OHA Senior Private Lending Fund (U) LLC
03/13/2026 | Press release | Distributed by Public on 03/13/2026 04:01
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand our results of operations and financial condition. The MD&A is provided as a supplement to and should be read in conjunction with our financial statements and notes thereto in Part II, Item 8 of this Form 10-K "Financial Statements and Supplementary Data." This discussion contains forward-looking statements, which relate to future events, our future performance or financial condition and involves numerous risks and uncertainties. Actual results could differ materially from those implied or expressed in any forward-looking statements. Dollar amounts are in thousands, except per share data, percentages and as otherwise noted.
Overview
The Company is a Delaware limited liability company formed on June 27, 2022. We are an externally managed, closed-end, diversified management investment company that elected to be regulated as a business development company under the 1940 Act. OHA Private Credit Advisors II, L.P. is the investment adviser of the Company. In addition, for U.S. federal income tax purposes, we elected to be treated as a RIC under Subchapter M of the Code. We were formed to make investments and generate returns in the form of current income and long-term capital appreciation.
The Company's investment objective is to generate attractive risk-adjusted returns, predominately in the form of current income, with select investments exhibiting the ability to capture long-term capital appreciation with a focus on downside protection. The Company seeks to achieve its investment objective by investing primarily in the non-investment grade credit markets in North America and Europe, with a primary focus on direct lending in the United States. The Company will target investments in well-established, larger companies generally with earnings before interest, taxes, depreciation and amortization ("EBITDA") of $75 million or greater ("Larger Borrowers"), consistent with OHA's investment history and proven investment process. We believe that credit profiles of Larger Borrowers generally benefit from greater business diversification, stronger market positions, experienced management teams and a greater ability to navigate challenging markets.
Subject to any restrictions imposed under the 1940 Act, any related RIC asset diversification requirements and any guidelines and limitations set forth herein, the Company's investments are expected to primarily consist of senior secured first lien loans and unitranche loans but may include second lien loans or other assets. The Company will seek target position sizes of 2% to 5% of NAV and seek to allocate (a) greater than or equal to 80% of NAV to first lien and unitranche loans and (b) less than or equal to 20% of NAV to second lien loans. The Company's investment mandate is structured so as to allow for co-investment across OHA's entire platform, based on existing SEC exemptive relief under Rule 17d-1 under the 1940 Act and any additional SEC exemptive relief obtained in the future.
Key Components of Our Results of Operations
Investments
We focus primarily on senior secured loans and securities of private U.S. companies. The level of investment activity (both the number of investments and the size of each investment) can and will vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to private companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make.
Revenues
We generate revenue in the form of interest and fee income on debt investments, capital gains, and dividend income from our equity investments in our portfolio companies. Our senior and subordinated debt investments are expected to bear interest at a fixed or floating rate. As of December 31, 2025 and as of December 31, 2024, 99.6% and 99.8% of our debt investments based on fair value in our portfolio were at floating rates, respectively. Interest on debt securities is generally payable quarterly or semiannually. In some cases, some of our investments may provide for deferred interest payments or PIK interest. The principal amount of the debt securities and any accrued but unpaid PIK interest generally will become due at the maturity date. In addition, we may generate revenue in the form of commitment and other fees in connection with transactions. Original issue discounts and market discounts or premiums will be capitalized, and we will accrete or amortize such amounts as interest income. We will record prepayment premiums on loans and debt securities as interest
income. Dividend income, if any, will be recognized on an accrual basis to the extent that we expect to collect such amounts.
Expenses
Our primary operating expenses include the payment of fees to the Adviser under the Advisory Agreement, our allocable portion of Overhead expenses under the Administration Agreement and other operating costs described below.
Except as specifically provided below, all investment professionals and staff of the Adviser, when and to the extent engaged in providing investment advisory services to us, and the base compensation, bonus and benefits, rent, utilities, insurance, payroll taxes, bonuses, employee benefits, furnishings, telecommunications and certain information services and certain office expenses, including office supplies and equipment and other similar expenses and the other routine overhead expenses, of such personnel allocable to such services, (individually and collectively, "Overhead") will be provided and paid for by the Adviser. We will bear all other reasonable costs and expenses of our operations, administration and transactions, including, but not limited to:
1)investment advisory fees, including management fees and incentive fees, to the Adviser, pursuant to the Advisory Agreement;
2)the Company's allocable portion of Overhead and other expenses incurred by the Administrator in performing its administrative obligations under the Administration Agreement, including but not limited to: (i) the Company's chief compliance officer, chief financial officer, chief operating officer, and their respective staffs; (ii) investor relations, legal, operations, treasury and any other non-investment professionals at the Administrator that perform duties for the Company; and (iii) any personnel of OHA or any of its affiliates providing non-investment related services to the Company; and
3)all other expenses of the Company's operations, administration and transactions including, without limitation, those relating to:
(i)organization and offering fees, costs and expenses associated with this offering (including legal, accounting (including expenses of in-house legal, accounting, tax and other professionals of the Adviser, inclusive of their allocated Overhead), printing, mailing, subscription processing and filing fees costs and expenses (including "blue sky" laws and regulations) and other offering fees costs and expenses, including fees, costs and expenses associated with technology integration between the Company's systems and those of participating intermediaries, diligence expenses of participating intermediaries, fees, costs and expenses in connection with preparing the preparation of the Company's governing documents, offering memoranda, sales materials and other marketing expenses, design and website fees, costs and expenses, fees, costs and expenses of the Company's transfer agent, fees, costs and expenses to attend retail seminars sponsored by participating intermediaries and fees, costs, expenses and reimbursements for travel, meals, accommodations, entertainment and other similar expenses related to meetings or events with prospective investors, intermediaries, registered investment advisors or financial or other advisors;
(ii)all taxes, fees, costs, and expenses, retainers and/or other payments of accountants, legal counsel, advisors (including tax advisors), administrators, auditors (including, for the avoidance of doubt, the Company's financial audit, and with respect to any additional auditing required under The Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and any applicable legislation implemented by an EEA member state in connection with such Directive (the "AIFMD")), investment bankers, administrative agents, paying agents, depositaries, custodians, trustees, sub-custodians, consultants (including individuals consulted through expert network consulting firms), engineers, senior advisors, industry experts, operating partners, deal sourcers (including personnel dedicated to but not employed by the Administrator and its affiliates in the credit-focused business of the Adviser), and other professionals (including, for the avoidance of doubt, the costs and charges allocable with respect to the provision of internal legal, tax, accounting, technology, portfolio reconciliation, portfolio compliance and reporting or other services or that are otherwise related to the implementation, maintenance and supervision of the procedures relating to the books and records of the Company and any personnel related thereto, inclusive of their allocated Overhead (including secondees and temporary personnel or consultants that may be engaged on short- or long-term arrangements) as deemed appropriate by the Administrator, with the oversight of the Board, where such internal personnel perform services that would be paid by the Company if outside service providers provided the same services); fees, costs, and expenses herein include (x) fees, costs and expenses for time spent by its in-house attorneys and tax advisors that provide legal advice and/or services to the Company or its portfolio companies on matters related to potential or actual investments and transactions and the ongoing operations of the Company and
(y) fees, costs and expenses incurred to provide administrative and accounting services to the Company or its portfolio companies, and fees, costs, expenses and charges incurred directly by the Company or affiliates in connection such services (including overhead related thereto), in each case, (I) that are specifically charged or specifically allocated or attributed by the Administrator, with the oversight of the Board, to the Company or its portfolio companies and (II) provided that any such amounts shall not be greater than what would be paid to an unaffiliated third party for substantially similar advice and/or services of the same skill and expertise, in accordance with the Adviser's expense allocation policy);
(iii)all fees, costs and expenses of calculating the Company's NAV, including the cost of any third-party valuation services;
(iv)all fees, costs and expenses of effecting any sales of the Shares and other securities;
(v)any fees, costs and expenses payable under any managing dealer and selected intermediary agreements, if any;
(vi)all interest and fees, costs and expenses arising out of all borrowings, guarantees and other financings or derivative transactions (including interest, fees and related legal expenses) made or entered into by the Company, including, but not limited to, the arranging thereof and related legal expenses;
(vii)all fees, costs and expenses of any loan servicers and other service providers and of any custodians, lenders, investment banks and other financing sources;
(viii)all fees, costs and expenses incurred in connection with the formation or maintenance of entities or vehicles to hold the Company's assets for tax or other purposes;
(ix)all fees, costs and expenses of derivatives and hedging;
(x)all fees, costs and expenses, including travel, entertainment, lodging and meal expenses, incurred by the Adviser, or members of its investment team, or payable to third parties, in evaluating, developing, negotiating, structuring and performing due diligence on prospective portfolio companies, including such expenses related to potential investments that were not consummated, and, if necessary, enforcing the Company's rights;
(xi)all fees, costs and expenses (including the allocable portions of Overhead and out-of-pocket expenses such as travel expenses) or an appropriate portion thereof of employees of the Adviser to the extent such expenses relate to attendance at meetings of the Board or any committees thereof;
(xii)all fees, costs and expenses, if any, incurred by or on behalf of the Company in developing, negotiating and structuring prospective or potential investments that are not ultimately made, including, without limitation any legal, tax, administrative, accounting, travel, meals, accommodations and entertainment, advisory, consulting and printing expenses, reverse termination fees and any liquidated damages, commitment fees that become payable in connection with any proposed investment that is not ultimately made, forfeited deposits or similar payments;
(xiii)all allocated fees, costs and expenses incurred by the Administrator in providing managerial assistance to those portfolio companies that request it;
(xiv)all brokerage fees, costs and expenses, hedging fees, costs and expenses, prime brokerage fees, costs and expenses, custodial fees, costs and expenses, agent bank and other bank service fees, costs and expenses; private placement fees, costs and expenses, commissions, appraisal fees, commitment fees and underwriting fees, costs and expenses; fees, costs and expenses of any lenders, investment banks and other financing sources, and other investment costs, fees and expenses actually incurred in connection with evaluating, making, holding, settling, clearing, monitoring or disposing of actual investments (including, without limitation, travel, meals, accommodations and entertainment expenses and any expenses related to attending trade association and/or industry meetings, conferences or similar meetings, any costs or expenses relating to currency conversion in the case of investments denominated in a currency other than U.S. dollars) and expenses arising out of trade settlements (including any delayed compensation expenses);
(xv)investment fees, costs and expenses, including all fees, costs and expenses incurred in sourcing, evaluating, developing, negotiating, structuring, trading (including trading errors), settling, monitoring and holding prospective or actual investments or investment strategies including, without limitation, any financing, legal, filing, auditing, tax, accounting, compliance, loan administration, travel, meals, accommodations and entertainment, advisory, consulting, engineering, data-related and other professional fees, costs and expenses in connection therewith (to the extent the Adviser is not reimbursed by a prospective or actual issuer of the applicable investment or other third parties or capitalized as part of the acquisition price of the transaction) and any fees, costs and expenses related to the organization or maintenance of any vehicle through which the Company directly or indirectly participates in the acquisition, holding and/or disposition of investments or which otherwise facilitate the Company's investment activities, including without limitation any travel and accommodations expenses related to such vehicle and the salary and benefits of any personnel (including personnel of the Adviser or its affiliates) and/or in connection with the maintenance and operation of such vehicle, or other overhead expenses (including any fees, costs and expenses associated with the leasing of office space (which may be made with one or more affiliates of the Adviser as lessor in connection therewith));
(xvi)all transfer agent, dividend agent and custodial fees, costs and expenses;
(xvii)all federal and state registration fees, franchise fees, any stock exchange listing fees and fees payable to rating agencies;
(xviii)Independent Board members' fees and expenses including travel, entertainment, lodging and meal expenses, and any legal counsel or other advisors retained by, or at the discretion or for the benefit of, the independent Board members;
(xix)costs of preparing financial statements and maintaining books and records, costs of Sarbanes-Oxley Act of 2002 compliance and attestation and costs of preparing and filing reports or other documents with the SEC, Financial Industry Regulatory Authority, U.S. Commodity Futures Trading Commission ("CFTC") and other regulatory bodies and other reporting and compliance costs, including registration and exchange listing and the costs associated with reporting and compliance obligations under the 1940 Act and any other applicable federal and state securities laws, and the compensation of professionals responsible for the foregoing;
(xx)all fees, costs and expenses associated with the preparation and issuance of the Company's periodic reports and related statements (e.g., financial statements and tax returns) and other internal and third-party printing (including a flat service fee), publishing (including time spent performing such printing and publishing services) and reporting-related expenses (including other notices and communications) in respect of the Company and its activities (including internal expenses, charges and/or related costs incurred, charged or specifically attributed or allocated by the Company or the Adviser or its affiliates in connection with such provision of services thereby);
(xxi)all fees, costs and expenses of any reports, proxy statements or other notices to Members (including printing and mailing costs) and the costs of Board member meetings;
(xxii)all proxy voting fees, costs and expenses;
(xxiii)all fees, costs and expenses associated with an exchange listing (to the extent applicable);
(xxiv)any and all taxes and/or tax-related interest, fees or other governmental charges (including any penalties incurred where the Adviser lacks sufficient information from third parties to file a timely and complete tax return) levied against the Company and all fees, costs and expenses incurred in connection with any tax audit, investigation, litigation, settlement or review of the Company and the amount of any judgments, fines, remediation or settlements paid in connection therewith;
(xxv)all fees, costs and expenses of any litigation, arbitration or audit involving the Company any vehicle or its portfolio companies and the amount of any judgments, assessments fines, remediations or settlements paid in connection therewith, Board members and officers, liability or other insurance (including costs of title insurance) and indemnification (including advancement of any fees, costs or expenses to persons entitled to indemnification) or extraordinary expense or liability relating to the affairs of the Company;
(xxvi)all fees, costs and expenses associated with the Company's information, obtaining and maintaining technology (including any and all fees, costs and expenses of any investment, books and records, portfolio compliance and reporting systems such as "Wall Street Office," "Everest" (Allvue), "Trinity" and similar systems and services, including consultant, software licensing, data management and recovery services fees and any tools, programs, subscriptions or other systems providing market data, analytical, database, news or third-party research or information services and the costs of any related professional service providers), third party or proprietary hardware/software, data-related communication, market data and research (including news and quotation equipment and services and including costs allocated by the Adviser's or its affiliates' internal and third-party research group (which are generally based on time spent, assets under management, usage rates, proportionate holdings or a combination thereof or other reasonable methods determined by the Administrator) and expenses and fees (including compensation costs) charged or specifically attributed or allocated by Adviser and/or its affiliates for data-related services provided to the Company and/or its portfolio companies (including in connection with prospective investments), each including expenses, charges, fees and/or related costs of an internal nature; reporting costs (which includes notices and other communications and internally allocated charges), and dues and expenses incurred in connection with membership in industry or trade organizations;
(xxvii)all fees, costs and expenses of specialty and custom software for monitoring risk, compliance and the overall portfolio, including any development costs incurred prior to the filing of the Company's election to be treated as a BDC;
(xxviii)all fees, costs and expenses associated with individual or group Members;
(xxix)all insurance fees, costs and expenses (including fidelity bond, Board members and officers errors and omissions liability insurance and other insurance premiums incurred for the benefit of the Adviser);
(xxx)all fees, costs and expenses of winding up and liquidating the Company's assets;
(xxxi)all fees, costs and expenses related to compliance-related matters (such as developing and implementing specific policies and procedures in order to comply with certain regulatory requirements) and regulatory filings; notices or disclosures related to the Company's activities (including, without limitation, expenses relating to the preparation and filing of filings required under the Securities Act, TIC Form SLT filings, Internal Revenue Service filings under FATCA and FBAR reporting requirements applicable to the Company or reports to be filed with the CFTC, reports, disclosures, filings and notifications prepared in connection with the laws and/or regulations of jurisdictions in which the Company engages in activities, including any notices, reports and/or filings required under the AIFMD, European Securities and Markets Authority and any related regulations, and other regulatory filings, notices or disclosures of the Adviser relating to the Company and its affiliates relating to the Company, and their activities) and/or other regulatory filings, notices or disclosures of the Adviser and its affiliates relating to the Company including those pursuant to applicable disclosure laws and expenses relating to FOIA requests, but excluding, for the avoidance of doubt, any expenses incurred for general compliance and regulatory matters that are not related to the Company and its activities;
(xxxii)all fees, costs and expenses (including travel) in connection with the diligence and oversight of the Company's service providers;
(xxxiii)all fees, costs and expenses, including travel, meals, accommodations, entertainment and other similar expenses, incurred by the Adviser or its affiliates for meetings with existing investors and any intermediaries, registered investment advisors, financial and other advisors representing such existing investors; and
(xxxiv)all other fees, costs and expenses incurred by the Administrator in connection with administering the Company's business.
OHA has agreed to pay any organizational expenses of the Company (excluding any expenses incurred in connection with a subscription facility) in excess of $750,000 and has agreed to pay any annual operating expenses of the Company (excluding (i) third-party legal expenses incurred in connection with investments and the ordinary course operation of the Company and (ii) the management fee and incentive fees paid to the Adviser) that would cause such operating expenses to exceed 0.40% per annum of the Company's average net assets in respect of the relevant year.
Portfolio and Investment Activity
As of December 31, 2025 and December 31, 2024, based on fair value, our portfolio consisted of 98.6% and 98.5% first lien debt investments, respectively, 1.4% and 1.5% second lien debt investments, respectively, and 0.0% and 0.0% preferred equity investments, respectively.
As of December 31, 2025 and December 31, 2024, we had investments in 84 and 61 portfolio companies with an aggregate fair value of approximately $421.2 million and $423.4 million, respectively.
Our investment activity for the years ended December 31, 2025, December 31, 2024, and December 31, 2023 is presented below (information presented herein is at amortized cost unless otherwise indicated):
| For the Years Ended | |||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||
| Total investments, beginning of year | $ | 420,729 | $ | 318,837 | 149,464 | ||||||||||||
|
New investments purchased(1)
|
80,160 | 209,849 | 194,717 | ||||||||||||||
| Net accretion of discount on investments | 1,763 | 3,051 | 1,326 | ||||||||||||||
| Net realized gain (loss) on investments | 269 | 187 | 68 | ||||||||||||||
| Investments sold or repaid | (81,525) | (111,195) | (26,738) | ||||||||||||||
| Total investments, end of year | $ | 421,396 | $ | 420,729 | $ | 318,837 | |||||||||||
(1)Purchases include PIK interest, if applicable.
The following table presents certain selected information regarding our investment portfolio:
| As of | |||||||||||
| December 31, 2025 | December 31, 2024 | ||||||||||
|
Weighted average yield on debt and income producing investments, at amortized cost (1)
|
9.7 | % | 10.8 | % | |||||||
|
Weighted average yield on debt and income producing investments, at fair value (1)
|
9.7 | % | 10.7 | % | |||||||
| Number of portfolio companies | 84 | 61 | |||||||||
|
Weighted average EBITDA (2)
|
$264.6 | $239.0 | |||||||||
|
Average loan-to-value (LTV) (3)
|
43.1 | % | 40.8 | % | |||||||
| Percentage of debt investments bearing a floating rate, at fair value | 99.6 | % | 99.8 | % | |||||||
| Percentage of debt investments bearing a fixed rate, at fair value | 0.4 | % | 0.2 | % | |||||||
(1)Computed as (a) the annual stated interest rate or yield plus the annual accretion of discounts or less the annual amortization of premiums, as applicable, on income producing securities, divided by (b) the total relevant investments at amortized cost or fair value, as applicable. Actual yields earned over the life of each investment could differ materially from the yields presented above. Total weighted average yield shown includes total investments.
(2)Includes all private debt investments for which fair value is determined by the Adviser as valuation designee in conjunction with a third-party valuation firm and excludes structured products. Amounts are weighted based on fair market value of each respective investment. Amounts were derived from the most recently available financial information provided by the portfolio company and may reflect a normalized or adjusted amount. Accordingly, we make no representation or warranty in respect of this information. Amounts in millions.
(3)Includes all private debt investments for which fair value is determined by our Adviser as valuation designee in conjunction with a third-party valuation firm and excludes quoted assets. Average loan-to-value represents the net ratio of loan-to-value for each portfolio company, weighted based on the fair value of total applicable private debt investments. Loan-to-value is calculated as the current total net debt of all loan tranches outstanding divided by the estimated enterprise value of the portfolio company as of the most recent year end.
Our investments consisted of the following:
| As of | |||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||
| First Lien Debt | $ | 415,096 | $ | 415,252 | $ | 414,659 | $ | 417,230 | |||||||||||||||
| Second Lien Debt | 6,192 | 5,877 | 6,070 | 6,200 | |||||||||||||||||||
| Preferred Equity | 108 | 108 | - | - | |||||||||||||||||||
| Total Investments | $ | 421,396 | $ | 421,237 | $ | 420,729 | $ | 423,430 | |||||||||||||||
As of December 31, 2025 and December 31, 2024, there were no investments on non-accrual status.
The tables below describe investments by industry composition based on fair value as of December 31, 2025 and December 31, 2024:
| December 31, 2025 | |||||
| Services: Business | 20.0 | % | |||
| High Tech | 12.8 | % | |||
| Healthcare, Education and Childcare | 12.7 | % | |||
| Capital Equipment | 7.1 | % | |||
| Finance | 6.5 | % | |||
| Media: Diversified & Production | 5.4 | % | |||
| Consumer Goods: Durable | 4.8 | % | |||
| Insurance | 4.4 | % | |||
| Services: Consumer | 4.2 | % | |||
| Chemicals, Plastics and Rubber | 4.0 | % | |||
| Automobile | 3.7 | % | |||
| Aerospace and Defense | 3.4 | % | |||
| Printing and Publishing | 3.3 | % | |||
| Construction & Building | 2.4 | % | |||
| Retail Stores | 1.7 | % | |||
| Buildings and Real Estate | 1.6 | % | |||
| Containers, Packaging and Glass | 1.0 | % | |||
| Ecological | 0.8 | % | |||
| Utilities: Water | 0.2 | % | |||
| Telecommunications | - | % | |||
| Total | 100.0 | % | |||
| December 31, 2024 | |||||
| Services: Business | 17.9 | % | |||
| High Tech | 11.8 | % | |||
| Healthcare, Education and Childcare | 10.3 | % | |||
| Insurance | 7.7 | % | |||
| Capital Equipment | 6.3 | % | |||
| Services: Consumer | 6.2 | % | |||
| Finance | 5.9 | % | |||
| Chemicals, Plastics and Rubber | 5.5 | % | |||
| Consumer Goods: Durable | 4.9 | % | |||
| Media: Diversified & Production | 4.5 | % | |||
| Aerospace and Defense | 3.4 | % | |||
| Printing and Publishing | 3.3 | % | |||
| Automobile | 3.3 | % | |||
| Construction & Building | 1.6 | % | |||
| Technology & Electronics | 1.6 | % | |||
| Retail Stores | 1.6 | % | |||
| Buildings and Real Estate | 1.4 | % | |||
| Broadcasting and Entertainment | 1.2 | % | |||
| Containers, Packaging and Glass | 0.9 | % | |||
| Ecological | 0.7 | % | |||
| Total | 100 | % | |||
The tables below describe investments by geographic composition based on fair value as of December 31, 2025 and December 31, 2024:
| December 31, 2025 | ||||||||||||||||||||||||||
|
Amortized Cost |
Fair Value |
% of Total Investments at Fair Value |
Fair Value as % of Net Assets | |||||||||||||||||||||||
| United States | $ | 388,433 | $ | 387,169 | 91.9 | % | 83.2 | % | ||||||||||||||||||
| United Kingdom | 13,484 | 13,501 | 3.2 | 2.9 | ||||||||||||||||||||||
| Germany | 12,644 | 13,554 | 3.2 | 2.9 | ||||||||||||||||||||||
| Canada | 6,835 | 7,013 | 1.7 | 1.5 | ||||||||||||||||||||||
| Total | $ | 421,396 | $ | 421,237 | 100.0 | % | 90.5 | % | ||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
|
Amortized Cost |
Fair Value |
% of Total Investments at Fair Value |
Fair Value as % of Net Assets | |||||||||||||||||||||||
| United States | $ | 378,303 | $ | 381,519 | 90.1 | % | 87.4 | % | ||||||||||||||||||
| United Kingdom | 13,554 | 13,553 | 3.2 | 3.1 | ||||||||||||||||||||||
| Germany | 12,129 | 11,860 | 2.8 | 2.7 | ||||||||||||||||||||||
| Switzerland | 9,955 | 9,863 | 2.3 | 2.3 | ||||||||||||||||||||||
| Canada | 6,788 | 6,635 | 1.6 | 1.5 | ||||||||||||||||||||||
| Total | $ | 420,729 | $ | 423,430 | 100.0 | % | 97.0 | % | ||||||||||||||||||
Our Adviser has developed a risk rating methodology for a systematic approach to portfolio monitoring. The Adviser assesses the risk profile of each of our debt investments and rates each of them based on the following categories, which we
refer to as "Risk Ratings." The Adviser reviews the ratings on a quarterly basis and adjusts any scores as appropriate to align with the below definitions.
Risk Ratings Definitions
•Risk Rating 1 - Investments with a score of 1 contain the lowest amount of risk in our portfolio. Borrower is performing above expectations, and the trends and risk factors are generally favorable.
•Risk Rating 2 - Investments with a score of 2 contain an acceptable level of risk that is similar to the risk at the time of origination or acquisition. Borrower is performing in-line with expectations, and the risk factors are neutral to favorable. Investments are assigned a score of 2 at the time of origination or acquisition.
•Risk Rating 3 - Investments with a score of 3 mean the borrower is performing below expectations and that the loan's risk has increased somewhat since origination or acquisition.
•Risk Rating 4- Investments with a score of 4 mean the borrower is performing materially below expectations and indicates that the loan's risk has increased materially since origination or acquisition. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 120 days past due).
•Risk Rating 5- Investments with a score of 5 mean the borrower is performing substantially below expectations and indicates that the loan's risk has increased substantially since origination, acquisition, or restructure. Most or all of the debt covenants are out of compliance and payments are substantially delinquent.
The below table summarizes the Risk Ratings as of December 31, 2025 and December 31, 2024:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Fair Value | % of Fair Value | Fair Value | % of Fair Value | ||||||||||||||||||||
| Risk Rating 1 | $ | 42,549 | 10.1 | % | $ | 77,027 | 18.2 | % | |||||||||||||||
| Risk Rating 2 | 334,306 | 79.4 | 328,923 | 77.7 | |||||||||||||||||||
| Risk Rating 3 | 44,382 | 10.5 | 17,480 | 4.1 | |||||||||||||||||||
| Risk Rating 4 | - | - | - | - | |||||||||||||||||||
| Risk Rating 5 | - | - | - | - | |||||||||||||||||||
| Total investments | $ | 421,237 | 100.0 | % | $ | 423,430 | 100.0 | % | |||||||||||||||
The weighted average Risk Rating of our debt investment portfolio was 2.00 and 1.86 as of December 31, 2025 and December 31, 2024, respectively, and there were no debt investments assigned a Risk Rating of 4 or 5 as of December 31, 2025 and December 31, 2024.
Results of Operations
The following table represents the operating results:
| For the Years Ended | |||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||
| Total investment income | $ | 45,863 | $ | 50,603 | $ | 29,406 | |||||||||||
| Net expenses | 10,182 | 10,883 | 8,107 | ||||||||||||||
| Net investment income (loss) | 35,681 | 39,720 | 21,299 | ||||||||||||||
| Net realized gain (loss) | 3,247 | (11,572) | 11,991 | ||||||||||||||
| Net unrealized appreciation (depreciation) | 39,300 | (26,410) | 2,197 | ||||||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | 78,228 | $ | 1,738 | $ | 35,487 | |||||||||||
Net increase (decrease) in net assets resulting from operations can vary from period to period as a result of various factors, including the level of new investment commitments, expenses, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio.
Investment Income
Investment income was as follows:
| For the Years Ended | |||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||
| Interest income | $ | 45,023 | $ | 47,735 | $ | 27,257 | |||||||||||
| Other income | 840 | 2,868 | 2,149 | ||||||||||||||
| Total investment income | $ | 45,863 | $ | 50,603 | $ | 29,406 | |||||||||||
For the years ended December 31, 2025, December 31, 2024, and December 31, 2023, total investment income was approximately $45.9 million, $50.6 million, and $29.4 million, respectively. The size of our investment portfolio at fair value as of December 31, 2025 and as of December 31, 2024 was approximately $421.2 million and $423.4 million, respectively. Our weighted average yield on debt and income producing investments at fair value as of December 31, 2025 and as of December 31, 2024, was 9.7% and 10.7%, respectively, which is also the total weighted average yield on total investments.
For the year ended December 31, 2025, the Company recognized $1,162 of non-recurring revenue from accelerated original issue discount and miscellaneous fees.
Expenses
Expenses were as follows:
| For the Years Ended | |||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||
| Management fees | $ | 3,011 | $ | 2,777 | $ | 1,698 | |||||||||||
| Income incentive fee | 5,010 | 5,618 | 3,064 | ||||||||||||||
| Capital gains incentive fee | - | - | 1,183 | ||||||||||||||
| Professional fees | 987 | 1,150 | 896 | ||||||||||||||
| Board of Managers fees | 212 | 211 | 210 | ||||||||||||||
| Administrative services expenses | 577 | 358 | 352 | ||||||||||||||
| Amortization of offering costs | - | - | 382 | ||||||||||||||
| Other general & administrative | 994 | 1,092 | 1,315 | ||||||||||||||
|
Total expenses before taxes
|
10,791 | 11,206 | $ | 9,100 | |||||||||||||
| Incentive fee waiver | (609) | (395) | (1,032) | ||||||||||||||
| Excise tax | - | 72 | 39 | ||||||||||||||
|
Total expenses
|
$ | 10,182 | $ | 10,883 | 8,107 | ||||||||||||
Management Fees
For the years ended December 31, 2025, December 31, 2024, and December 31, 2023, management fees were approximately $3.0 million, $2.8 million, and $1.7 million, respectively. As of December 31, 2025 and December 31, 2024, $0.8 million and $0.8 million, respectively, remained payable. Management fees are payable monthly in arrears at an annual rate of 0.65% of the value of our net assets as of the beginning of the first calendar day of the applicable month.
Income Based Incentive Fees
For the years ended December 31, 2025, December 31, 2024, and December 31, 2023, income based incentive fees were approximately $5.0 million, $5.6 million, and $3.1 million, respectively, before incentive fees waivers. For the years ended December 31, 2025, December 31, 2024, and December 31, 2023, the Adviser waived $0.6 million, $0.4 million, and $1.0 million in income incentive fees in accordance with the annual Operating Expense Cap (as defined in Note 2). As of December 31, 2025 and December 31, 2024, approximately $4.4 million and $5.2 million, respectively, of income based incentive fees remained payable.
Capital Gains Incentive Fees
For the years ended December 31, 2025 and December 31, 2024, the Company incurred no capital gains incentive fees. For the year ended December 31, 2023, the Company incurred $1.2 million capital gains incentive fees. The accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less in the prior period. If such cumulative amount is negative, then there is no accrual.
Other Expenses
Organization costs and offering costs include expenses incurred in our initial formation and offering. Professional fees include legal, audit, tax, valuation, other professional fees incurred related to the management of the Company. Administrative service expenses represent fees paid to the Administrator for our allocable portion of Overhead and other expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of the cost of certain of our executive officers, their respective staff and other non-investment
professionals that perform duties for us. Other general and administrative expenses include insurance, filing, research, our sub-administrator, and other costs.
Total other expenses were approximately $2.8 million, $2.8 million, and $3.2 million for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, primarily comprised of approximately $1.0 million, $1.2 million, and $0.9 million of professional fees (including legal, audit, and tax) and approximately $1.0 million, $1.1 million, and $1.3 million of other general and administrative expenses (including insurance, research, and other allocated costs), respectively.
Under the terms of the Administration Agreement and the Advisory Agreement, we reimburse the Administrator and Adviser, respectively, for services performed for us. In addition, pursuant to the terms of these agreements, the Administrator and Adviser may delegate its obligations under these agreements to an affiliate or to a third party and we reimburse the Administrator and Adviser for any services performed for us by such affiliate or third party. For the years ended December 31, 2025, December 31, 2024, and December 31, 2023, the Administrator charged $0.5 million, $0.4 million, and $0.0 million, respectively, for certain costs and expenses allocable to the Company under the terms of the Administration Agreement.
Income Taxes, Including Excise Taxes
We have elected to be treated as a RIC under Subchapter M of the Code, and we intend to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify for tax treatment as a RIC, we must, among other things, distribute to our Members in each taxable year generally at least 90% of the sum of our investment company taxable income, as defined by the Code (without regard to the deduction for distributions paid), and net tax-exempt income for that taxable year. To maintain our tax treatment as a RIC, we, among other things, intend to make the requisite distributions to our Members, which generally relieve us from corporate-level U.S. federal income taxes.
Depending on the level of taxable income earned in a tax year, we may carry forward taxable income (including net capital gains, if any) in excess of current year distributions from the current tax year into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such taxable income, as required. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year distributions from such income, we will accrue excise tax on estimated excess taxable income.
For the year ended December 31, 2025, we incurred $0.0 million of U.S. federal excise tax. For the year ended December 31, 2024, we incurred $0.1 million of U.S. federal excise tax. For the year ended December 31, 2023, we incurred $0.0 million of U.S. federal excise tax.
Net Realized Gain (Loss)
The realized gains and losses were comprised of the following:
| For the Years Ended | |||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||
| Net realized gain (loss) on investments | $ | 269 | $ | 187 | $ | 68 | |||||||||||
| Net realized gain (loss) on foreign currency transactions | 743 | (383) | 1,145 | ||||||||||||||
| Net realized gain (loss) on foreign currency forward contracts | 2,235 | (11,376) | 10,778 | ||||||||||||||
| Net realized gain (loss) | $ | 3,247 | $ | (11,572) | $ | 11,991 | |||||||||||
For the year ended December 31, 2025, we generated a $3.2 million net realized gain which was primarily comprised of realized activity on foreign currency forward contracts and foreign currency transactions. For the years ended December 31, 2024 and December 31, 2023, we generated a net realized loss of approximately $11.6 million and a net realized gain of $12.0 million, respectively, which was primarily comprised of realized activity on foreign currency forward contracts and foreign currency transactions during these periods. For the years ended December 31, 2025,
December 31, 2024, and December 31, 2023, the net realized movement on foreign currency forward contracts was mainly due to EUR forward contracts.
Net Change in Unrealized Appreciation (Depreciation)
Net change in unrealized appreciation (depreciation) was comprised of the following:
| For the Years Ended | |||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||
| Net change in unrealized appreciation (depreciation) on investments | $ | (2,860) | $ | (2,758) | $ | 5,337 | |||||||||||
| Net change in unrealized appreciation (depreciation) on foreign currency forward contracts | 42,160 | (23,652) | (3,140) | ||||||||||||||
| Net change in unrealized appreciation (depreciation) | $ | 39,300 | $ | (26,410) | $ | 2,197 | |||||||||||
For the year ended December 31, 2025, net unrealized appreciation were driven by unrealized appreciation on foreign currency forward contracts. For the year ended December 31, 2024, net unrealized depreciation were primarily due to depreciation on the foreign currency forward contracts and unrealized depreciation on investments due to negative valuation adjustments.
Financial Condition, Liquidity, and Capital Resources
Our liquidity and capital resources are generated primarily from the proceeds of capital drawdowns of our privately placed capital commitments, cash flows from interest, dividends and fees earned from our investments and principal repayments. The primary uses of our cash are investments in portfolio companies and other investments to comply with certain portfolio diversification requirements, the cost of operations (including paying our Adviser and Administrator or its affiliates), and cash distributions to the holders of our Shares.
There were no outstanding borrowings as of December 31, 2025 and December 31, 2024. We seek to carefully consider our unfunded commitments for the purpose of planning our ongoing financial leverage.
As of December 31, 2025, cash taken together with our uncalled capital commitments of $156.6 million, is expected to be sufficient for our investing activities and to conduct our operations.
As of December 31, 2025, we had approximately $42.4 million in cash. During the year ended December 31, 2025, we provided approximately $37.1 million in cash for operating activities, primarily due to an increase of $78.2 million in net assets resulting from operations and proceeds from sales and principal repayments of $81.5 million partially offset by investment purchases of $78.6 million and unrealized appreciation on foreign currency forward contracts of $42.2 million. Cash used in financing activities was approximately $36.9 million during the year ended December 31, 2025, which was primarily due to $37.6 million of distributions paid.
As of December 31, 2024, we had approximately $42.2 million in cash. During the year ended December 31, 2024, we used $89.2 million in cash for operating activities, primarily due to investment purchases of $209.0 million partially offset by sales and principal repayments of $111.2 million. Cash provided by financing activities was approximately $14.2 million during the year ended December 31, 2024, which was primarily due to proceeds from issuance of common shares of $60.9 million during the period, offset by $46.3 million of distributions paid.
Equity
Subscriptions and Drawdowns
As of December 31, 2025 and December 31, 2024, we had 44,724,135 of Shares issued and outstanding with a par value of $0.01 per Share.
We have entered into subscription agreements with investors providing for the private placement of our Shares. Under the terms of the subscription agreements, each investor is required to fund drawdowns to purchase our Shares up to the amount of their respective Capital Commitment on an as-needed basis each time our Adviser delivers a capital call notice to such investor.
The following table summarizes capital activity during the years ended December 31, 2025:
| Shares | Capital in Excess of Par Value | Accumulated Net Investment Income (Loss) | Accumulated Net Realized Gain (Loss) | Accumulated Net Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Total Net Assets | |||||||||||||||||||||||||||||||||||||||
| Balance, beginning of year | 44,724,135 | $ | 447 | $ | 459,283 | $ | 7,178 | $ | (7,213) | $ | (23,405) | $ | 436,290 | ||||||||||||||||||||||||||||
| Common Shares issued | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Distribution reinvestment | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Repurchase of Shares | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Net investment income (loss) | - | - | - | 35,681 | - | - | 35,681 | ||||||||||||||||||||||||||||||||||
| Net realized gain (loss) | - | - | - | - | 3,247 | - | 3,247 | ||||||||||||||||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) | - | - | - | - | - | (2,860) | (2,860) | ||||||||||||||||||||||||||||||||||
| Net change in unrealized currency gain (losses) on non-investment assets and liabilities | - | - | - | - | - | 42,160 | 42,160 | ||||||||||||||||||||||||||||||||||
| Distributions declared | - | - | - | (41,265) | (7,590) | - | (48,855) | ||||||||||||||||||||||||||||||||||
| Tax reclassification of shareholders' equity in accordance with GAAP | - | - | - | 99 | (99) | - | - | ||||||||||||||||||||||||||||||||||
| Balance, end of year | 44,724,135 | $ | 447 | $ | 459,283 | $ | 1,693 | $ | (11,655) | $ | 15,895 | $ | 465,663 | ||||||||||||||||||||||||||||
The following table summarizes capital activity during the year ended December 31, 2024:
| Shares | Capital in Excess of Par Value | Accumulated Net Investment Income (Loss) | Accumulated Net Realized Gain (Loss) | Accumulated Net Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Total Net Assets | |||||||||||||||||||||||||||||||||||||||
| Balance, beginning of period | 38,954,613 | $ | 390 | $ | 398,535 | $ | 6,522 | $ | 11,561 | $ | 3,005 | $ | 420,013 | ||||||||||||||||||||||||||||
|
Common Shares issued
|
5,769,522 | 57 | 60,821 | - | - | - | 60,878 | ||||||||||||||||||||||||||||||||||
| Distribution reinvestment | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Repurchase of Shares | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Net investment income (loss) | - | - | - | 39,720 | - | - | 39,720 | ||||||||||||||||||||||||||||||||||
| Net realized gain (loss) | - | - | - | - | (11,572) | - | (11,572) | ||||||||||||||||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) | - | - | - | - | - | (2,758) | (2,758) | ||||||||||||||||||||||||||||||||||
| Net change in unrealized currency gain (losses) on non-investment assets and liabilities | - | - | - | - | - | (23,652) | (23,652) | ||||||||||||||||||||||||||||||||||
| Distributions declared | - | - | - | (36,582) | (9,757) | - | (46,339) | ||||||||||||||||||||||||||||||||||
| Tax reclassification of shareholders' equity in accordance with GAAP | - | - | (73) | (2,482) | 2,555 | - | - | ||||||||||||||||||||||||||||||||||
| Balance, end of period | 44,724,135 | $ | 447 | $ | 459,283 | $ | 7,178 | $ | (7,213) | $ | (23,405) | $ | 436,290 | ||||||||||||||||||||||||||||
The following table summarizes capital activity during the year ended December 31, 2023:
| Shares | Capital in Excess of Par Value | Accumulated Net Investment Income (Loss) | Accumulated Net Realized Gain (Loss) | Accumulated Net Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Total Net Assets | |||||||||||||||||||||||||||||||||||||||
| Balance, beginning of period | 18,648,373 | $ | 186 | $ | 186,232 | $ | 539 | $ | - | $ | 808 | $ | 187,765 | ||||||||||||||||||||||||||||
|
Common Shares issued
|
20,306,240 | 204 | 212,724 | - | - | - | 212,928 | ||||||||||||||||||||||||||||||||||
| Distribution reinvestment | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Repurchase of Shares | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Net investment income (loss) | - | - | - | 21,299 | - | - | 21,299 | ||||||||||||||||||||||||||||||||||
| Net realized gain (loss) | - | - | - | - | 11,991 | - | 11,991 | ||||||||||||||||||||||||||||||||||
| Net change in unrealized appreciation (depreciation) | - | - | - | - | - | 5,337 | 5,337 | ||||||||||||||||||||||||||||||||||
| Net change in unrealized currency gain (losses) on non-investment assets and liabilities | - | - | - | - | - | (3,140) | (3,140) | ||||||||||||||||||||||||||||||||||
| Distributions declared | - | - | - | (15,481) | (686) | - | (16,167) | ||||||||||||||||||||||||||||||||||
| Tax reclassification of shareholders' equity in accordance with GAAP | - | - | (421) | 165 | 256 | - | - | ||||||||||||||||||||||||||||||||||
| Balance end of period | 38,954,613 | $ | 390 | $ | 398,535 | $ | 6,522 | $ | 11,561 | $ | 3,005 | $ | 420,013 | ||||||||||||||||||||||||||||
Distributions
We expect to pay quarterly distributions. Any distributions we make will be at the discretion of our Board, considering factors such as our earnings, cash flow, capital needs and general financial condition and the requirements of Delaware law. As a result, our distribution rates and payment frequency may vary from time to time.
The Company's distributions are recorded on the record date. The following table summarizes distributions declared during the year ended December 31, 2025:
| Date Declared | Record Date | Payment Date |
Amount
Per Share(1)
|
Total Distributions | ||||||||||||||||||||||
| March 4, 2025 | March 12, 2025 | March 14, 2025 | $ | 0.23 | $ | 10,552 | ||||||||||||||||||||
| April 28, 2025 | April 28, 2025 | June 2, 2025 | $ | 0.20 | $ | 8,944 | ||||||||||||||||||||
| July 30, 2025 | July 30, 2025 | August 15, 2025 | $ | 0.20 | $ | 9,165 | ||||||||||||||||||||
| October 30, 2025 | October 31, 2025 | November 14, 2025 | $ | 0.20 | $ | 8,945 | ||||||||||||||||||||
| December 29, 2025 | December 31, 2025 | January 30, 2026 | $ | 0.25 | $ | 11,249 | ||||||||||||||||||||
|
Total
|
$ | 48,855 | ||||||||||||||||||||||||
(1)Includes capital gain distributions of $0.1697 per for share for the January 30, 2026 distribution payment.
The following table summarizes distributions declared during the year ended December 31, 2024:
| Date Declared | Record Date | Payment Date |
Amount
Per Share(1)
|
Total Distributions | ||||||||||||||||||||||
| March 6, 2024 | March 6, 2024 | March 22, 2024 | $ | 0.20 | $ | 7,625 | ||||||||||||||||||||
| May 2, 2024 | May 8, 2024 | May 22, 2024 | $ | 0.25 | $ | 9,769 | ||||||||||||||||||||
| July 30, 2024 | June 28, 2024 | August 16, 2024 | $ | 0.24 | 9,349 | |||||||||||||||||||||
| November 6, 2024 | November 7, 2024 | November 15, 2024 | $ | 0.47 | 19,596 | |||||||||||||||||||||
| Total | $ | 46,339 | ||||||||||||||||||||||||
(1)Includes capital gain distributions of $0.2329 per for share for the November 15, 2024 distribution payment.
The following table summarizes distributions declared during the year December 31, 2023:
| Date Declared | Record Date | Payment Date |
Amount Per Share |
Total Distributions | ||||||||||||||||||||||
| June 2, 2023 | June 6, 2023 | June 8, 2023 | $ | 0.15 | $ | 3,222 | ||||||||||||||||||||
| August 8, 2023 | August 31, 2023 | September 15, 2023 | $ | 0.20 | 5,011 | |||||||||||||||||||||
| November 6, 2023 | November 14, 2023 | November 17, 2023 | $ | 0.20 | 7,934 | |||||||||||||||||||||
| Total | $ | 16,167 | ||||||||||||||||||||||||
Off-Balance Sheet Arrangements
Portfolio Company Commitments
Our investment portfolio contains and is expected to continue to contain debt investments which are in the form of lines of credit or delayed draw commitments, which require us to provide funding when requested by portfolio companies in accordance with underlying loan agreements. As of December 31, 2025 and December 31, 2024, the Company had the following unfunded delayed draw term loans and revolvers:
| Par Value as of | ||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Unfunded delayed draw commitments | $ | 27,456 | $ | 35,950 | ||||||||||
| Unfunded revolving commitments | 28,576 | 28,764 | ||||||||||||
| Total unfunded commitments | $ | 56,032 | $ | 64,714 | ||||||||||
Investor Commitments
As of December 31, 2025, the Company had $616.9 million in total capital commitments from investors, $156.6 million of which was undrawn. As of December 31, 2024, the Company had $543.8 million in total capital commitments from investors, $83.5 million of which was undrawn.
Other Commitments and Contingencies
From time to time, we may become a party to certain legal proceedings incidental to the normal course of our business. As of December 31, 2025, management was not aware of any pending or threatened litigation.
Related Party Transactions
We have entered into a number of business relationships with affiliated or related parties, including the Advisory Agreement and the Administration Agreement.
In addition to the aforementioned agreements, we rely on exemptive relief that has been granted to us, our Adviser, and certain of our Adviser's affiliates by the SEC to co-invest with other funds managed by our Adviser or its affiliates in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors.
Recent Developments
Appointment of Officers
On February 24, 2026, the Board appointed Amaka Dike as Chief Financial Officer of the Company effective as of the close of business on February 24, 2026. Mrs. Dike has primary responsibility for the financial oversight of OHA's business development companies (BDCs), interval funds and related vehicles. She serves on the firm's risk committee. Prior to joining OHA, Ms. Dike was a Principal at The Carlyle Group Inc., where she oversaw financial operations for multiple direct lending and cross strategy funds. Earlier in her career, she was a Senior Manager in EY's Financial Services audit practice, serving banking institutions and alternative investment managers. Ms. Dike holds a Master of Arts in Economics from Kent State University and a Bachelor of Business Administration in Accounting, summa cum laude, from West Virginia University. She is a Certified Public Accountant.
On February 24, 2026, the Board appointed Andrew Winer as President of the Company effective as of the close of business on February 24, 2026. Mr. Winer will also continue to serve as Chief Operating Officer of the Company. Mr. Winer focuses on new business developments and oversees the operation of OHA's BDCs and similar vehicles. He has held senior roles in commercial real estate and finance at several firms and holds a B.B.A and Masters in Accounting from the University of Michigan.
Critical Accounting Policies and Estimates
The preparation of the financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ.
Investments at Fair Value
Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.
The Company is required to report its investments for which current market values are not readily available at fair value. The Company values its investments in accordance with ASC 820, which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the applicable measurement date. ASC 820 prioritizes the use of observable market prices derived from such prices over entity-specific inputs. Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material.
Investments that are listed or traded on an exchange and are freely transferable are valued at either the closing price (in the case of securities and futures) or the mean of the closing bid and offer (in the case of options) on the principal exchange on which the investment is listed or traded. Investments for which other market quotations are readily available will typically be valued at those market quotations. To validate market quotations, the Company will utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Where it is possible to obtain reliable, independent market quotations from a third-party vendor, the Company will use these quotations to determine the value of its investments. The Company utilizes mid-market pricing (i.e., mid-point of average bid and ask prices) to value these investments. The Adviser obtains these market quotations from independent pricing services, if available; otherwise from one or more broker quotes. To assess the continuing appropriateness of pricing sources and methodologies, the Adviser regularly performs price verification procedures and issues challenges as necessary to independent pricing services or brokers, and any differences are reviewed in accordance with the valuation procedures. The Adviser does not adjust the prices unless it has a reason to believe market quotations are not reflective of the fair value of an investment.
Where prices or inputs are not available or, in the judgment of the Adviser, not reliable, valuation approaches based on the facts and circumstances of the particular investment will be utilized. Securities that are not publicly traded or for which market prices are not readily available, as will be the case for a substantial portion of the Company's investments, are valued at fair value as determined in good faith by the Adviser as the Company's valuation designee under Rule 2a-5 under the 1940 Act, pursuant to the Company's valuation policy, and under the oversight of the Board, based on, among other things, the input of independent valuation firms retained by the Company to review the Company's investments. These valuation approaches involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments' complexity.
With respect to the quarterly valuation of investments, the Company undertakes a multi-step valuation process each quarter in connection with determining the fair value of our investments for which reliable market quotations are not readily available as of the last calendar day of each quarter, which includes, among other procedures, the following:
•The valuation process begins with each investment being preliminarily valued by the Adviser's valuation team in consultation with the Adviser's investment professionals responsible for each portfolio investment;
•In addition, independent valuation firms retained by the Company prepare quarter-end valuations of each such investment that was (i) originated or purchased prior to the first calendar day of the quarter and (ii) is not a de minimis investment, as determined by the Adviser. The independent valuation firms provide a final range of values on such investments to the Adviser. The independent valuation firms also provide analyses to support their valuation methodology and calculations;
•The Adviser's valuation committee with respect to the Company (the "Valuation Committee") reviews each valuation recommendation to confirm they have been calculated in accordance with the Company's valuation policy and compares such valuations to the independent valuation firms' valuation ranges to ensure the Adviser's valuations are reasonable;
•The Adviser's Valuation Committee then determines fair value marks for each of the Company's portfolio investments; and
•The Board and Audit Committee periodically review the valuation process and provide oversight in accordance with the requirements of Rule 2a-5 under the 1940 Act.
As part of the valuation process, the Company will take into account relevant factors in determining the fair value of our investments for which reliable market quotations are not readily available, many of which are loans, including and in combination, as relevant, of: (i) the estimated enterprise value of a portfolio company, generally based on an analysis of discounted cash flows, publicly traded comparable companies and comparable transactions, (ii) the nature and realizable value of any collateral, (iii) the portfolio company's ability to make payments based on its earnings and cash flow, (iv) the markets in which the portfolio company does business, and (v) overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase transaction, public offering or subsequent equity or debt sale occurs, the Adviser will consider whether the pricing indicated by the external event corroborates its valuation.
The Company has and will continue to engage independent valuation firms to provide assistance regarding the determination of the fair value of the Company's portfolio securities for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment each quarter, and the Company and the Adviser may reasonably rely on that assistance. However, the Adviser is responsible for the ultimate valuation of the portfolio investments at fair value as determined in good faith pursuant to the Company's valuation policy, the Board's oversight and a consistently applied valuation process.
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the applicable measurement date.
The fair value hierarchy under ASC 820 prioritizes the inputs to valuation methodology used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The levels used for classifying investments are not necessarily an indication of the risk associated with investing in these securities. The three levels of the fair value hierarchy are as follows:
•Level 1: Inputs to the valuation methodology that reflect unadjusted quoted prices available in active markets for identical assets or liabilities as of the reporting date.
•Level 2: Inputs to the valuation methodology other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date.
•Level 3: Inputs to the valuation methodology are unobservable and significant to overall fair value measurement.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Adviser's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.
The Company's accounting policy on the fair value of our investments is critical because the determination of fair value involves subjective judgments and estimates. Accordingly, the notes to the Company's financial statements express the uncertainty with respect to the possible effect of these valuations, and any change in these valuations, on the financial statements. The SEC adopted Rule 2a-5 under the 1940 Act which establishes requirements for determining fair value in good faith for purposes of the 1940 Act. We are in compliance with the requirements of Rule 2a-5.
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