Blue Owl Capital Corporation III Reports First Quarter Net Investment Income Per Share of $0.39 and NAV Per Share of $15.65
NEW YORK, May 8, 2024 /PRNewswire/ -- Blue Owl Capital Corporation III (NYSE: OBDE, or the "Company") today announced financial results for its first quarter ended March 31, 2024.
FIRST QUARTER 2024 HIGHLIGHTS
- First quarter net investment income ("NII") per share of $0.39, which exceeds the first quarter regular dividend of $0.35 per share by $0.04 per share
- Successfully listed on the New York Stock Exchange in January as one of the largest BDCs in the public market
- In conjunction with the listing, the Board of Directors (the "Board") declared five special dividends of $0.06 per share to be paid quarterly beginning in the second quarter of 2024
- 10.5% annualized dividend yield based on first quarter net asset value ("NAV") per share1
- NAV per share increased to $15.65 compared to $15.56 as of December 31, 2023, representing the Company's highest NAV per share since inception
"OBDE delivered strong performance in the first quarter, achieving record net asset value per share for the fifth consecutive quarter," commented Craig W. Packer, Chief Executive Officer. "We have made meaningful progress towards reaching our target leverage range and believe we are well positioned to deliver sustained, attractive risk-adjusted returns to our shareholders as a public company."
Dividend Declarations
The Company's Board declared a second quarter 2024 dividend of $0.35 per share for stockholders of record as of June 28, 2024, payable on or before July 15, 2024.
In addition, and as previously announced, the Board declared a series of five special dividends of $0.06 per share, payable to stockholders of record quarterly beginning in the second quarter 2024. A full schedule of the record and payment dates can be found on the Company's website.
PORTFOLIO AND INVESTING ACTIVITY
For the three months ended March 31, 2024, new investment commitments totaled $736.4 million across 43 new portfolio companies and 14 existing portfolio companies. This compares to $435.9 million for the three months ended December 31, 2023 across 17 new portfolio companies and 13 existing portfolio companies.
For the three months ended March 31, 2024, the principal amount of new investments funded was $630.9 million. For this period, the Company had $232.9 million aggregate principal amount in sales and repayments.
For the three months ended December 31, 2023, the principal amount of new investments funded was $350.8 million. For this period, the Company had $328.4 million aggregate principal amount in sales and repayments.
As of March 31, 2024 and December 31, 2023, the Company had investments in 188 and 153 portfolio companies with an aggregate fair value of $4.0 billion and $3.6 billion, respectively. As of March 31, 2024, the average investment size in each portfolio company was $21.2 million based on fair value.
As of March 31, 2024, based on fair value, our portfolio consisted of 82.3% first lien senior secured debt investments, 6.6% second lien senior secured debt investments, 1.5% unsecured debt investments, 4.9% preferred equity investments, and 4.7% common equity investments.
As of December 31, 2023, based on fair value, our portfolio consisted of 76.4% first lien senior secured debt investments, 12.1% second lien senior secured debt investments, 1.7% unsecured debt investments, 5.2% preferred equity investments, and 4.6% common equity investments.
As of March 31, 2024 and December 31, 2023, approximately 88.9% and 88.5% of the portfolio was invested in secured debt, respectively. As of March 31, 2024, 98.2% of our debt investments based on fair value in our portfolio were at floating rates.
As of March 31, 2024 and December 31, 2023, the weighted average total yield of accruing debt and income-producing securities at fair value (which includes interest income and amortization of fees and discounts) was 11.7% and 12.1%, respectively, and the weighted average total yield of accruing debt and income-producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 11.7% and 12.1%, respectively.
As of March 31, 2024, loans on non-accrual represented 0.3% of the total fair value of the debt portfolio.
RESULTS OF OPERATIONS FOR THE FIRST QUARTER ENDED MARCH 31, 2024
Investment Income
Investment income increased to $113.4 million for the three months ended March 31, 2024 from $97.9 million for the same period in prior year primarily due to an increase in interest income as a result of an increase in our debt investment portfolio at par as well as an increase in the base rates charged on our floating rate debt investments. Dividend income increased period over period due an increase in our portfolio of dividend income-producing equity investments at cost. Included in interest income are other fees such as prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns which are non-recurring in nature. Other income increased period over period due to an increase in incremental fee income, which are fees that are generally available to us as a result of closing investments and generally paid at the time of closing or as a result of episodic amendments made to the terms of our existing debt investments. We expect that investment income will vary based on a variety of factors including the pace of our originations and repayments.
Expenses
Total expenses increased to $64.7 million for the three months ended March 31, 2024 from $35.1 million for the same period in prior year due to an increase in management fees, incentive fees, interest expense and other expenses including the payment of listing advisory fees. The increase in interest expense was driven by an increase in average daily borrowings period over period, as well as an increase in the average interest rate period over period. Management fees increased due to an increase in our investment portfolio at fair value as well as the increased fee rates effective as of our listing date. The increase in other expenses was primarily driven by expenses associated with the exchange listing, which are not anticipated to be recurring in nature. As a percentage of total assets, professional fees, directors' fees and other general and administrative expenses increased period over period.
Liquidity and Capital Resources
As of March 31, 2024, we had $140.2 million in cash, $2.2 billion in total principal value of debt outstanding, and $345.8 million of undrawn capacity on our credit facilities. The Company's weighted average interest rate on debt outstanding was 7.0% and 6.9% for the three months ended March 31, 2024 and December 31, 2023, respectively. Ending net debt to equity was 1.04x and 0.86x as of March 31, 2024 and December 31, 2023, respectively.
(1) Dividend yield reflects regular dividend payable to stockholders of record on June 28, 2024, special dividend payable to stockholders of record on May 31, 2024 and Q1 2024 net asset value per share of $15.65. | ||||
CONFERENCE CALL AND WEBCAST INFORMATION
Conference Call Information:
The conference call will be broadcast live on May 9, 2024 at 11:00 a.m. Eastern Time on the Events section of OBDE's website at www.BlueOwlCapitalCorporationIII.com. Please visit the website to test your connection before the webcast.
Participants are also invited to access the conference call by dialing one of the following numbers:
- Domestic: (877) 407-9714
- International: +1 (201) 689-8865
All callers will need to reference "Blue Owl Capital Corporation III" once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected.
Replay Information:
An archived replay will be available for 14 days via a webcast link located on the Events section of OBDE's website, and via the dial-in numbers listed below:
- Domestic: (877) 660-6853
- International: +1 (201) 612-7415
- Conference ID: 13745828
ABOUT BLUE OWL CAPITAL CORPORATION III
Blue Owl Capital Corporation III (NYSE:OBDE) is a specialty finance company focused on lending to U.S. middle-market companies. As of March 31, 2024, OBDE had investments in 188 portfolio companies with an aggregate fair value of $4.0 billion. OBDE has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. OBDE is externally managed by Blue Owl Diversified Credit Advisors, an SEC-registered investment adviser that is an indirect affiliate of Blue Owl Capital Inc. ("Blue Owl") (NYSE:OWL) and is a part of Blue Owl's Credit platform.
Certain information contained herein may constitute "forward-looking statements" that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about OBDE, its current and prospective portfolio investments, its industry, its beliefs and opinions, and its assumptions. Words such as "anticipates," "expects," "intends," "plans," "will," "may," "continue," "believes," "seeks," "estimates," "would," "could," "should," "targets," "projects," "outlook," "potential," "predicts" and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond OBDE's control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors identified in OBDE's filings with the SEC. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date on which OBDE makes them. OBDE does not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law.
INVESTOR CONTACTS
Investor Contact:
BDC Investor Relations
[email protected]
Media Contact:
Prosek Partners
Josh Clarkson
[email protected]
FINANCIAL HIGHLIGHTS | ||||||
For the Three Months Ended | ||||||
($ in thousands, except per share amounts) | March 31, 2024 | December 31, 2023 | March 31, 2023 | |||
Investments at Fair Value | $ 3,987,997 | $ 3,590,701 | $ 3,523,437 | |||
Total Assets | $ 4,180,538 | $ 3,761,097 | $ 3,629,962 | |||
Net Asset Value Per Share | $ 15.65 | $ 15.56 | $ 15.20 | |||
Investment Income | $ 113,445 | $ 111,542 | $ 97,881 | |||
Net Investment Income | $ 48,275 | $ 71,647 | $ 61,579 | |||
Net Income | $ 54,061 | $ 80,557 | $ 73,976 | |||
Net Investment Income Per Share | $ 0.39 | $ 0.58 | $ 0.51 | |||
Net Realized and Unrealized Gains (and | $ 0.05 | $ 0.07 | $ 0.10 | |||
Net Income Per Share | $ 0.44 | $ 0.66 | $ 0.61 | |||
Distributions Declared from Net Investment Income Per Share | $ 0.35 | $ 0.49 | $ 0.44 | |||
Weighted Average Yield of Accruing Debt | 11.7 % | 12.1 % | 11.8 % | |||
Weighted Average Yield of Accruing Debt | 11.7 % | 12.1 % | 11.8 % | |||
Percentage of Debt Investments at Floating | 98.2 % | 98.1 % | 98.2 % | |||
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | ||||
(Amounts in thousands, except share and per share amounts) | ||||
March 31, 2024 (Unaudited) | December 31, 2023 | |||
Assets | ||||
Investments at fair value | ||||
Non-controlled, non-affiliated investments (amortized cost of | $ 3,874,424 | $ 3,498,800 | ||
Non-controlled, affiliated investments (amortized cost of | 113,573 | 91,901 | ||
Total investments at fair value (amortized cost of $3,966,543 and | 3,987,997 | 3,590,701 | ||
Cash | 140,229 | 141,448 | ||
Interest receivable | 32,307 | 25,147 | ||
Receivable for investments sold | 14,999 | — | ||
Prepaid expenses and other assets | 5,006 | 3,801 | ||
Total Assets | $ 4,180,538 | $ 3,761,097 | ||
Liabilities | ||||
Debt (net of unamortized debt issuance costs of $26,782 and | $ 2,124,005 | $ 1,754,496 | ||
Distribution payable | 43,096 | 60,779 | ||
Management fee payable | 11,851 | 4,517 | ||
Incentive fee payable | 7,140 | — | ||
Payables to affiliates | 3,724 | 896 | ||
Payable for investments purchased | 32,731 | — | ||
Accrued expenses and other liabilities | 31,291 | 29,297 | ||
Total Liabilities | $ 2,253,838 | $ 1,849,985 | ||
Commitments and contingencies (Note 7) | ||||
Net Assets | ||||
Common shares $0.01 par value, 500,000,000 shares authorized; | $ 1,231 | $ 1,228 | ||
Additional paid-in-capital | 1,833,649 | 1,829,029 | ||
Accumulated undistributed (overdistributed) earnings | 91,820 | 80,855 | ||
Total Net Assets | $ 1,926,700 | $ 1,911,112 | ||
Total Liabilities and Net Assets | $ 4,180,538 | $ 3,761,097 | ||
Net Asset Value Per Share | $ 15.65 | $ 15.56 | ||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
(Amounts in thousands, except share and per share amounts) | |||
(Unaudited) | |||
For the Three Months Ended March 31, | |||
2024 | 2023 | ||
Investment Income | |||
Investment income from non-controlled, non-affiliated investments: | |||
Interest income (excluding payment-in-kind ("PIK") interest income) | $ 95,714 | $ 79,360 | |
PIK interest income | 9,478 | 12,483 | |
Dividend income | 5,325 | 4,979 | |
Other income | 1,693 | 1,059 | |
Total investment income from non-controlled, non-affiliated investments | 112,210 | 97,881 | |
Investment income from non-controlled, affiliated investments: | |||
Interest income (excluding PIK interest income) | 408 | — | |
PIK interest income | 29 | — | |
Dividend income | 795 | — | |
Other income | 3 | — | |
Total investment income from non-controlled, affiliated investments | 1,235 | — | |
Total Investment Income | 113,445 | 97,881 | |
Expenses | |||
Interest expense | 35,778 | 28,539 | |
Management fee | 11,851 | 4,393 | |
Performance based incentive fees | 7,140 | — | |
Professional fees | 1,584 | 1,259 | |
Directors' fees | 228 | 196 | |
Listing advisory fees | 6,040 | — | |
Other general and administrative | 2,151 | 731 | |
Total Expenses | 64,772 | 35,118 | |
Net Investment Income (Loss) Before Taxes | 48,673 | 62,763 | |
Income tax expense (benefit), including excise tax expense (benefit) | 398 | 1,184 | |
Net Investment Income (Loss) After Taxes | $ 48,275 | $ 61,579 | |
Net Realized and Change in Unrealized Gain (Loss) | |||
Net change in unrealized gain (loss): | |||
Non-controlled, non-affiliated investments | 7,709 | 23,799 | |
Non-controlled, affiliated investments | 1,535 | 26 | |
Translation of assets and liabilities in foreign currencies | (277) | 52 | |
Income tax (provision) benefit | 1 | (1) | |
Total Net Change in Unrealized Gain (Loss) | 8,968 | 23,876 | |
Net realized gain (loss): | |||
Non-controlled, non-affiliated investments | (3,389) | (11,498) | |
Foreign currency transactions | 207 | 19 | |
Total Net Realized Gain (Loss) | (3,182) | (11,479) | |
Total Net Realized and Change in Unrealized Gain (Loss) | 5,786 | 12,397 | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ 54,061 | $ 73,976 | |
Earnings (Loss) Per Share - Basic and Diluted | $ 0.44 | $ 0.61 | |
Weighted Average Shares Outstanding - Basic and Diluted | 123,028,290 | 121,201,415 | |
PORTFOLIO AND INVESTMENT ACTIVITY | |||
For the Three Months Ended March 31, | |||
($ in thousands) | 2024 | 2023 | |
New investment commitments | |||
Gross originations | $ 743,919 | $ 21,814 | |
Less: Sell downs | (7,500) | — | |
Total new investment commitments | $ 736,419 | $ 21,814 | |
Principal amount of investments funded: | |||
First-lien senior secured debt investments | 611,078 | 3,535 | |
Second-lien senior secured debt investments | — | — | |
Unsecured debt investments | — | — | |
Preferred equity investments | 488 | 12,162 | |
Common equity investments | 19,332 | 2,623 | |
Total principal amount of investments funded | $ 630,898 | $ 18,320 | |
Principal amount of investments sold or repaid: | |||
First-lien senior secured debt investments | (56,756) | (2,697) | |
Second-lien senior secured debt investments | (172,113) | (4,800) | |
Unsecured debt investments | (3,796) | (36) | |
Preferred equity investments | (242) | — | |
Common equity investments | — | — | |
Total principal amount of investments sold or repaid | $ (232,907) | $ (7,533) | |
Number of new investment commitments in new portfolio | 43 | 1 | |
Average new investment commitment amount | $ 14,493 | $ 909 | |
Weighted average term for new debt investment commitments (in | 5.9 | 4.6 | |
Percentage of new debt investment commitments at floating rates | 99.6 % | 100.0 % | |
Percentage of new debt investment commitments at fixed rates | 0.4 % | — % | |
Weighted average interest rate of new debt investment commitments(2) | 10.2 % | 11.5 % | |
Weighted average spread over applicable base rate of new floating | 4.8 % | 6.6 % | |
(1) Number of new investment commitments represents commitments to a particular portfolio company. | ||||
(2) For the three months ended March 31, 2024 and 2023, assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) or 3-month SOFR, which was 5.30% and 4.91% as of March 31, 2024 and March 31, 2023, respectively. | ||||
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SOURCE Blue Owl Capital Corporation III