Financial Data and Key Metrics Changes - For the quarter ended June 2025, the net investment income (NII) was $79 million, equating to $0.17 per common share, with a net asset value (NAV) of approximately $3 billion or $6.56 per common share [3] - The net debt to total assets ratio stood at 30.4%, with unsecured debt and preferred shares comprising 77.1% of total debt [3] Business Line Data and Key Metrics Changes - The company has increased its focus on first lien senior secured middle market loans, with the first lien mix rising by 642 basis points to 70.5% from the previous year [4][5] - The second lien mix decreased by 202 basis points to 14.4%, and further reduced to 13.7% after two additional second lien loans were repaid [5] - Subordinated structured notes decreased to 0.6% of the investment portfolio, down 781 basis points from the prior year [5][9] Market Data and Key Metrics Changes - The company has invested $12.6 billion in over 350 exited investments, achieving a 12% unlevered investment level gross cash IRR [8] - As of June 2025, the portfolio comprised 97 companies across 33 industries, with an aggregate fair value of $6.7 billion [8] Company Strategy and Development Direction - The company is strategically rotating its asset mix towards first lien senior secured loans, which are expected to generate higher yields compared to real estate investments [10][21] - The focus is on companies with less than $50 million in EBITDA, targeting a market of over 200,000 companies in the U.S. [5][25] - The company aims to enhance portfolio company operations and utilize a cost-efficient floating rate revolver [6][10] Management's Comments on Operating Environment and Future Outlook - Management noted a significant slowdown in inflation affecting property costs, which is favorable for net operating income (NOI) growth, projecting double-digit growth in the future [21] - The company is strategically exiting investments at value-maximizing prices while focusing on middle market lending, which is seen as a value driver [22][26] Other Important Information - The company announced monthly common shareholder distributions of $0.45 per share for September and October, with a total distribution of approximately $4.6 billion since its IPO [4] - The company has a strong liquidity position with $1.3 billion in combined cash and undrawn revolving credit facilities, and 62% of its assets are unencumbered [12][13] Q&A Session Summary Question: Outlook for the REIT and income trajectory amidst industry challenges - Management acknowledged industry challenges but noted a substantial improvement in their portfolio, with a 7% increase in same property NOI over the last year and expectations for double-digit growth going forward [19][21] Question: Strategy regarding real estate investments - Management emphasized a selective exit strategy for real estate investments, focusing on maximizing value and transitioning from lower-yielding real estate to higher-yielding middle market loans [22][26]

Financial Data and Key Metrics Changes - Adjusted net investment income for Q4 2024 was $6,200,000 or $0.29 per share, a slight decrease from $6,600,000 or $0.31 per share in the previous quarter [4][17] - NAV as of 12/31/2024 was $191,800,000 or $8.85 per share, down from $198,900,000 or $9.18 per share as of 09/30/2024, representing a 3.6% decline [4][18] - The weighted average effective yield on the portfolio's debt and preferred equity was 10.2%, down from 11% in the previous quarter [18] Business Line Data and Key Metrics Changes - The investment portfolio totaled $457,000,000 at year-end, a decrease from $474,300,000 at the end of the previous quarter, consisting of debt and equity investments in 91 portfolio companies, down from 94 [12] - In 2024, the company invested $30,400,000 in seven new portfolio companies and $57,600,000 in existing portfolio companies [14] - Total investment income for Q4 2024 was $14,000,000, down from $15,700,000 in Q3 2024, primarily due to a decline in interest rates [20] Market Data and Key Metrics Changes - Middle market direct lending M&A volumes in Q4 2024 were the strongest since Q4 2021, leading to an 85% year-over-year increase in sponsored direct lending volumes for 2024 [12][13] - Private credit middle market deal issuance was 2.9 times greater than syndicated deal lending in 2024, with delayed draw term loan fundings 2.4 times greater than in 2023 [13] Company Strategy and Development Direction - The company plans to focus on growing the portfolio and addressing legacy portfolio issues, indicating a shift towards more offensive strategies in 2025 [30][31] - The strategic partnership with the Wendell Group is expected to close in Q1 2025, with Wendell committing $1,000,000,000 of new seed capital to support investment strategies [9][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the favorable market outlook and the potential for a sustainable deal environment throughout 2025, driven by lower interest rates and increased M&A activity [8][9] - The company is committed to maintaining a predominantly first lien portfolio and leveraging its credit experience and rigorous underwriting standards [26] Other Important Information - The company reported a net loss on the portfolio for Q4 2024 of $7,700,000, primarily due to unrealized mark-to-market losses [23] - Total expenses for Q4 2024 were $8,000,000, down from $9,200,000 in Q3 2024, mainly due to lower interest and debt financing expenses [22] Q&A Session Summary Question: Strategy to grow earnings and portfolio given recent contractions - Management indicated plans to clean up legacy portfolio issues and is hopeful for growth in 2025 [30][31] Question: Resolution of long-standing non-accrual investments - Management is actively working on non-accrual investments and hopes to make progress in 2025 [33][34] Question: Consideration of swapping bank credit facilities for other debt structures - Management acknowledged the consideration but emphasized strong interest from financial institutions in providing capital for diversified middle market portfolios [36][40]