Morgan Stanley Direct Lending Fund(MSDL) - 2024 Q1 - Quarterly Report

Investment Overview - The total investments as of March 31, 2024, amounted to $3,323,767,000, with a fair value of$3,293,205,000, representing a 3.0% increase from December 31, 2023[248] - First lien debt constituted 94.6% of total investments at fair value, amounting to $3,115,404,000 as of March 31, 2024[248] - The second lien debt represented 3.6$118,107,000 as of March 31, 2024[248] - The investment portfolio at amortized cost grew from $2,992,717 as of March 31, 2023, to$3,323,767 as of March 31, 2024[260] - The number of portfolio companies increased from 172 as of December 31, 2023, to 178 as of March 31, 2024[252] Revenue Generation - The company primarily generates revenue through interest income from debt investments, with a typical term of five to eight years and interest rates based on benchmarks like SOFR[239] - Total investment income increased from $83,639 in Q1 2023 to$99,101 in Q1 2024, driven by capital deployment and rising SOFR rates[260] - Net investment income after taxes rose from $44,222 in Q1 2023 to$54,651 in Q1 2024[259] Investment Strategy - The investment strategy focuses on middle-market companies with annual EBITDA between $15 million and$200 million, primarily through senior secured term loans[237] - The company’s investment objective is to achieve attractive risk-adjusted returns primarily through current income and, to a lesser extent, capital appreciation[237] Financial Management - The company expects general and administrative expenses to remain stable or decline as a percentage of total assets during periods of asset growth[246] - As of March 31, 2024, total outstanding debt was $2.42 billion, with$1.49 billion principal outstanding and $923.745 million unused[277] - The company had approximately$64.8 million in cash as of March 31, 2024, with additional availability under credit facilities totaling approximately $923.7 million[270] Shareholder Returns - The company closed its Initial Public Offering on January 26, 2024, raising approximately$97.1 million from the issuance of 5,000,000 shares[271] - The company adopted an "opt out" dividend reinvestment plan (DRIP) effective January 26, 2024, allowing stockholders who do not opt out to have cash dividends automatically reinvested in additional shares[273] - For the three months ended March 31, 2024, the declared distribution was $0.50 per share, with 513,697 shares issued, compared to$0.50 per share and 482,781 shares for the same period in 2023[274] - The company declared a distribution of $0.50 per share on May 8, 2024, payable on July 25, 2024[279] - The company issued 618,878 and 445,235 DRIP shares in connection with distributions on January 25, 2024, and January 25, 2023, respectively[274] Debt and Interest Rates - The company’s debt portfolio is characterized by a weighted average interest coverage ratio based on total gross debt commitments, excluding recurring revenue deals[251] - The percentage of performing debt bearing a floating rate remained stable at 99.9$232,120, significantly higher than $126,539 in Q1 2023[253] - Net realized losses on investments were$5,625 in Q1 2024, primarily due to the restructuring of three portfolio companies[267] Management and Governance - The company is externally managed by an adviser that is a wholly owned subsidiary of Morgan Stanley, but it is not a subsidiary of Morgan Stanley[236] - The company has applied for a new exemptive relief order from the SEC to enhance co-investment opportunities, which is currently pending approval[241] Credit Facilities - On April 19, 2024, the company amended the Truist Credit Facility, increasing the facility size to $1.3 billion and extending the maturity date to April 19, 2029[278] - The company entered into a share repurchase plan on January 25, 2024, to acquire up to$100 million of its Common Stock, but no shares were repurchased under this plan as of March 31, 2024[276]