**Morgan Stanley Direct Lending Fund Reports Year-End Results**

Morgan Stanley Direct Lending Fund (MSDL), a specialty finance company focused on lending to middle-market businesses, released its financial results for the year ended December 31, 2025. The company reported total investment income of $397.3 million, a decrease from $416.1 million in the previous year. This decline was attributed to declining base rates and repricings on the existing portfolio. Net expenses for the year totaled $218.4 million, compared to $193.4 million in 2024, primarily due to higher average borrowings outstanding. As a result, net investment income after taxes was $176.0 million, down from $220.2 million in the prior year.

The company experienced a net change in unrealized depreciation of $46.5 million, contrasting with an unrealized appreciation of $11.8 million in 2024. This shift was primarily due to changes in spreads in the secondary markets as well as financial performance in certain portfolio companies. Additionally, MSDL reported net realized losses of $7.4 million, compared to $16.5 million in the previous year, primarily due to the sale and/or restructuring of certain portfolio companies. Overall, the net increase in net assets resulting from operations was $122.1 million, a decrease from $215.6 million in the prior year. Earnings per share (basic and diluted) were $1.40, compared to $2.43 in the previous year.

Key operational developments included the composition of the investment portfolio, with 96.2% allocated to first lien debt, 2.0% to second lien debt, 0.3% to other debt investments, and 1.5% to equity investments, based on fair value. The weighted average yield on debt and income-producing investments at cost was 9.3%. As of December 31, 2025, investments in 227 portfolio companies were held, with 44 new investment commitments made during the year and 25 portfolio companies exited or fully repaid. The company's investment performance rating indicated that 93.7% of the portfolio was classified as Risk Rating 2, performing in line with initial underwriting expectations.

Looking ahead, MSDL announced several strategic developments. On January 2, 2026, Capstone Lending LLC, a joint venture between MSDL and an institutional partner, commenced operations with a focus on senior secured loans to middle-market companies. MSDL committed up to $200 million to this venture. Furthermore, on February 19, 2026, Capstone Lending acquired a portfolio of senior secured term loans with an aggregate principal of $372.8 million. On February 26, 2026, the Board of Directors approved a share repurchase program, authorizing the repurchase of up to $100 million of the company's common stock at prices below net asset value per share over a 24-month period. The Board also declared a distribution of $0.45 per share, payable on April 24, 2026, to shareholders of record as of March 31, 2026.

About Morgan Stanley Direct Lending Fund

Morgan Stanley Direct Lending Fund is a non-diversified, externally managed company focused on providing senior secured loans and debt financing to U.S. middle-market companies. It targets private equity-backed firms with strong cash flow, leading market positions, and high barriers to entry. The fund seeks attractive risk-adjusted returns through disciplined credit analysis, active portfolio management, and leveraging Morgan Stanley’s extensive relationships and resources.

This description was generated via AI from an annual report. Updated 9 months ago.

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