.

Steven: Our gross and net debt to equity levels.

Steven: Were 112% and 104% respectively at December 31, 2024, compared to 121% and 109% at September 32024.

Steven: At December 31, our available liquidity was $4 8 billion.

Steven: And as Michael indicated during his remarks.

Steven: And approximately 75% of our drawn balance sheet and 47% of our committed balance sheet was comprised of unsecured debt.

Steven: Currently expect our distributions during the year will total at least $2 80 per share.

Steven: Rise to $2 56 per share of base distributions and 24 per share of supplemental distributions.

Michael Forman: And with that I'll turn the call back to Michael for a few closing remarks before we open the call for questions.

Steven: Turning to our capital structure during the fourth quarter, we issued $700 million of.

Michael Forman: Thanks Steven.

Michael Forman: As we move into 2025, we remain highly focused on our strategy and the opportunities ahead of us.

Steven: Of six 5% unsecured notes due 2030.

Steven: Which subsequently were swapped to floating rate.

Michael Forman: Our portfolio continues to demonstrate strong credit performance and our balance sheet provides us with ample liquidity to take advantage of quality transactions during 2025 and beyond.

Steven: Interest rate swap agreements at an average of sofa plus.

Steven: Plus 2122, 7%.

Steven: Proceeds were used to repay outstanding debt on our revolver.

Michael Forman: We thank you for your continued support and we look forward to updating you on our progress toward our goals during the year with that operator wed like to open the line for questions.

Steven: We continue to proactively manage our liability structure for upcoming maturities and.

Steven: And we expect we will access the unsecured market on an opportunistic basis during 2025.

Michael Forman: Thank you.

Michael Forman: Time, we will conduct a question answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby will be compile the Q&A roster.

Steven: Our gross and net debt to equity levels.

Steven: Were 112% and 104% respectively at December 31, 2024, compared to 121% and 109% at September 32024.

Steven: At December 31, our available liquidity was $4 8 billion.

Speaker Change: Our first question comes from Ken Lee RBC capital markets. Your line is now open.

Steven: And approximately 75% of our drawn balance sheet and 47% of our committed balance sheet was comprised of unsecured debt.

Ken Lee: Hey, Thanks for taking my question and good morning.

Speaker Change: Just one on the on the dividend outlook there.

Steven: And with that I'll turn the call back to Michael for a few closing remarks before we open the call for questions.

Speaker Change:

Speaker Change: I guess I'm wondering if you could just further flesh out your confidence in terms of the dividend outlook it sounds as if.

Michael Gorman: Thanks Steven.

Michael Gorman: As we move into 2025, we remain highly focused on our strategy and the opportunities ahead of us.

Speaker Change: Bill over it comes as a big factor there.

Speaker Change: Wonder if you could just provide some color in terms of what it implies about adjusted net investment income outlook as well. Thanks.

Michael Gorman: Our portfolio continues to demonstrate strong credit performance and our balance sheet provides us with ample liquidity to take advantage of quality transactions during 2025 and beyond.

Ken Lee: Yes, good morning, Ken.

Speaker Change: I'm happy to start and Stephen might want to add to it I think.

Ken Lee: Couple of different points, there, we have set up our dividend policy.

Michael Gorman: We thank you for your continued support and we look forward to updating you on our progress toward our goals during the year with that operator wed like to open the line for questions.

Ken Lee: From the last couple of years now with this kind of idea of the base in the supplemental.

Ken Lee: The base being the 64 of the supplemental being.

Michael Gorman: Thank you.

Ken Lee: The six I would note at the 64 cents I think at current NAV is still roughly 11%. So still attractive we did have several quarters of over earning.

Michael Gorman: Time, we will conduct a question answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby will be compile the Q&A roster.

Ken Lee: Over the last handful of years, considering the rate as well as the spread environment.

Ken Lee: We think it's prudent to count a reward the shareholders with that level of additional earnings Thats been the conversation with our board as well.

Speaker Change: Our first question comes from Ken Lee RBC capital markets. Your line is now open.

Ken Lee: So I think we remain focused on that base and supplement also the components that are providing the guidance of expecting $2 80 for the year.

Ken Lee: Hey, Thanks for taking my question and good morning.

Speaker Change: Just one on the on the dividend outlook there.

Ken Lee: Yes, Tim it's Steven just to add on to what Dan was saying we were had been I would call. It successful in building the spillover balance that we've talked to the market about.

Speaker Change: I guess I'm wondering if you could just further flesh out your confidence in terms of the dividend outlook it sounds as if the.

Speaker Change: The spillover income is a big factor there.

Ken Lee: As we sit today that that represents.

Speaker Change: I'm just wondering if you could just provide some color in terms of what it implies about adjusted net investment income outlook as well. Thanks.

Ken Lee: Two seven quarters worth of total dividend.

Ken Lee: In terms of the strategy. This year, we would reduce that to somewhere around three three quarters' worth of total dividends, which on a long term basis and you can certainly cover the stock for a long time, we said, we'd like to be plus or minus two quarters. So it brings us back to that that level that sort of long term target level in that.

Ken Lee: Yes, good morning, Ken.

Speaker Change: I'm happy to start and Steve may want to add to it I think.

Speaker Change: A couple of different points. There we have set up our dividend policy from the last couple of years now with this kind of idea of the base in the supplemental.

Speaker Change: The base being the 64 of the supplemental being the.

Ken Lee: Range so.

Ken Lee: Nothing more than that and think it's a good signal obviously for shareholders as well to have some certainty of payments this year.

Speaker Change: Six.

Speaker Change: Note at the 64 cents I think at current NAV is still roughly 11%. So still attractive we did have several quarters of over earning.

Ken Lee: Got you very helpful. There.

Ken Lee: And just one follow up if I may.

Speaker Change: Over the last handful of years, considering the rate as well as the spread environment.

Speaker Change: I think in the prepared remarks, you mentioned.

Speaker Change: We think it's prudent to count a reward the shareholders with that level of additional earnings Thats been the conversation with our board as well.

Speaker Change: Seeing a decline in base rates as well some spread compression in the quarter there.

Speaker Change: I Wonder if I could just get your thoughts around how would you characterize the spreads are getting per unit of risk like for example leverage.

Speaker Change: So I think we remain focused on that base and supplement also the components that are providing the guidance of expecting $2 80 for the year.

Speaker Change: What kind of trends are you seeing there. Thanks.

Speaker Change: Yes.

Speaker Change: Thank you.

Speaker Change: Yes, Tim it's Steven just to add on to what Dan was saying we have been I would call. It successful in building the spillover balance that we've talked to the market about.

Ken Lee: Ken we've we've seen almost across all credit markets, a decent amount of spread compression.

Ken Lee: And a lot of ways at least for kind of the new deal flow, we probably saw more of that spread compression.

Speaker Change: Yes, as we sit today that that represents.

Speaker Change: Two seven quarters worth of total dividend.

Ken Lee: In the first half of <unk>.

Speaker Change: In terms of the strategy. This year, we would reduce that to somewhere around 3.3 quarters' worth of total dividends switch.

Ken Lee: Last year sort of going into the third quarter. So I think we've seen maybe some stability.

Ken Lee: Stability on the new deals, albeit maybe still testing certain kind of new levels. I think you could argue the regular way.

Speaker Change: Long term basis, and you can certainly cover the stock for a long time, we've said, we'd like to be plus or minus two quarters. So it brings us back to that that level that sort of long term target level in that range.

Ken Lee: Direct lending deal. These days is $4 75, or a kind of 5%.

Ken Lee: Before fee income now.

Speaker Change: It's nothing more than that and think it's a good signal obviously for shareholders as well, perhaps uncertainty of payments this year.

Ken Lee: But you've seen the syndicated market tightened down pretty meaningfully as well.

Ken Lee: I think we've also seen a certain amount of re pricings in the book.

Speaker Change: Got you very helpful. There.

Ken Lee: That said I think there were pricings are generally highly correlated to the names that are performing well.

Speaker Change: And just one follow up if I may.

Speaker Change: I think in the prepared remarks, you mentioned.

Ken Lee: And I think we would also though on the other side of that use those were pricing to potentially exit certain positions, if we didnt necessarily love the risk reward but.

Speaker Change: A decline in base rates as well some spread compression in the quarter there.

Speaker Change: I'm wondering if I could just get your thoughts around how would you characterize the spreads are getting per unit of risk like for example leverage.

Ken Lee: So I think you can put in context.

Ken Lee: A bit of a more borrower friendly market. These days when it comes to spreads I think on the other side of that the total return of these deals that we're still seeing is roughly 10%.

Speaker Change: What kind of trends are you seeing there. Thanks.

Speaker Change: Yes.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: We've seen almost across all credit markets.

Speaker Change: The amount of spread compression.

Ken Lee: I think the strength of the company the size of the company.

Speaker Change: I think in a lot of ways at least for kind of the new deal flow, we probably saw more of that spread compression.

Ken Lee: <unk>.

Ken Lee: It's still.

Ken Lee: Pretty attractive in our minds.

Speaker Change: In the first half of.

Ken Lee: Got you very helpful. There. Thanks again.

Speaker Change: <unk>.

Ken Lee: Thanks have a good day.

Speaker Change: Last year sort of going into the third quarter. So I think we've seen maybe some steve.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Casey Alexander of Compass Point Research and trading your line is now open.

Speaker Change: Stability on the new deals, albeit may be still testing certain kind of new levels. I think you could argue the regular way.

Speaker Change: Direct lending deal. These days is 475 or a kind of 5%.

Speaker Change: Thank you.

Speaker Change: Since the deals have already closed and because it might help for modeling purposes is there any way to give any granularity or quantify.

Speaker Change: Before fee income now.

Speaker Change: But you've seen the syndicated market tightened down pretty meaningfully as well.

Speaker Change: I think we've also seen a certain amount of re pricings in the book.

Speaker Change: How much in terms of new origination Scott rolled over from Q4 to Q1.

Speaker Change: That said I think there were pricings are generally highly correlated to the names that are performing well.

Speaker Change: Good morning, guys.

Speaker Change: And I think we would also though on the other side of that use those were pricing for potentially exit certain positions, if we didnt necessarily love the risk reward but.

Speaker Change: I thank yous.

Speaker Change: Trying to think about the right to the number we're talking a couple of handful of deals too.

Speaker Change: It probably would've generated two three.

Speaker Change: So I think you can put in context.

Speaker Change: <unk> census, sort of fee income.

Speaker Change: A bit of more borrower friendly market. These days when it comes to spreads I think on the other side of that the total return of these deals that we're still seeing is roughly 10%.

Speaker Change: Okay.

Speaker Change: Those deals those deals close just a timing difference.

Speaker Change: Okay and then.

Speaker Change: You talked about how.

Speaker Change: I think the strength of the company the size of the company.

Speaker Change: M&A may be delayed but at the same time, you said that your pipeline is filling so what do you.

Speaker Change: <unk>.

Speaker Change: It's still.

Speaker Change: Pretty attractive in our minds.

Speaker Change: Where are you getting the pipeline fill.

Speaker Change: Got you very helpful. There. Thanks again.

Speaker Change: Thanks have a good day.

Speaker Change: Our private equity sponsors starting to <unk>.

Speaker Change: Thank you.

Speaker Change: Bring forward some of the back books that they need to get rid of or are these companies that are just completely insulated from the.

Speaker Change: Our next question comes from Casey Alexander of Compass Point Research and trading your line is now open.

The bulk of government policies, where are you seeing that pipeline fill if M&A.

Speaker Change: Thank you.

Speaker Change: Since the deals have already closed and because it might help for modeling purposes is there any way to give any granularity or quantify.

Speaker Change: <unk> is being delayed.

Yes, no. It's a fair question and then maybe maybe we shouldn't have been a little bit of CRISPR and the prepared remarks, but I think we were I think we and probably the rest of the market.

Speaker Change: How much in terms of new origination Scott rolled over from Q4 to Q1.

Speaker Change: It has been kind of waiting for what I'll call that meaningful impact in M&A volumes that are across the market.

Speaker Change: Good morning, guys.

Speaker Change: Thank you.

Speaker Change: Trying to think about the right to the number we're talking a couple of handful of deals kind of to that.

Speaker Change: I'm not sure it gets maybe all the way to 21 levels, but I'm not sure it's that far off that.

Speaker Change: In many ways everything was lining up for that <unk> got.

Speaker Change: Probably would have generated two three.

Speaker Change: <unk> census, sort of fee income.

Speaker Change: Private equity Lps wanting to get capital back you've got a bunch of dry powder, it's been a slow a couple of years.

Speaker Change: Okay.

Speaker Change: Those deals those deals close just a timing difference.

Speaker Change: Think.

Speaker Change: Okay and then.

Speaker Change: The capital markets and others.

Speaker Change: Probably further buildup on that trend as it relates to the new administration, so the coming onboard.

Speaker Change: You talked about how.

Speaker Change: M&A may be delayed but at the same time, you said that your pipeline is filling so what do you.

Speaker Change: So I think.

Speaker Change: In our mind with some of the points, whether it's tariffs or sort of otherwise I think people are doing a little bit more maybe work at the portfolio company level, it's slowing down in our mind that larger wave that we're expecting that said that maybe in a simpler way I think we're kind a busier now than we were.

Speaker Change: Where are you getting the pipeline fill.

Speaker Change: Our private equity sponsors starting to <unk>.

Speaker Change: Bring forward some of the back books that they need to get rid of or are these companies that are just completely insulated from the.

Speaker Change: The bulk of government policies, where are you seeing that pipeline fill if M&A.

Speaker Change: In different points of 'twenty, three 'twenty, four but I think we're expecting to get busier as the quarters go forward.

Speaker Change: Pickup is being delayed.

Speaker Change: Okay. Thank you for that and one last one.

Speaker Change: Yes, no. It's a fair question and then maybe maybe we should have been a little bit of CRISPR and the prepared remarks, but I think we were I think we and probably the rest of the market.

Speaker Change: On Maverick.

Would you characterize that that sale kind of at the mark above or below.

Speaker Change: It has been kind of waiting for what I'll call that meaningful impact.

Fair question.

Speaker Change: M&A volumes that are across the market.

Speaker Change: It would have I would characterize it as.

Speaker Change: I'm not sure it gets maybe all the way to 21 levels, but I'm not sure it's that far off that.

Speaker Change: Below.

Speaker Change: In many ways everything was lining up for that <unk> got.

Mark: Mark I mean, I think the markets in sort of Q4 is quite a fair remark.

Speaker Change: Private equity LP is wanting to get capital back you've got a bunch of dry powder, it's been a slow a couple of years.

Speaker Change: I was actually above the mark of them, both Michael Baltimore lagged the sale price was kind of above the Mark I think.

Speaker Change: Thank you.

Speaker Change: The capital markets and others.

Speaker Change: As we got to go through the closing conditions as those certain ways, which will monetize that on a go forward basis.

Speaker Change: Probably further buildup on that trend as it relates to the new administration, so the coming onboard.

Speaker Change: All of our valuations we would.

Speaker Change: So I think.

Speaker Change: Incorporate certain.

Speaker Change: In our mind with some of the points, whether it's tariffs or sort of otherwise I think people are doing a little bit more maybe work at the portfolio company level, it's slowing down in our mind that larger wave that we're expecting that said that maybe in a simpler way I think we're kind of busier now than we were.

Speaker Change: <unk>.

Speaker Change: Points are there to not just bring it to straight kind of.

Speaker Change: Market values at a price side, but I think thats in line with how we would value something like that but the sale was above the mark you would've seen.

Speaker Change: Alright, great. Thank you appreciate it.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Robert Dodd of Raymond James Your line is now open.

Speaker Change: In different points of 'twenty, three 'twenty, four but I think we're expecting to get busier as the quarters go forward.

Robert Dodd: Hi, guys.

Speaker Change: Okay. Thank you for that and one last one.

Speaker Change: On the kind of tied to the M&A build right.

Speaker Change: On Maverick.

Robert Dodd: Larger players of the market.

Robert Dodd: Focus on sponsor finance, but you all know.

Speaker Change: Would you characterize that that sale kind of at the mark above or below.

Robert Dodd: So how would you characterize separately from the sponsor backed.

Robert Dodd: Our outlook for 'twenty, five and building pipeline the asset backed finance side.

Speaker Change: Fair question.

Speaker Change: It would have I would characterize it as.

Robert Dodd: Uh huh.

Robert Dodd: Although the market talk about that as kind of the next wave.

Speaker Change: Below.

Speaker Change: Mark I mean, I think the markets in sort of Q4 is quite a fair remark.

Robert Dodd: For a while but what's your what's your outlook on that side of the book.

Speaker Change: I was actually above the mark of them. Both my father always lagged the sale price was kind of above the Mark I think.

Robert Dodd: Yes, I mean, I think Youre right, Robert we've got a big kind of business there we've got.

Robert Dodd: Roughly 50 people focused on that we've got north of 65 billion of total AUM.

Speaker Change: As we got to go through the closing conditions as there is certain ways, which will monetize that on a go forward basis.

It's always been a part of what we're doing here at F. S. K.

Speaker Change: And all of our valuations we would.

Robert Dodd: We've been active there I think that's had a fair amount of that kind of a certain amount of activity for different reasons right. We've seen different things going on with banks, we've seen different asset portfolio is coming out of banks, we've seen somatic, which I think is almost equity market driven.

Speaker Change: Incorporate certain.

Speaker Change: Points are there to not just bring it to straight kind of.

Speaker Change: Market values at a price side, but I think thats in line with how we would value something like that but the sale was above the mark you would've seen.

Speaker Change: Alright, great. Thank you I appreciate it.

Robert Dodd: Where the equity market is rewarding companies for being balance sheet light do you think about our asset backed businesses or others. We're essentially in the assets storage business. So theres. Good partnerships that we can do with those corporates there bumps.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Robert Dodd of Raymond James Your line is now open.

Robert Dodd: Hi, guys.

Robert Dodd: On the kind of tied to the M&A Bill a lot of the.

Robert Dodd: Larger players of the market.

Robert Dodd: A bunch of those corporates are probably names that we would historically get to do business with.

Robert Dodd: Focus on sponsor finance, but you all know.

Speaker Change: So how would you characterize separately from the sponsor backed.

The size of that market is meaningful I do think in a lot of ways that market at least on the institutional side, probably feels like the direct lending market did five or 10 years ago in terms of people starting to get more interest, but it's a big market.

Speaker Change: Our outlook for 'twenty, five and building pipeline the asset backed finance side.

Speaker Change: Although the market talk about that as kind of the next wave.

Speaker Change: For a while but what's your what's your outlook on that side of the book.

Robert Dodd: I think we've got a bunch of unique or proprietary origination angles, we're going to continue to try to exploit.

Robert Dodd: Yes, I mean, I think Youre right, Robert we've got a big business there we've got.

Speaker Change: Got it. Thank you and then just on your.

Robert Dodd: Roughly 50 people focused on that we've got north of 65 billion of total AUM.

Robert Dodd: Non accruals are down I mean.

Are you seeing areas of win.

Robert Dodd: It's always been a part of what we're doing here at F. S. K.

Robert Dodd: It's obviously not broadly.

Robert Dodd: I think you said EBITA growth across the portfolio weighted average, 16% that's pretty great.

Robert Dodd: We've been active there I think that's had a fair amount of that kind of a certain amount of activity for different reasons right. We've seen different things going on with banks, we've seen different asset portfolio is coming out of banks, we've seen <unk>, which I think is almost equity market driven.

Robert Dodd: Great.

Robert Dodd: But that's across the whole portfolio.

Robert Dodd: Are there any areas.

Robert Dodd: The portfolio of the market where concerns are ramping up.

Robert Dodd: Yes.

Robert Dodd: Where the equity market is rewarding companies for being balance sheet light. If you think about our asset backed businesses are others. We're essentially in the assets storage business. So theres. Good partnerships that we can do with those corporates there a.

Robert Dodd: It's the right question.

Robert Dodd: I think the issues that we probably have seen either across the portfolio or maybe a couple of names that we would have mentioned here have probably been more idiosyncratic to those specific issuers.

Robert Dodd: A bunch of those corporates are probably names that we would historically get to do business with.

Robert Dodd: Whether it was customer loss or otherwise.

Robert Dodd: The size of that market is meaningful I do think in a lot of ways that market at least on the institutional side, probably feels like the direct lending market did five or 10 years ago in terms of people starting to get more interest, but it's a big market.

Robert Dodd: I would say kind of more broadly.

Robert Dodd: We've been in an environment, where interest coverage ratios, even though they're sort of rebounding have been probably on the lower side for the last handful of years I think that does expose companies. When there is a bump in the road that bubbles up or becomes an issue sort of faster so.

Robert Dodd: We've got a bunch of unique or proprietary origination angles, we're going to continue to try to exploit.

Robert Dodd: There's probably a little bit more of that as time goes on but again, it's been probably more idiosyncratic.

Robert Dodd: Got it. Thank you and then just on <unk>.

Robert Dodd: Non accruals are down I mean.

Robert Dodd: Are you seeing areas.

Robert Dodd: I do think.

Robert Dodd: There are things out there that are top of mind. These days right we touched on tariffs.

Robert Dodd: It's obviously not broadly.

Speaker Change: EBITA growth across the portfolio weighted average, 16% that's correct.

Robert Dodd: On the department of government efficiency.

Robert Dodd: Great.

Robert Dodd: But that's across the whole portfolio.

Robert Dodd: There are different.

Robert Dodd: Are there any areas.

Robert Dodd: I think scenarios or concerns around either continued wage inflation or the ability to get the right amount of employees.

Robert Dodd: The portfolio of the market where concerns are ramping up.

Robert Dodd: Yes.

Robert Dodd: That's not a top of mind.

Robert Dodd: It's the right question.

Robert Dodd: I.

Robert Dodd: I think the issues that we probably have seen.

Robert Dodd: I think we're pretty constructive on the economy, we're pretty constructive on the big levers of the U S economy, but I do think there is some.

Robert Dodd: Either across the portfolio or maybe a couple of names that we would have mentioned here have probably been more idiosyncratic to the specific issuers.

Robert Dodd: Either.

Robert Dodd: Events or scenarios out there that have some downside to it.

Robert Dodd: Whether it was customer loss or otherwise.

Robert Dodd: Using our portfolio monitoring unit, we're using the whole team to be pretty focused on us.

Robert Dodd: I would say kind of more broadly.

Speaker Change: Got it thank you very much.

Robert Dodd: We've been in an environment, where interest coverage ratios, even though they are sort of rebounding have been probably on the lower side for the last handful of years I think that does expose companies. When there is a bump in the road that bubbles up or becomes an issue sort of faster so.

Robert Dodd: Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Finian O'shea of Wells Fargo Securities. Your line is now open.

Finian O'shea: Hey, everyone. Good morning.

Finian O'shea: Couple questions on the on the fees.

Robert Dodd: Theres, probably a little bit more of that as kind of a time goes on but again, it's been probably more idiosyncratic.

Finian O'shea: Is the.

Finian O'shea: 41, I think you said for the nonrecurring.

Robert Dodd: I do think.

Finian O'shea: That's an improvement can we think should we think of that as.

Robert Dodd: There are things out there that are top of mind. These days right we touched on tariffs.

Finian O'shea: More of a one off strong quarter or sort of rebound level.

Robert Dodd: Just on the department of government efficiency.

Finian O'shea: And then similar question for the.

Robert Dodd: There are different.

Robert Dodd: I think scenarios or concerns around either continued wage inflation or the ability to get the right amount of employees.

Finian O'shea: The.

Finian O'shea: C Cup dividend.

Finian O'shea: That's a that's a recurring one but understanding and practice it moves around a little bit so seeing what we should think of that.

Robert Dodd: That's got a top of mind.

Robert Dodd: Hi.

Finian O'shea: The 46 million there as well thanks.

Robert Dodd: I think we're pretty constructive on the economy, we're pretty constructive on the big levers of the U S economy, but I do think there is some.

Vince: Yes, good morning, Vince.

Speaker Change: On the on the joint venture dividend maybe first.

Robert Dodd: Either.

Speaker Change: I think youre right I mean, it will move a bit obviously there is there can be different events repayments or kind of other fees earned within there. Obviously, we've got a great joint venture partner there as we think about how we.

Robert Dodd: Events or scenarios out there that have some downside to it.

Robert Dodd: Using our portfolio monitoring unit, we're using the whole team to be pretty focused on us.

Robert Dodd: Got it thank you very much.

Speaker Change: Kind of manage distributions.

Robert Dodd: Thank you.

Speaker Change: Distributions, there, but I think with inside that range of what you would have seen in the last couple of quarters is probably fair I would note I think we got some room to grow the joint venture.

Robert Dodd: Thank you.

Operator: Our next question comes from Finian O'shea of Wells Fargo Securities. Your line is now open.

Finian O'shea: Hey, everyone. Good morning.

Speaker Change: I think thats kind of top of mind.

Finian O'shea: Couple questions on the on the fees.

For us.

Speaker Change: Almost in line with.

Is the.

Speaker Change: Like where we're at from a target leverage perspective right.

Finian O'shea: 41, I think you said for the nonrecurring.

Speaker Change: We are at from a leverage perspective, right now, but obviously with more of the lower side of our target I think we'd be pretty comfortable at 115 versus kind of 104, but.

Finian O'shea: That's an improvement can we think should we think of that as.

Finian O'shea: More of a one off strong quarter or sort of rebound level.

Speaker Change: That's at least the way to think about the joint venture I think you are kind of broader.

Finian O'shea: And then similar question for the.

Speaker Change: Fee and dividend income and I think that will bounce around right.

Finian O'shea: The <unk>.

Finian O'shea: <unk> dividend.

Speaker Change: Alright.

Speaker Change: The asset backed space.

Finian O'shea: That's a that's a recurring one but understanding and practice it moves around a little bit so, saying, what we should think of that.

Speaker Change: Well not all of those deals are necessarily linear.

Speaker Change: In terms of when cash flows released I think we probably continue to see lower what I'll call regular way fee income just because originations have been probably a bit more muted.

Finian O'shea: The 46 million there as well thanks.

Speaker Change: Yes, good morning, Vince.

On the on the joint venture dividend may be first.

Speaker Change: I think youre right I mean, it will move a bit obviously there is there can be different events repayments or kind of other fees earned within there. Obviously, we've got a great joint venture partner there as we think about how we.

Speaker Change: And maybe even a little bit kind of May call us call Pro income is.

Speaker Change: <unk>.

Speaker Change: We are holding on to assets for a fairly lengthy amount of time in sort of that call products that are rolling off, but yes, I think that one will bounce around a bit but.

Speaker Change: Kind of manage distributions.

Speaker Change: Distributions, there, but I think with inside that range of what you would've seen in the last couple of quarters is probably fair I would note I think we got some room to grow the joint venture.

Speaker Change: I think the joint venture, probably a little bit more consistency airplanes.

Speaker Change: Okay. Thanks.

Speaker Change: So sort of tying into that.

Speaker Change: I think thats kind of top of mind for us.

Speaker Change: Question on the dividend discussion.

Speaker Change: Almost in line with <unk>.

Speaker Change: You covered pretty well in the remarks and the Q&A here.

Speaker Change: Where we're at from a target leverage perspective, where we're at from a leverage perspective right now, but obviously, we're in more of the lower side of our target I think we'd be pretty comfortable at 115 versus kind of 104, but.

Speaker Change: What's the like ongoing level.

Speaker Change: Any.

Speaker Change: Of.

Speaker Change: Taxable income.

Speaker Change: Over NOI.

Speaker Change: That's at least the way to think about the joint venture I think you are kind of broader.

Speaker Change: And ABF might generate some.

Speaker Change: Non accruals might generate some.

Speaker Change: Fee and dividend income and I think that will bounce around.

Speaker Change: Right.

Speaker Change: And.

Speaker Change: Asset backed space.

Speaker Change: That.

Speaker Change: Looking at it from that way, if there's a significant amount like does this.

Speaker Change: Well not all of those deals are necessary.

Speaker Change:

Speaker Change: Linear.

Speaker Change: Does this payout and the.

Speaker Change: In terms of when cash flows released I think we probably continue to see lower what I'll call regular way fee income just because originations have been probably a bit more muted.

Speaker Change: <unk> assumed.

Speaker Change: Low to mid <unk> NOI. This year does that get you back down to the target two quarters or.

Speaker Change: Is there a good chance that this sort of same policy extends into 2006, when we revisit a year from now.

Speaker Change: And maybe even a little bit kind of may call us on the call Pro income is.

Speaker Change: We were holding on to assets for a fairly lengthy amount of time and so to that call products that are rolling off, but I think that one will bounce around a bit but.

Stephen: Yes, let me start on that Stephen is going to take.

Stephen: I think it's probably difficult to forecast out and think about what happens in 2006, right I think that'd be very dependent upon.

Speaker Change: I think the joint venture, probably a little bit more consistency airplanes.

Speaker Change: Okay. Thanks.

Stephen: Deal activity, where we're seeing kind of markets et cetera.

Speaker Change: So sort of tying into that.

Speaker Change: Question on the dividend discussion.

Stephen: But I think we wanted to make the statement and provide that clarity as it relates to 2005.

Speaker Change: You covered pretty well in the remarks and the Q&A here.

Steven: But Steven asbestos.

Speaker Change: Whats the like ongoing level.

Stephen: No I think Thats I think thats right.

Steven: As you remember when.

Speaker Change: If any.

Steven: When we entered.

Speaker Change: <unk>.

Steven: Came into 2024.

Speaker Change: Taxable income.

Speaker Change: Over NOI.

Then our spillover on again, a total quarters' worth of dividends basis was kind of two nine quarters close to three.

Speaker Change: I imagine ABF might generate some.

Speaker Change: Non accruals might generate some.

Steven: We paid the special last year in the first two quarters that helped us a little bit there and as mentioned earlier on one of the questions were $2 seven quarters now at the end of this year, all things being equal we'd be down around two three quarters worth of dividends, which is.

Speaker Change: And.

Speaker Change: That.

Speaker Change: Looking at it from that way, if there's a significant amount like does this.

Speaker Change: Does this payout and saying assumed.

Speaker Change: Low to mid <unk> NOI. This year does that get you back down to the target two quarters or.

Steven: In our range kind of.

Steven: Closer to the top end of our range of plus or minus three quarters worth of dividends.

Speaker Change: Is there a good chance that this sort of same policy extends into 2006 when.

Steven: Again, spillover will move a little bit to it always does just because there's so many puts and takes there on a year over year basis, but.

Speaker Change: We revisit a year from now.

Speaker Change: Yes, well, let me start on that Stephen is going to take.

Steven: We think it's again a very good strategy returning some of this capital to shareholders. This year and then as Dan says.

Speaker Change: It's probably difficult to forecast out or think about what happens in 2006, right I think that'd be very dependent upon.

Steven: Periscope next year, and see where things are.

Speaker Change: Deal activity, where we're seeing kind of markets et cetera.

Speaker Change: Is there like.

Steven: Just going forward.

Speaker Change: But I think we wanted to make the statement and provide that clarity as it relates to 2005.

Steven: Say beyond this year are you.

Steven: Always going to try to stick close to that two quarters like it did feel like you let it.

Speaker Change: But Steven I would say no.

Speaker Change: I think Thats I think thats right.

Speaker Change: As you remember when.

Steven: Fair enough.

Speaker Change: When we entered.

Steven: To the high end for some time as did did many of your peers, but is.

Speaker Change: <unk> came in to 2024.

Speaker Change: Then our spillover on again, a total quarters' worth of dividends basis was kind of $2 nine quarters close to three.

Steven: Or is that sort of is this maybe sort of like a lesson learned like we let it get too high.

Steven: We're going to stick to this too going forward or might there be times, where.

Speaker Change: We paid the special last year in the first three quarters that helped us a little bit there and as mentioned earlier on one of the questions were $2 seven quarters now at the end of this year, all things being equal we'd be down around two three.

Steven: I don't know you find it advantageous and run it back up.

Steven: Well I think the increase was really more rate driven we are in the environment as Dan mentioned in his prepared remarks here with higher rates and so there were.

Speaker Change: Quarters worth of dividends, which is.

Speaker Change: And our range kind of.

So to the top end of our range of plus or minus three quarters worth of dividends.

Steven: Materially higher earnings on a per share basis from us.

Speaker Change: Again, spillover will move a little bit to it always does just because there's so many puts and takes there on a year over year basis, but we think it's again a very good strategy returning some of this capital to shareholders. This year and then as Dan says.

Steven: You would indicate we and also many of our peers and so I think that accounted for the.

Steven: The increase in spillover over short of our target and different companies have different target levels. So we would rather wait.

Steven: Right of way say that we're very comfortable in our plus or minus two quarters I think that's a good healthy balance.

Speaker Change: Periscope next year, and see where things are.

Steven: We werent upset about it.

Speaker Change: Is there like.

Steven: Yes.

Steven: Grew incrementally so to speak above that balance in the last several quarters because it was again at a really nice rate environment. We just didn't want to take the the total payout.

Speaker Change: Just going forward.

Speaker Change: Say beyond this year are you.

Speaker Change: It's always going to try to stick close to that two quarters like it did feel like you let it.

Steven: Two an artificially high level just for a couple of quarters, we wanted to save that because we had an expectation that rates at some point would come back down.

Speaker Change: Ran up.

Speaker Change: To the high end for some time as did did many of your peers, but.

Steven: So it's frankly worked and moved as we would be very comfortable with.

Speaker Change: Is that sort of is this maybe sort of like a lesson learned like we let it get too high and we're going to stick to this too going forward or might there be times, where.

Steven: Awesome. Thanks, so much for the color.

Steven: Thank you.

Steven: Thank you.

Speaker Change: I don't know you find it advantageous and run it back up.

Speaker Change: Our next question comes from Maxwell for Chair of Truth Securities. Your line is now open.

Speaker Change: Well I think the increase was really more rate driven we are in the environment as Dan mentioned in his prepared remarks here with higher rates and yes, there were.

Mark Hughes: Hey, good morning, I am calling in for Mark Hughes.

Speaker Change: Yes.

Speaker Change: You hit on the economic topics of debate around executive orders, there et cetera.

Speaker Change: Materially higher earnings on a per share basis from us.

Speaker Change: More broadly.

Speaker Change: And sorry, if I missed this but as you look at your portfolio today. How do you think you are positioned relative to some of these dynamics.

Speaker Change: Indicate we can also many of our peers and so I think that accounted for the.

Speaker Change: The increase in spillover over sort of our target and different companies have different target levels. So we would rather wait.

Speaker Change: Yes.

Speaker Change: Yes, good morning, guys. Good good question.

Speaker Change: Yes, I would.

Speaker Change: Right of way say that we're very comfortable in our plus or minus two quarters I think that's a good healthy balance.

Speaker Change: Take a step back and in some ways I think we.

Speaker Change: For multiple months now going back even kind of.

Speaker Change: Yes, we werent box.

Speaker Change: Yes.

Speaker Change: Grew incrementally so to speak about that balance in the last several quarters because it was again at a really nice rate environment. We just didn't want to take the the total payout.

Speaker Change: Before the actual election as a firm we're focused on different scenarios or kind of what the impacts of things could be.

Speaker Change: Two an artificially high level just for a couple of quarters, we wanted to save that because we had an expectation that rates at some point would come back down.

Speaker Change: We're yes, we're using all the resources of the firm as we kind of think through this.

We have gone through position by position, both with our portfolio monitoring team the deal teams, but actually going out to the portfolio of companies themselves.

Speaker Change: So it's frankly worked and moved as we would be very comfortable with.

Speaker Change: Awesome. Thanks, so much for the color.

Speaker Change: Thank you.

Speaker Change: To think about where.

Speaker Change: Thank you.

Speaker Change: The tariff risk might be or.

Speaker Change: Our next question comes from Maxwell for Chair of <unk> Securities. Your line is now open.

Speaker Change: There anything that might relate to government contracts can have an issue.

Speaker Change: It's it's.

Speaker Change: Hey, good morning, and I am calling in for Mark Hughes.

Speaker Change: It's not a large percentage of the portfolio I think thats the good news.

Speaker Change: Yes.

Speaker Change: You hit on the economic topics of debate around executive orders, there et cetera.

Speaker Change: The thing that we're keeping our eye on as it could be material, though.

Speaker Change: A certain individual name.

Speaker Change: More broadly.

Speaker Change: And sorry, if I missed this but as you look at your portfolio today, how do you think you're positioned relative to some of these dynamics.

Speaker Change: But also I would note this whole thing is pretty dynamic right.

Speaker Change: In the sense of.

Speaker Change: Yes.

Speaker Change: How it will really play out at the end I think some of the conversations around tariffs has probably been almost a catalyst for other conversations with certain of these countries. So.

Speaker Change: Yes, good morning, so a good good question.

Speaker Change: Yes.

Speaker Change: Take a step back and in some ways I think we.

Speaker Change: For multiple months now going back even kind.

Speaker Change: It's live we've got effectively a list of names that were focused on because of it and I suspect it will continue to evolve.

Speaker Change: Before the actual election as a firm we're focused on different scenarios or kind of what the impacts of things could be.

Yes, that's helpful color. Thank you and then.

Speaker Change: We're yes, we're using the resources of the firm as we kind of think through this.

Speaker Change: As M&A picks up.

Speaker Change: We have gone through position by position, both with our portfolio monitoring team the deal teams, but actually going out to the portfolio of companies themselves.

Speaker Change: Half of this year.

Speaker Change: To get your thoughts or your views on how you expect the mix of incumbent borrowers versus new borrowers to trend over over the course of this year.

Speaker Change: To think about where the.

Speaker Change: Yeah.

Speaker Change: The tariff risk might be or.

Speaker Change: I think youre right in the sense of.

Speaker Change: There anything that might relate to government contracts could have been an issue.

Speaker Change: And we talked about this at length in the prepared remarks and the Q&A.

Speaker Change: We are confident about that M&A level going up I think that would almost by definition.

Speaker Change: <unk>.

Speaker Change: It's not a large percentage of the portfolio I think thats the good news.

Speaker Change: Inc. Reduce that incumbency, so the number I think the larger platforms.

Speaker Change: The thing that we're keeping our eye on as it could be material, though to us.

Speaker Change: A certain individual name.

Speaker Change: Do have an advantage with the size of their portfolios I think that advantages us not even just loans that are on the books today right, but it's loans that you.

Speaker Change: But also I would note like this whole thing is pretty dynamic right.

Speaker Change: In the sense of.

Speaker Change: How it will really play out at the end I think some of the conversations around tariffs has probably been almost a catalyst for other conversations with certain of these countries. So.

You may have led to even sort of prior but you've got the history on the company.

Speaker Change: <unk> loans that we might know very well from our.

Speaker Change: Leverage credit business.

Speaker Change: It's live we've got effectively a list of names that were focused on because of it and I suspect it will continue to evolve.

Speaker Change: I think that incumbency point in my mind is not just helpful. On an origination side. It's also helpful on the diligence side most.

Speaker Change: Halston is most simplistic format, it's easier to lend to a company that you plan to before.

Speaker Change: Yes, that's helpful color. Thank you and then.

Speaker Change: But I think you should expect that number just.

Speaker Change: As M&A picks up.

Speaker Change: Hi.

Jeff initiative increased market activity for M&A.

Speaker Change: Half of this year I wanted to get your thoughts or your views on how you expect the mix of incumbent borrowers versus new borrowers to trend over over the course of this year.

Speaker Change: <unk> trends down a bit on the <unk> comments.

Speaker Change: Got it thank you.

Speaker Change: Thanks have a good day.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Melissa Wedel of J P. J P. Morgan Your line is now open.

Speaker Change: I think youre right in the sense of.

Speaker Change: And we talked about this at length in the prepared remarks and the Q&A.

Melissa Wedel: Good morning, Thanks for taking my questions.

Speaker Change: We are confident about that M&A level going up I think that was almost by definition.

Melissa Wedel: The first one is wanting to follow up on the fee income line item for <unk>.

Speaker Change: Inc. Reduce that incumbency, so the number I think the larger platforms.

Melissa Wedel: Can you take your point that a few deals slip into it sounds like the first quarter.

Melissa Wedel: But even looking at the S. Four.

Speaker Change: Do have an advantage with the size of their portfolios I think that advantages us not even just loans that are on the books today right, but it's loans that.

Melissa Wedel: The average fee income over the first three quarters in the year. It was in the high teens and for <unk>. It looks like any thoughts on how that is there something beyond a few deals slipping into <unk> that would drive that fee income lower.

Speaker Change: You may have led to even sort of prior but you've got the history on the company.

Speaker Change: It's loans that we might know very well from our.

Melissa Wedel: Yes.

Speaker Change: Leverage credit business.

Melissa Wedel: And Stephen can add to this.

Speaker Change: I think that incumbency point in my mind is not just helpful. On an origination side. It's also helpful on the diligence side.

Stephen: I think that line will have a certain amount of.

Stephen: You can use the word volatility to it right. It's obviously dependent on kind of new activity.

Speaker Change: Most of its most simplistic format, it's easier to lend to a company that you plan to before.

Stephen: I think the deals and the asset backed business are not all necessarily kind of linear when they can pay.

Speaker Change: But I think you should expect that number just.

Hi.

Speaker Change: Jeff initiative increased market activity for M&A.

Stephen: Distributions on.

Speaker Change: It trends down a bit on the <unk> comments.

Stephen: But.

Stephen: I would kind of continue to expect that I do think the number was artificially probably low respective any historical type average, but Steven you might want to add.

Speaker Change: Got it thank you.

Speaker Change: Thanks have a good day.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Melissa Wedel of J P. J P. Morgan Your line is now open.

Melissa Wedel: Melissa just adding to that a bit.

Melissa Wedel: I think that the $7 million, we had in the fourth quarter as Dan mentioned in a question earlier with a couple of the deals that were delayed.

Melissa Wedel: Good morning, Thanks for taking my questions.

Melissa Wedel: The first one is wanting to follow up on the fee income line item for <unk>.

Melissa Wedel: That seven had those deals closed it probably would've been more in the 10 to 11 range I would imagine.

Melissa Wedel: When you take your point that a few deals slip into it sounds like the first quarter.

Melissa Wedel: But even looking at the.

Melissa Wedel: Something along those lines.

Melissa Wedel: Sort of average fee income over the first three quarters in the year. It was in the high teens and for <unk>. It looks like it's less than half of that is there something beyond a few deals slipping into one Q that would drive that fee income lower.

Melissa Wedel: If you look at our long term average sort of between 15 and $16 million.

Melissa Wedel: On a quarterly basis, obviously, it goes above and below that Thats, just the average and so I think dan's comments about the mix of activity in the fourth quarter was more unique to it coupled with the couple of deals that were delayed.

Melissa Wedel: Yes.

Stephen: And Stephen can add to this.

Stephen: I think that line will have a certain amount of Av.

Melissa Wedel: Okay. Thank you for that.

Melissa Wedel: And then.

Stephen: You can use the word volatility to it right. It's obviously dependent on kind of new activity.

Melissa Wedel: Sort of related to the flipping of deals into one Q I mean, we're two thirds the way through the first quarter at this point in terms of repayment activity in a sense is there anything you can share with us.

Stephen: I think the deals and the asset backed business are not all necessarily kind of linear when they can pay.

Melissa Wedel: Certainly it was elevated in for Q.

Stephen: Distributions on.

Can you share how first quarter shaping up.

Stephen: But.

Stephen: Hi.

I would kind of continue to expect that I do think the number was artificially probably low respective any historical type average, but Steven you might want to add.

Melissa Wedel: Yes, I think youre correct on that.

Melissa Wedel: <unk>.

Melissa Wedel: Probably.

Melissa Wedel: I think everyone should expect a certain amount of additional repayments right you have the.

Steven: Melissa just adding to that a bit I think the $7 million, we had in the fourth quarter as Dan mentioned in a question earlier with a couple of the deals that were delayed.

Melissa Wedel: You have the syndicated market.

Melissa Wedel: Open we always expect these markets to.

Melissa Wedel: In some ways and sort of concert I think obviously, there will be points in time, when the private markets can step in.

Steven: Seven had those deals closed probably would've been more in the 10 to 11 range I would imagine.

Melissa Wedel: The syndicated markets might not be open but.

Steven: Something along those lines.

Melissa Wedel: I think we're seeing some of that I think we are seeing certain instances of deals that are being.

Speaker Change: If you look at our long term average, it's sort of between 15 and $16 million on a quarterly basis, obviously, it goes above and below that thats just the average and so I think dan's comments about the mix of activity in the fourth quarter was more unique to us coupled with the couple of deals that were delayed.

Melissa Wedel: Re priced or sort of.

Melissa Wedel: A new sort of refinancing being put in place, we're taking as an opportunity to get repaid and just kind of move on.

Melissa Wedel: I think you should probably expect the balance of kind of new deals versus repayments to be better than Q1.

Speaker Change: Okay. Thank you for that.

Steven: And then.

Speaker Change: Sort of related to the flipping of deals into one Q I mean, we're two thirds the way through the first quarter at this point in terms of repayment activity in essence is there anything you can share with us.

Melissa Wedel: Yes.

Melissa Wedel: Thank you for that and I'll throw in one last one just given the tight spread environment to your point about the markets that broadly syndicated market being open how.

Steven: Certainly it was elevated in <unk>.

Melissa Wedel: Yeah.

Can you share how first quarter shaping up.

Melissa Wedel: How urgent D. Do you feel about re levering the portfolio a little bit. Thank you.

Steven: Yes, I think youre correct on the.

Melissa Wedel: Yes, I think <unk> is probably not the right word because that would probably imply.

Steven: Probably.

Steven: I think everyone should expect a certain amount of additional repayments right you have the.

Melissa Wedel: Just got a racing to do deals I do think this is an environment, where we're a disciplined kind of matters.

Steven: You have the syndicated market.

Steven: Open we always expect these markets to.

Melissa Wedel: I always do describe the direct lending market.

Steven: In some ways and set a concert I think obviously there will be points in time, when the private markets can step in.

Melissa Wedel: As there'll be certain moments when its lender friendly the certain moments when it's borrower friendly.

Melissa Wedel: I think the theme, though is always about downside protection you are underwriting a deal with a view of.

Steven: The syndicated markets might not be open but.

Steven: I think we're seeing some of that I think we are seeing certain instances of deals that are being.

Melissa Wedel: Not having a default, but there is a default having a high recovery rates. So it is more borrower friendly today, but as I said I think the total returns and are still remains attractive.

Steven: Re priced or sort of.

Steven: A new sort of refinancing being put in place, we're taking as an opportunity to get repaid and just kind of move on.

Melissa Wedel: We are at the lower end of our range I think unequivocally I think thats it.

Melissa Wedel: Positive thing I think it speaks to the strength of the liability structure, we have which in these vehicles you know is very important.

Steven:

Steven: I think you should probably expect the balance of kind of new deals versus repayments to be better than Q1.

Melissa Wedel: I think you should expect that.

Steven: Yes.

Steven: Thank you for that and I'll throw in one last one just given the tight spread environment to your point about the market the broadly syndicated market being open how.

Melissa Wedel: We're going to trend back up to that mid point of the 115 over the coming quarters.

Melissa Wedel: What's kind of that upper range of kind of one to one in a quarter is what we've always talked about for target leverage.

Steven: Yeah.

Steven: How urgent D. Do you feel about re levering the portfolio a little bit. Thank you.

Speaker Change: That's very helpful. Thank you.

Melissa Wedel: Thank you have a good day.

Melissa Wedel: I'm showing no further questions at this time I would now like to turn it back to Dan Pietrzak for closing remarks.

Steven: Yes, I think <unk> is probably not the right word because that would probably imply.

Steven: Just got a racing to do deals I do think this is an environment, where we're disciplined kind of matters.

Dan Pietrzak: Well. Thank you everyone for joining us today on the call as always we appreciate your time, if you do have any further questions or things that we didn't address on the call. Please don't hesitate to reach out and if not we'll speak to you again next quarter. Thank you.

Steven: I always do describe the direct lending market.

Steven: As there will be certain moments when its lender friendly to certain moments when it's borrower friendly.

Dan Pietrzak: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Steven: I think that the theme, though is always about downside protection you are underwriting a deal with a view of.

Steven: <unk>.

Steven: Not having a default, but there is a default having a high recovery rates. So it is more borrower friendly today, but as I said I think the total returns and are still remains attractive.

Steven: We are at the lower end of our range I think unequivocally I think thats it.

Steven: Positive thing I think it speaks to the strength of the liability structure, we have which in these vehicles you know is very important.

Steven: I think you should expect that.

Steven: We're going to trend back up to that mid point of the 115 over the coming quarters.

Steven: What's kind of that upper range of kind of one to one in the quarter is what we've always talked about your target leverage.

Speaker Change: That's very helpful. Thank you.

Steven: Thank you have a good day.

Steven: I'm showing no further questions at this time I would now like to turn it back to Dan Pietrzak for closing remarks.

Steven: Well. Thank you everyone for joining us today on the call as always we appreciate your time.

Steven: If you do have any further questions or things that we didn't address on the call. Please don't hesitate to reach out and if not we'll speak to you again next quarter. Thank you.

Steven: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Steven: Okay.

Steven: Okay.

Steven: [music].

Steven: Okay.

Steven: Okay.

Steven: [music].

Steven: Okay.

Steven: [music].