Ares Capital(US:ARCC)2025-10-28 00:48Investment Commitments and Performance - New investment commitments for Q3 2025 totaled $3.924 billion, slightly up from $3.919 billion in Q3 2024[551] - The principal amount of investments funded in Q3 2025 was $3.507 billion, compared to $3.283 billion in Q3 2024, reflecting a 6.8% increase[551] - The net investment commitments for Q3 2025 were $1.299 billion, slightly down from $1.321 billion in Q3 2024[551] - The percentage of new investment commitments at floating rates was 93% in Q3 2025, compared to 95% in Q3 2024[551] - The company realized a gross internal rate of return of approximately 13% on exited investments since its IPO, with total proceeds of approximately $68.6 billion from $53.1 billion originally invested[542] - The principal amount of investments sold or repaid in Q3 2025 was $2.635 billion, compared to $2.542 billion in Q3 2024[551] - Total investment income for Q3 2025 was $782 million, a slight increase from $775 million in Q3 2024, while for the nine months ended September 30, 2025, it rose to $2,259 million from $2,231 million in 2024[597] - Net investment income for Q3 2025 was $338 million, down from $361 million in Q3 2024, and for the nine months, it decreased to $1,045 million from $1,074 million[597] Asset Management and Financial Metrics - Ivy Hill Asset Management, L.P. had assets under management of approximately $13.5 billion as of September 30, 2025[564] - For the three months ended September 30, 2025, Ivy Hill Asset Management reported management and incentive fee income of $15 million, an increase from $13 million in the same period of 2024[564] - The total investment in Ivy Hill Asset Management as of September 30, 2025, was $2,018 million at amortized cost and $1,800 million at fair value[565] - The weighted average grade of the investments in the portfolio at fair value was 3.1 as of September 30, 2025, unchanged from December 31, 2024[562] - IHAM's net income attributable to Ivy Hill Asset Management, L.P. for the nine months ended September 30, 2025, was $216 million, demonstrating robust profitability despite market fluctuations[576] - The company's investment income for the three months ended September 30, 2025, was $84 million, while for the nine months, it reached $228 million, showcasing consistent revenue generation[576] Debt and Liabilities - The total principal amount of outstanding debt was $20.878 billion as of September 30, 2025, compared to $18.948 billion as of December 31, 2024[644] - The ratio of total principal amount of outstanding debt to stockholders' equity was 1.09:1.00 as of September 30, 2025, up from 1.03:1.00 as of December 31, 2024[649] - Total liabilities for IHAM as of September 30, 2025, were $1,007 million, with consolidated liabilities at $9,017 million, reflecting a strategic management of debt[573] - The company has a senior secured revolving credit facility allowing borrowing up to $5.5 billion, with $4.4 billion in a revolving tranche and $1.1 billion in a term loan tranche[650] Market Conditions and Risks - The macroeconomic environment showed positive total returns in leveraged corporate credit markets, supported by stable inflation and low unemployment rates[549] - The company is exposed to significant financial market risks, including changes in interest rates and the valuations of its investment portfolio, influenced by global economic conditions and geopolitical events[687] - The ongoing war between Russia and Ukraine and other geopolitical conflicts have introduced significant volatility in financial markets, impacting the company's market risks[687] Valuation and Fair Value Measurements - The fair value of investments is determined using a multi-step valuation process, with significant reliance on independent third-party valuation providers[4] - The company follows ASC 820-10 for fair value measurements, categorizing inputs into three levels based on observability[4] - The company’s investment valuation process involves independent third-party valuation providers to support fair value determinations for investments without readily available market quotations[688] Tax and Dividend Information - The company intends to continue making requisite distributions to stockholders to qualify for tax treatment applicable to RICs, thereby avoiding U.S. federal corporate-level income taxes[613] - For the three months ended September 30, 2025, the company recorded a net tax expense of $72 million, compared to $5 million for the same period in 2024, indicating a significant increase in tax liabilities[615] - The cash dividend declared per share for the third quarter of 2025 was $0.48, consistent across the previous quarters[640] Investment Backlog and Future Commitments - As of October 23, 2025, the company had an investment backlog of approximately $3.0 billion, indicating potential future investments[4] - From October 1, 2025 to October 23, 2025, the company made new investment commitments of approximately $735 million, with 95% in first lien senior secured loans[3][4]