Group 1 - Kayne Anderson BDC, Inc. (KBDC) has been established as a significant position in the investment portfolio since its assessment began in October 2024 [1] Group 2 - Roberts Berzins has over a decade of experience in financial management, focusing on corporate financial strategies and large-scale financings [2] - He has contributed to institutionalizing the REIT framework in Latvia to enhance liquidity in pan-Baltic capital markets [2] - His work includes developing national SOE financing guidelines and frameworks for channeling private capital into affordable housing [2]

Group 1 - Business Development Companies (BDCs) are facing significant challenges in the current market conditions, with Nuveen Churchill Direct Lending Corp (NCDL) experiencing a consistent downtrend in earnings [1] - The article highlights the importance of a diversified investment strategy that includes classic dividend growth stocks, BDCs, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1] Group 2 - The author emphasizes a hybrid investment approach that balances growth and income, aiming for total returns on par with the S&P [1]

FS KKR Capital Corp. ( N Y S E : F S K ) I n v e s t o r P r e s e n t a t i o n March 2026 All information is as of December 31, 2025 unless otherwise noted FS KKR ADVISOR & MARKET OVERVIEW FS/KKR Advisor: Overview | | Size & Scale | | | | --- | --- | --- | --- | | ~$14 billion AUM publicly | FSK has direct involvement | Incumbency from large | | | traded BDC within | of ~250 professionals and | portfolio of 2,700+ issuers | ~$11 billion diversified | | $288 billion KKR Credit | ~120 investment | across KK ...

Core Insights - The private credit market presents high yield opportunities but carries significant risks, including valuation opacity, liquidity risk, credit deterioration, and structural vulnerabilities [1] Private Credit Risks - Private credit risk encompasses vulnerabilities and potential losses from non-bank lending, characterized by higher yields but less transparency and regulation compared to traditional markets [3] Exposure to Private Credit Risks - Major alternative asset managers and Business Development Companies (BDCs) are heavily exposed to private credit risks, particularly in the software and technology sectors, with many BDCs holding about 25% of their portfolios in software [4] Rising Defaults and Bank Contagion - Analysts predict that default rates for U.S. private credit firms could rise to 13% due to AI disruptions in the software sector, impacting regional banks with exposure to risky private loans [5] Notable Private Credit Stocks to Avoid - Blue Owl Capital is currently rated Zacks Rank 4 (Sell) due to declining EPS revisions for FY26 and FY27, despite its attractive P/E valuation and stock price [6][7] Liquidity Concerns - Blue Owl Capital has restricted investor withdrawals from its private credit fund, raising liquidity concerns in the market as these restrictions have become a significant stress point [8] Top Private Credit Stocks to Consider - Three notable private credit stocks with a Zacks Rank 3 (Hold) include: - The Blackstone Group (BX): Stock price $114, FY26 EPS growth of 14% [11] - Apollo Global Management (APO): Stock price $109, FY26 EPS growth of 10% [12] - Ares Management (ARES): Stock price $116, FY26 EPS growth of 37% [13] Ares Capital as a BDC Example - Ares Capital (ARCC) is highlighted as a BDC with strong demand, investing in U.S. middle-market companies, and has a low Beta and a 10.13% annual dividend yield [16][17] Long-term Growth Potential - The private credit market has historically provided higher long-term returns than public markets, driven by active management and strategic exits, although it faces near-term volatility due to macro conditions [18][19]

Core Viewpoint - Main Street Capital's shares fell by 11% in February due to concerns in the private credit market, despite reporting strong fourth-quarter financial results [1]. Group 1: Private Credit Market Concerns - The private credit market is facing challenges as banks have reduced lending due to consolidation, increased regulations, and a growing aversion to risk, allowing investment firms to fill the gap [2]. - Several private capital borrowers have defaulted on riskier loans, raising concerns about potential future defaults, which has negatively impacted providers of private credit, including BDCs like Main Street Capital [3]. Group 2: Main Street Capital's Financial Performance - Main Street Capital reported a distributable net investment income (DNII) of $1.09 per share for the fourth quarter, a 5% increase from the previous year, with an annual DNII of $4.21 per share, up from $4.16 in 2024 [4]. - The company's net asset value per share increased by 5.3%, driven by higher valuations of its equity investments, and it achieved several new quarterly and annual records across key performance metrics [4]. Group 3: Loan Portfolio Quality - As of year-end, only 1% of Main Street Capital's total investment portfolio was in non-accrual status, indicating a high-quality loan portfolio, which is better than some peers [5]. Group 4: Dividend Strategy - Main Street Capital remains confident in its strategy of investing in high-quality, smaller private companies to generate favorable investment returns, supporting its monthly dividend [6]. - The company has increased its monthly dividend 11 times since Q4 2021 and has paid a supplemental dividend for 18 consecutive quarters [6].

Core Viewpoint - The company has completed its conversion from a REIT to a Business Development Company (BDC) as of January 1, 2026, to enhance its investment capabilities and remove real estate coverage restrictions [1] Group 1: Strategic Focus and Financial Management - The company is focusing its 2025 efforts on reducing exposure to underperforming credits, having received $117 million in total paydowns from early 2025 through the reporting date [1] - The strategic focus has shifted toward the lower middle market, targeting cash-flowing borrowers with EBITDA between $5 million and $50 million across diverse industries [1] - Distributable earnings pressure for 2025 is primarily attributed to realized losses from two underperforming credits, leading to dividends being characterized as a tax-free return of capital [1] Group 2: Investment Strategy and Market Conditions - The company maintains a high bar for new cannabis investments due to challenges such as a lack of industry equity capital, increasing tax liabilities, and slow progress on regulatory reforms [1] - The company is actively managing three nonaccrual loans with the intent to redeploy recovered capital into performing credits to unlock future earnings potential [1]

Financial Data and Key Metrics Changes - For the quarter ended December 31, 2025, the company generated net interest income of $5.2 million and distributable earnings of -$2.8 million, or -$0.12 per basic weighted average common share, with GAAP net income of $900,000 or $0.04 per basic weighted average common share [21] - For the full year ended December 31, 2025, net interest income was $24.6 million, distributable earnings were $8.7 million, or $0.39 per basic weighted average common share, and GAAP net loss was $20.7 million, or $0.95 per basic weighted average common share [22] - The CECL reserve was $46.1 million, approximately 18.2% of loans at carrying value, with a total unrealized loss of $27.7 million for loans held at fair value [25] Business Line Data and Key Metrics Changes - The company originated $53 million of new commitments during fiscal year 2025 and closed on $89.7 million of new commitments in the lower middle market after year-end [7][8] - The company received $117 million in paydowns from performing and underperforming credits from the start of 2025 through the call date [6][11] Market Data and Key Metrics Changes - The active pipeline increased to $1.4 billion, up from $400 million in the previous quarter, primarily due to the conversion from a REIT to a BDC, which expanded the investment universe [28][29] Company Strategy and Development Direction - The company focused on reducing exposure to underperforming credits and converting from a REIT to a BDC to enhance investment flexibility and pursue a broader range of operating businesses [6][8] - The strategy includes sourcing deals in the lower middle market across various industries, primarily targeting cash-flowing borrowers with $5 million to $50 million of EBITDA [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about unlocking future earnings potential as capital is reinvested into performing credits, despite ongoing challenges with underperforming loans [16] - The company remains cautious about making new loans in the cannabis sector due to regulatory uncertainties and the lack of equity capital in the industry [44] Other Important Information - The board of directors declared a first-quarter dividend of $0.05 per share, to be paid on April 15, 2026 [9][26] Q&A Session Summary Question: What led to the increase in the active pipeline? - The increase was primarily due to the conversion from a REIT to a BDC, which expanded the investable universe beyond real estate-backed loans [28] Question: Can you provide a split between cannabis and non-cannabis pipeline? - The company views the active pipeline as encompassing lower middle market companies across various industries without breaking out specific sectors [30] Question: What is the status of loans in non-accrual? - The company has three loans on non-accrual and is focused on receiving paydowns to redeploy that capital into performing credits [12] Question: Will the company make new loans in cannabis this year? - The company continues to evaluate opportunities in cannabis but faces high barriers due to regulatory challenges and market conditions [44] Question: How does the Blue Owl Capital situation affect sentiment? - Management refrained from commenting on other companies' performances but emphasized their own credit performance and portfolio management [45]

Core Insights - Advanced Flower Capital Inc. is transitioning from a real estate investment trust (REIT) to a business development company (BDC) to enhance investment flexibility and pursue a broader range of transactions [5][20] - The company aims to actively manage its portfolio to reduce exposure to underperforming credits and preserve capital, with expectations of unlocking future earnings potential as repayments are received [5][12] Financial Performance - For the fiscal year 2025, Advanced Flower Capital Inc. reported distributable earnings of negative $0.12 per share for the quarter and positive $0.39 per share for the full year, primarily due to realized losses from underperforming credits [6][15] - The company generated net interest income of $24,600,000 for the full year and had a GAAP net loss of $20,700,000 [15][17] - As of December 31, 2025, the company had total assets of $275,600,000 and total shareholder equity of $175,600,000, with a book value per share of $7.46 [17] Portfolio Management - The company received $117,000,000 in paydowns from performing and underperforming credits from the start of 2025 through the present [5][8] - The current portfolio consists of $366,400,000 of principal outstanding across 15 loans, with a CECL reserve of $46,100,000, representing approximately 18.2% of loans at carrying value [16][17] - The company is focused on sourcing deals in the lower middle market, primarily targeting cash-flowing borrowers with EBITDA between $5,000,000 and $50,000,000 [12][20] Strategic Initiatives - The conversion to a BDC, effective January 1, 2026, allows the company to pursue opportunities beyond real estate-backed loans, enhancing long-term shareholder value [5][20] - The active deal pipeline has increased significantly to over $1,400,000,000, up from $400,000,000 in the previous quarter, driven by the expanded investment universe post-conversion [12][19] Future Outlook - The Board of Directors declared a first quarter dividend of $0.05 per share, to be paid on April 15, 2026 [7][17] - The company is optimistic about unlocking value from underperforming loans while actively pursuing new lending opportunities [14][20]

Group 1 - Horizon Technology Finance (HRZN) is identified as a business development company (BDC) where a bearish stance has been maintained based on its fundamentals [1] Group 2 - Roberts Berzins has over a decade of experience in financial management, assisting top-tier corporates in shaping financial strategies and executing large-scale financings [2] - He has contributed to institutionalizing the REIT framework in Latvia to enhance liquidity in pan-Baltic capital markets [2] - His work includes developing national SOE financing guidelines and frameworks for channeling private capital into affordable housing [2]

分组1 - The primary source of return for Business Development Companies (BDCs) is income, indicating that most investors in this sector are income-oriented [1] - Roberts Berzins has over a decade of experience in financial management, focusing on shaping financial strategies for top-tier corporates and executing large-scale financings [1] - Berzins has contributed to institutionalizing the REIT framework in Latvia to enhance the liquidity of pan-Baltic capital markets [1] 分组2 - Berzins has been involved in developing national SOE financing guidelines and frameworks to channel private capital into affordable housing [1] - He holds a CFA Charter and an ESG investing certificate, and has experience with the Chicago Board of Trade [1] - Berzins actively participates in thought-leadership activities to support the development of pan-Baltic capital markets [1]