Market Overview - Major indexes experienced a decline, ending a seven-day winning streak for the S&P 500, with the Dow down 91 points (-0.20%), S&P 500 down 25 points (-0.38%), Nasdaq down 155 points (-0.68%), and Russell 2000 down 25 points (-1.02%) [1] - Bond yields also retreated, with the 10-year yield at 4.13% and the 2-year yield at 3.57% [1] AI Trade Concerns - There is growing skepticism regarding the sustainability of the AI trade, with questions about whether the current market multiples are justified or if the market is in a bubble [2] Gold Market - Gold prices surpassed $4,000 for the first time, closing at $3,981 per troy ounce, reflecting a +0.76% increase [3] - The rise in gold prices is viewed as a hedge against potential market volatility, particularly as the S&P 500 reached new all-time highs [3] Consumer Credit Trends - Consumer credit saw a significant decline to $363 million in August, down from a $16.0 billion increase the previous month, and well below expectations of $14.0 million [4] - The decline is attributed to deteriorating credit quality, rising credit card balances, and increased delinquencies, with revolving credit down -5.5% year over year [4] Economic Indicators - The data indicates a softening U.S. economy, characterized by a weakening labor market and rising inflation costs, contributing to the pullback in consumer credit [5] - No major economic reports are scheduled for release, and the government shutdown is expected to limit new data availability [6] Federal Reserve Insights - The Federal Open Market Committee (FOMC) recently cut rates by 25 basis points, bringing the Fed funds rate to 4.00-4.25% for the first time in three years [7] - The next FOMC meeting is anticipated to discuss further rate cuts, although the lack of government reports due to the shutdown complicates the outlook [8]

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]