Saratoga Investment Corp. Reports $1.2 Billion in Assets and Improved Financial Performance

Saratoga Investment Corp., a specialty finance company, reported total assets of $1.2 billion and investments in 48 portfolio companies as of February 28, 2025. The portfolio consisted primarily of first lien term loans (88.7%), with smaller portions in second lien term loans (0.7%), unsecured loans (1.7%), structured finance securities (1.5%), and equity interests (7.4%). The weighted average yield on all investments was approximately 10.8%. The company's total return based on market value was 27.17%, while its total return based on net asset value (NAV) per share was 10.11%. These figures contrast sharply with the previous fiscal year's negative 3.92% market value return and 4.20% NAV per share return.

Significant changes in financial performance compared to the previous fiscal year (ended February 29, 2024) include a substantial increase in total investment income, rising from $143.7 million to $148.9 million. This increase was primarily driven by the recovery of previously non-accrual interest income related to the Knowland investment, offset by a slight decrease in the overall portfolio's weighted average interest rate. Operating expenses also increased, from $86.8 million to $95.9 million, largely due to higher interest and debt financing expenses and increased administrator expenses. The company's net increase in net assets resulting from operations was $28.1 million, a considerable improvement over the $8.9 million reported in the prior year.

During the fiscal year, Saratoga Investment Corp. invested $168.1 million in new and existing portfolio companies, while realizing $312.1 million in exits and repayments, resulting in net repayments of $144 million. The company's investment activities included a fifth refinancing of the Saratoga CLO in June 2024, which did not extend the reinvestment period or legal maturity but adjusted interest rates on two existing notes. The company also continued its share repurchase plan, purchasing 1,035,203 shares of common stock at an average price of $22.05. Notably, the company utilized its ATM program, selling 7,844,716 shares for gross proceeds of $207.9 million.

The company's operations are externally managed by Saratoga Investment Advisors, LLC, with no employees of its own. The investment advisor receives a base management fee of 1.75% per annum of gross assets (excluding cash and cash equivalents) and an incentive fee based on pre-incentive fee net investment income and realized capital gains. The company's financial condition and results of operations are subject to various risks, including interest rate volatility, economic downturns, and the illiquidity of its investments, as detailed in the filing's extensive risk factor discussion. The company's outlook is contingent upon various factors, including its ability to originate new loans and investments, borrowing costs, and the availability of additional capital.