Great Elm Capital Corp. Reports $12.5M Investment Income in Q1 2025

Great Elm Capital Corp. (GECC) reported its financial results for the first quarter of 2025, revealing a total investment income of $12.5 million, a significant increase from $8.9 million in the same period last year. This growth was primarily driven by a larger debt investment portfolio, which averaged $256.2 million with an average coupon rate of 11.7%. The company also recorded net investment income of $4.6 million, or $0.40 per share, compared to $3.2 million, or $0.37 per share, in the prior year. However, the net asset value (NAV) per share decreased to $11.46 from $11.79 at the end of the previous quarter.

In terms of operational changes, GECC has made strategic moves to enhance its investment capabilities. Notably, the company formed a joint venture, CLO Formation JV, LLC, on April 23, 2024, to facilitate the creation of collateralized loan obligations (CLOs). This venture is expected to generate recurring distributions from subordinated note securities in CLOs. Additionally, GECC contributed investments in its operating company subsidiaries to Great Elm Specialty Finance, LLC, which is anticipated to create revenue and cost synergies across its specialty finance subsidiaries.

The company’s investment portfolio saw a fair value increase to $341.9 million as of March 31, 2025, up from $324.3 million at the end of 2024. This growth was attributed to new investments totaling $48.1 million, although it was partially offset by repayments and sales amounting to $27.0 million. The portfolio's composition remains diversified across various industries, with structured finance and specialty finance representing significant portions of the total investments.

GECC's financial performance was also impacted by rising expenses, which totaled $7.9 million for the quarter, compared to $5.7 million in the prior year. The increase in expenses was largely due to higher management and incentive fees, as well as increased interest expenses resulting from new debt issuances. The company’s interest expense rose to $4.3 million, reflecting the impact of recent debt offerings, including the issuance of $56.5 million in 8.50% notes due 2029.

Looking ahead, GECC remains optimistic about its investment strategy and market conditions. The company believes it has sufficient liquidity to meet its obligations and continue pursuing new investment opportunities. The board has declared a distribution of $0.37 per share for the quarter ending June 30, 2025, which will be paid in cash, further indicating the company's commitment to returning value to its shareholders while navigating the evolving financial landscape.