ARES CAPITAL CORP
For the period ended Dec 31, 2024. Filed Feb 5, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 5, 2025
ARCC$19.13-1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-07.
0001287750-24-000011
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-05.
0001287750-25-000007
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 230 previous paragraphs and 241 current paragraphs.
124 unchanged; 85 reworded; 29 added; 17 removed; 4 previous and 3 current paragraphs rearranged.
Tables are not compared: 39 previous and 41 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
•fluctuations in global interest rates;
Current report
•political and regulatory conditions that contribute to uncertainty and market volatility including the impact of the recent U.S. presidential election and legislative, regulatory, trade and policy changes associated with a new administration;
Current report
•the disruption of global shipping activities;
Current report
During the fourth quarter of 2024, leveraged corporate credit markets posted positive returns, driven by sustained economic growth, a healthy level of corporate earnings and further stability in the capital markets and U.S. banking system. With expectations for easing inflationary measures, the Federal Reserve softened its monetary policies and lowered the federal funds rate in support of its goals of maximum employment and returning inflation to its two percent objective.
Current report
(1)We have committed to fund up to $500 million to IHAM, the availability of which is solely at our discretion.
Current report
(4)As of December 31, 2024 and 2023, net unrealized losses of $70 million and $13 million, respectively, have been eliminated upon consolidation and the elimination is included in “non-controlling interests in Consolidated IHAM Vehicles” in the selected balance sheet information.
Current report
RESULTS OF OPERATIONS
Current report
(1)Excludes $2,517 million and $580 million of new investment commitments sold to third party lenders during the years ended December 31, 2024 and 2023, respectively. Excludes $412 million and $470 million of investment commitments sold to IHAM for the years ended December 31, 2024 and 2023, respectively.
Current report
Conversion of the 2024 Convertible Notes
Current report
In March 2024, in connection with the repayment of the 2024 Convertible Notes, we issued approximately 20 million shares of our common stock at a conversion price of $20.12 per share for a total value of $407 million. See Note 5 to our consolidated financial statements for the year ended December 31, 2024 for more information relating to the repayment of the 2024 Convertible Notes.
Current report
See Note 12 to our consolidated financial statements for the year ended December 31, 2024 for information regarding shares of common stock issued or purchased in accordance with our dividend reinvestment plan.
Current report
(4)Excludes the April 2036 CLO Subordinated Notes and the October 2036 CLO Subordinated Notes (each as defined below), which were retained by us and, as such, eliminated in consolidation.
Current report
Debt Securitizations
Current report
ADL CLO 1 Debt Securitization
Current report
In May 2024, we, through our wholly owned consolidated subsidiary, Ares Direct Lending CLO 1 LLC (“ADL CLO 1”), completed a $702 million term debt securitization (the “ADL CLO 1 Debt Securitization”). The ADL CLO 1 Debt Securitization is also known as a collateralized loan obligation and is an on-balance sheet financing incurred by us, which is consolidated by us for financial reporting purposes and subject to our overall asset coverage requirement. The notes offered in the ADL CLO 1 Debt Securitization that mature on April 25, 2036 (collectively, the “April 2036 CLO Notes”) were issued by ADL CLO 1 pursuant to the indenture governing the April 2036 CLO Notes and include (i) $406 million of Class A Senior Notes (the “April 2036 Class A CLO Notes”); (ii) $70 million of Class B Senior Notes (the “April 2036 Class B CLO Notes” and, together with the April 2036 Class A CLO Notes, the “April 2036 CLO Secured Notes”); and (iii) approximately $226 million of Subordinated Notes (the “April 2036 CLO Subordinated Notes”). We retained all of the April 2036 CLO Subordinated Notes, as such, the April 2036 CLO Subordinated Notes are eliminated in consolidation. The following table presents information on the April 2036 CLO Notes as of December 31, 2024 (dollar amounts in millions):
Current report
The April 2036 CLO Secured Notes are the secured obligations of ADL CLO 1 and are backed by a diversified portfolio of first lien senior secured loans contributed by us to ADL CLO 1 pursuant to the terms of a contribution agreement. The interest rate charged on the April 2036 CLO Secured Notes is based on SOFR plus a blended weighted average spread of 1.86%.
Current report
Our investment adviser serves as asset manager to ADL CLO 1 under anasset management agreement and is entitled to receive certain management fees for providing these services under the agreement. Our investment adviser hasagreed to waive any management fees from ADL CLO 1.
Current report
ADL CLO 4 Debt Securitization
Current report
In November 2024, we, through our wholly owned consolidated subsidiary, Ares Direct Lending CLO 4 LLC (“ADL CLO 4”), completed a $544 million term debt securitization (the “ADL CLO 4 Debt Securitization”). The ADL CLO 4 Debt Securitization is also known as a collateralized loan obligation and is an on-balance sheet financing incurred by us, which is consolidated by us for financial reporting purposes and subject to our overall asset coverage requirement. The loans incurred by ADL CLO 4 in the ADL CLO 4 Debt Securitization that mature on October 24, 2036 (collectively, the “October 2036 CLO Secured Loans”) include (i) $464 million of Class A Senior Loans (the “October 2036 Class A CLO Loans”), and (ii) $80 million of Class B Senior Loans (the “October 2036 Class B CLO Loans”). In addition, in connection with the ADL CLO 4 Debt Securitization, ADL CLO 4 issued approximately $260 million of subordinated notes (the “October 2036 CLO Subordinated Notes”). We retained all of the October 2036 CLO Subordinated Notes, as such, the October 2036 CLO Subordinated Notes are eliminated in consolidation. The October 2036 CLO Secured Loans may be converted by the lender into notes issued by ADL CLO 4 and bearing the same economic terms, subject to certain conditions under the documents governing the October 2036 CLO Secured Loans and the indenture governing such notes. The following table presents information on the October 2036 CLO Secured Loans as of December 31, 2024 (dollar amounts in millions):
Current report
The October 2036 CLO Secured Loans are the secured obligations of ADL CLO 4 and are backed by a diversified portfolio of first lien senior secured loans contributed by us to ADL CLO 4 pursuant to the terms of a contribution agreement. The interest rate charged on the October 2036 CLO Secured Loans is based on SOFR plus a blended weighted average spread of 1.58%.
Current report
Our investment adviser serves as asset manager to ADL CLO 4 under anasset management agreement and is entitled to receive certain management fees for providing these services under the agreement. Our investment adviser hasagreed to waive any management fees from ADL CLO 4.
Current report
2024 Convertible Unsecured Notes
Current report
In March 2024, we repaid in full the $403 million in aggregate principal amount of unsecured convertible notes which bore interest at a rate of 4.625% per year, payable semi-annually (the “2024 Convertible Notes”) upon their maturity, resulting in a realized loss on extinguishment of debt of $14 million. In accordance with the indenture governing the 2024 Convertible Notes, we settled the repayment of the 2024 Convertible Notes with a combination of cash and shares of our common stock. Approximately $393 million of aggregate principal amount was settled with approximately 20 million shares of our common stock and the remaining $10 million of aggregate principal amount was settled with available cash.
Current report
See Note 6 to our consolidated financial statements for the year ended December 31, 2024 for more information on our interest rate swaps.
Current report
•For portfolio investments selected for review by an IVP,
Current report
◦Relevant information related to the portfolio investment is made available by the Valuation Designee to the IVP, who does not independently verify such information.
Current report
◦The IVP reviews and analyzes the information provided by the Valuation Designee, along with relevant market and economic data, and independently determines a range of values for each of the selected portfolio investments.
Current report
◦The IVP provides its analysis to the Valuation Designee to support the IVP’s valuation methodology and calculations.
Current report
•For portfolio investments selected for review by an IVP, a positive assurance opinion or independent valuation report is issued by the IVP that confirms the fair value determined by the Valuation Designee for a selected portfolio investment is within the range of values independently calculated by such IVP.
Removed paragraphs (17)
Previous report
•the impact of global health crises on our or our portfolio companies’ business and the U.S. and global economy;
Previous report
•the state of the general economy;
Previous report
•the Israel-Hamas war;
Previous report
•our ability to raise capital in the private and public debt and equity markets;
Previous report
Credit markets continued to be under pressure during 2023 amid a risk-off environment and sustained macro-economic uncertainty due to rising Treasury yields, record-high inflation, tighter financial conditions, financial market instability and growing recession risk. Central banks have remained focused on restoring price stability by raising interest rates and have signaled that growth may be hindered until inflation comes under control.
Previous report
(1)Excludes $470 million and $1,544 million of investment commitments to IHAM for the years ended December 31, 2023 and 2022, respectively.
Previous report
For the year ended December 31, 2023, the net unrealized gains recorded on investments were largely due to
Previous report
the reversal of net unrealized depreciation recorded during 2022, as well as an increase in the fair value of certain of our portfolio company investments. For the year ended December 31, 2022, the net unrealized losses recorded on investments were largely due to declining prices in the credit and equity markets as market participants expected a higher return on similar investments as a result of the higher rate environment.
Previous report
During the year ended December 31, 2022, we also recognized net unrealized losses on foreign currency and other transactions of $12 million.
Previous report
(1) Represents the gross offering price per share before deducting underwriting discounts and commissions and offering expenses.
Previous report
(2)12.1 million of the shares were sold to the underwriters for a price of $18.53 per share, which the underwriters were then permitted to sell at variable prices to the public.
Previous report
Convertible Unsecured Notes
Previous report
We have issued $403 million in aggregate principal amount of unsecured convertible notes that mature on March 1, 2024 (the “2024 Convertible Notes”) unless previously converted or repurchased in accordance with its terms. We do not have the right to redeem the 2024 Convertible Notes prior to maturity. The 2024 Convertible Notes bear interest at a rate of 4.625% per annum, payable semi-annually.
Previous report
In certain circumstances, the 2024 Convertible Notes will be convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, at the conversion rate (listed below as of December 31, 2023) subject to customary anti-dilution adjustments and the requirements of the indenture (the “2024 Convertible Notes Indenture”). We have elected to settle our conversion obligations in connection with the 2024 Convertible Notes submitted for conversion on or after December 1, 2023 with a combination of cash and shares of our common stock. In accordance with the 2024 Convertible Notes Indenture, we notified the holders of the 2024 Convertible Notes and the trustee that all 2024 Convertible Notes submitted for conversion on or after December 1, 2023 shall be settled with a specified cash amount (as defined in the 2024 Convertible Notes Indenture) of $1 per $1,000 principal amount of the 2024 Convertible Notes and any additional amounts in stock based on the applicable conversion rate as described in the 2024 Convertible Notes Indenture. In addition, if we engage in certain corporate events as described in the 2024 Convertible Notes Indenture, holders of the 2024 Convertible Notes may require us to repurchase for cash all or part of the 2024 Convertible Notes at a repurchase price equal to 100% of the principal amount of the 2024 Convertible Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the required repurchase date.
Previous report
(1)Represents conversion price and conversion rate, as applicable, as of December 31, 2023, taking into account any applicable de minimis adjustments that will be made on the conversion date.
Previous report
In January 2024, our board of directors appointed Paul Cho as our Chief Accounting Officer, effective as of February 15, 2024. As previously announced, our Chief Accounting Officer, Vice President and Treasurer, Scott Lem, has been appointed as our new Chief Financial Officer, also effective February 15, 2024. Scott Lem will succeed Penni Roll, our current Chief Financial Officer, effective the same date. Penni Roll will remain at Ares Management in a senior leadership capacity as well as an officer of Ares Capital.
Previous report
In February 2024, we and our consolidated subsidiary, AFB, entered into an amendment to the BNP Funding Facility. The amendment, among other things, adjusted the interest rate charged on the BNP Funding Facility from an applicable SOFR or a “base rate” (as defined in the BNP Funding Facility) plus a margin of (i) 2.80% during the reinvestment period and (ii) 3.30% following the reinvestment period to an applicable SOFR or a “base rate” plus a margin of (i) 2.65% during the reinvestment period and (ii) 3.15% following the reinvestment period.
Reworded paragraphs (85)
Previous wording
K for the fiscal year ended December 31, 2022 located within Part II, Item 7. Management's Discussion and Analysis of
Current wording
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Previous wording
•changes in the general economy, slowing economy, rising inflation and risk of recession;
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•changes in the general economy, changes in inflation and risk of recession;
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•the Russia-Ukraine war and the potential for volatility in energy prices and other commodities and their impact on the industries in which we invest;
Current wording
•ongoing conflicts in the Middle Eastand the Russia-Ukraine war, including the potential for volatility in energy prices and other commodities and their impact on the industries in which we invest;
Previous wording
We use words such as “anticipates,” “believes,” “expects,” “intends,” “project,” “estimates,” “will,” “should,” “could,” “would,” “may” and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. Our actual results and condition could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” and the other information included in this Annual Report.
Current wording
We use words such as “anticipates,” “believes,” “expects,” “intends,” “projects,” “estimates,” “will,” “should,” “could,” “would,” “may” and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. Our actual results and condition could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” and the other information included in this Annual Report.
Previous wording
We have based the forward-looking statements included in this Annual Report on information available to us on the filing date of this Annual Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the Securities and Exchange Commission (“SEC”), including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K.
Current wording
We have based the forward-looking statements included in this Annual Report on information available to us as of the filing date of this Annual Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K.
Previous wording
We are externally managed by Ares Capital Management LLC (“Ares Capital Management” or our “investment adviser”), a subsidiary of Ares Management Corporation (NYSE: ARES) (“Ares Management”), a publicly traded, leading global alternative investment manager, pursuant to our investment advisory and management agreement. Ares Operations LLC (“Ares Operations” or our “administrator”), a subsidiary of Ares Management, provides certain administrative and other services necessary for us to operate.
Current wording
We are externally managed by Ares Capital Management LLC (“Ares Capital Management” or our “investment adviser”), a subsidiary of Ares Management Corporation (“Ares Management”), a publicly traded, leading global alternative investment manager, pursuant to our investment advisory and management agreement. Ares Operations LLC (“Ares Operations” or our “administrator”), a subsidiary of Ares Management, provides certain administrative and other services necessary for us to operate.
Previous wording
Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in first lien senior secured loans (including “unitranche” loans, which are loans that combine both senior and subordinated debt, generally in a first lien position) and second lien senior secured loans. In addition to senior secured loans, we also invest in subordinated loans (sometimes referred to as mezzanine debt), which in some cases includes an equity component and preferred equity.
Current wording
Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in first lien senior secured loans (including “unitranche” loans, which are loans that combine both senior and subordinated debt, generally in a first lien position) and second lien senior secured loans. In addition to senior secured loans, we also invest in subordinated loans (sometimes referred to as mezzanine debt) and preferred equity.
Previous wording
Since our initial public offering (“IPO”) on October 8, 2004 through December 31, 2023, our exited investments resulted in an asset level realized gross internal rate of return to us of approximately 13% (based on original cash invested, net of syndications, of approximately $42.1 billion and total proceeds from such exited investments of approximately $53.7 billion). Internal rate of return is the discount rate that makes the net present value of all cash flows related to a particular investment equal to zero. Internal rate of return is gross of expenses related to investments as these expenses are not allocable to specific investments. Investments are considered to be exited when the original investment objective has been achieved through the receipt of cash and/or non-cash consideration upon the repayment of a debt investment or sale of an investment or through the determination that no further consideration was collectible and, thus, a loss may have been realized.
Current wording
Since our initial public offering (“IPO”) on October 8, 2004 through December 31, 2024, our exited investments resulted in an asset level realized gross internal rate of return to us of approximately 13% (based on original cash invested, net of syndications, of approximately $49.7 billion and total proceeds from such exited investments of approximately $63.7 billion). Internal rate of return is the discount rate that makes the net present value of all cash flows related to a particular investment equal to zero. Internal rate of return is gross of expenses related to investments as these expenses are not allocable to specific investments. Investments are considered to be exited when the original investment objective has been achieved through the receipt of cash and/or non-cash consideration upon the repayment of a debt investment or sale of an investment or through the determination that no further consideration was collectible and, thus, a loss may have been realized.
Previous wording
Additionally, since our IPO on October 8, 2004 through December 31, 2023, our realized gains have exceeded our realized losses by approximately $0.9 billion (excluding a one-time gain on the acquisition of Allied Capital Corporation in April 2010 (the “Allied Acquisition”) and realized gains/losses from the extinguishment of debt and other transactions). For the same time period, our average annualized net realized gain rate was approximately 0.9% (excluding a one-time gain on the Allied Acquisition and realized gains/losses from the extinguishment of debt and other transactions). Net realized gain/loss rates for a particular period are the amount of net realized gains/losses during such period divided by the average quarterly investments at amortized cost in such period.
Current wording
Additionally, since our IPO on October 8, 2004 through December 31, 2024, our realized gains have exceeded our realized losses by approximately $0.9 billion (excluding a one-time gain on the acquisition of Allied Capital Corporation in April 2010 (the “Allied Acquisition”) and realized gains/losses from the extinguishment of debt and other transactions). For the same time period, our average annualized net realized gain rate was approximately 0.8% (excluding a one-time gain on the Allied Acquisition and realized gains/losses from the extinguishment of debt and other transactions). Net realized gain/loss rates for a particular period are the amount of net realized gains/losses during such period divided by the average quarterly investments at amortized cost in such period.
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(2)Includes both funded and unfunded commitments. Of these new investment commitments, we funded $4.6 billion and $8.7 billion for the years ended December 31, 2023 and 2022, respectively.
Current wording
(2)Includes both funded and unfunded commitments. Of these new investment commitments, we funded $11.8 billion and $4.6 billion for the years ended December 31, 2024 and 2023, respectively.
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(3)Includes both funded and unfunded commitments. For the years ended December 31, 2023 and 2022, investment commitments exited included exits of unfunded commitments of $779 million and $757 million, respectively.
Current wording
(3)Includes both funded and unfunded commitments. For the years ended December 31, 2024 and 2023, investment commitments exited included exits of unfunded commitments of $1.3 billion and $779 million, respectively.
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(4)For the year ended December 31, 2023, net repayments of first lien secured revolving loans were $327 million. For the year ended December 31, 2022, net fundings of first lien secured revolving loans were $275 million.
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(4)For the years ended December 31, 2024 and 2023, net repayments of first lien secured revolving loans were $68 million and $327 million, respectively.
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(8)“Weighted average yield of debt and other income producing securities” is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the dividend received by us related to our equity investment in IHAM during the most recent quarter end, as applicable), divided by (b) the total accruing debt and other income producing securities at amortized cost or at fair value (including the amortized cost or fair value of our equity investment in IHAM as applicable), as applicable.
Current wording
(8)“Weighted average yield of debt and other income producing securities” is computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the regular dividend received by us related to our equity investment in IHAM during the most recent quarter end, as applicable), divided by (b) the total accruing debt and other income producing securities at amortized cost or at fair value (including the amortized cost or fair value of our equity investment in IHAM as applicable), as applicable.
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(2)First lien senior secured loans include certain loans that we classify as “unitranche” loans. The total amortized cost and fair value of the loans that we classified as “unitranche” loans were $5.8 billion and $5.7 billion, respectively, as of December 31, 2023, and $5.0 billion and $4.8 billion, respectively, as of December 31, 2022.
Current wording
(2)First lien senior secured loans include certain loans that we classify as “unitranche” loans. The total amortized cost and fair value of the loans that we classified as “unitranche” loans were $8.8 billion and $8.6 billion, respectively, as of December 31, 2024, and $5.8 billion and $5.7 billion, respectively, as of December 31, 2023.
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(3)The proceeds from these certificates were applied to co-investments with Varagon Capital Partners (“Varagon”) and its clients to fund first lien senior secured loans to 22 and 22 different borrowers as of December 31, 2023 and 2022, respectively.
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(3)The proceeds from these certificates were applied to co-investments with Varagon Capital Partners (“Varagon”) and its clients to fund first lien senior secured loans to 20 and 22 different borrowers as of December 31, 2024 and 2023, respectively.
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(1)“Weighted average yields on debt and other income producing securities” are computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the dividend received by us related to our equity investment in IHAM during the most recent quarter end), divided by (b) the total accruing debt and other income producing securities at amortized cost or at fair value (including the amortized cost or fair value of our equity investment in IHAM as applicable), as applicable.
Current wording
(1)“Weighted average yields on debt and other income producing securities” are computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the regular dividend received by us related to our equity investment in IHAM during the most recent quarter end), divided by (b) the total accruing debt and other income producing securities at amortized cost or at fair value (including the amortized cost or fair value of our equity investment in IHAM as applicable), as applicable.
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(2)“Weighted average yields on total portfolio” are computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the dividend received by us related to our equity investment in IHAM during the most recent quarter end), divided by (b) total investments at amortized cost or at fair value, as applicable.
Current wording
(2)“Weighted average yields on total portfolio” are computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on accruing debt and other income producing securities (including the annualized amount of the regular dividend received by us related to our equity investment in IHAM during the most recent quarter end), divided by (b) total investments at amortized cost or at fair value, as applicable.
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(4)Represents the yield on our equity investment in IHAM, which is computed as (a) the annualized amount of the dividend received by us related to our equity investment in IHAM during the most recent quarter end, divided by (b) the amortized cost or fair value of our equity investment in IHAM, as applicable.
Current wording
(4)Represents the yield on our equity investment in IHAM, which is computed as (a) the annualized amount of the regular dividend received by us related to our equity investment in IHAM during the most recent quarter end, divided by (b) the amortized cost or fair value of our equity investment in IHAM, as applicable.
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As of December 31, 2023 and 2022, the weighted average grade of the investments in our portfolio at fair value was 3.1 and 3.2, respectively.
Current wording
As of December 31, 2024 and 2023, the weighted average grade of the investments in our portfolio at fair value was 3.1 and 3.1, respectively.
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As of December 31, 2023 and 2022, loans on non-accrual status represented 1.3% of the total investments at amortized cost (or 0.6% at fair value) and 1.7% at amortized cost (or 1.1% at fair value), respectively.
Current wording
As of December 31, 2024 and 2023, loans on non-accrual status represented 1.7% of the total investments at amortized cost (or 1.0% at fair value) and 1.3% at amortized cost (or 0.6% at fair value), respectively.
Previous wording
Ivy Hill Asset Management, L.P. (“IHAM”), our wholly owned portfolio company, is an asset manager and an SEC-registered investment adviser. As of December 31, 2023, IHAM had assets under management of approximately $13.5 billion. As of December 31, 2023, IHAM managed 20 vehicles (the “IHAM Vehicles”). IHAM earns fee income from managing the IHAM Vehicles and has also invested in certain of these vehicles as part of its business strategy. The amortized cost of IHAM’s total investments as of December 31, 2023 and 2022 was $2,288 million and $2,370 million, respectively. For the years ended December 31, 2023 and 2022, IHAM had management and incentive fee income of $56 million and $49 million, respectively, and other investment-related income of $328 million and $188 million, respectively, which included net realized gains or losses on investments and other transactions.
Current wording
Ivy Hill Asset Management, L.P. (“IHAM”), our wholly owned portfolio company, is an asset manager and an SEC-registered investment adviser. As of December 31, 2024, IHAM had assets under management of approximately $12.8 billion. As of December 31, 2024, IHAM managed 20 vehicles (the “IHAM Vehicles”). IHAM earns fee income from managing the IHAM Vehicles and has also invested in certain of these vehicles as part of its business strategy. The amortized cost of IHAM’s total investments as of December 31, 2024 and 2023 was $2,237 million and $2,288 million, respectively. For the years ended December 31, 2024 and 2023, IHAM had management and incentive fee income of $53 million and $56 million, respectively, and other investment-related income of $344 million and $328 million, respectively, which included net realized gains or losses on investments and other transactions.
Previous wording
From time to time, IHAM or certain IHAM Vehicles may purchase investments from, or sell investments to, us. For any such sales or purchases by the IHAM Vehicles to or from us, the IHAM Vehicle must obtain approval from third parties unaffiliated with us or IHAM, as applicable. During the years ended December 31, 2023 and 2022, IHAM or certain of the IHAM Vehicles purchased $1.2 billion and $3.4 billion, respectively, of loans from us. For the years ended December 31, 2023 and 2022, we recognized $13 million and $20 million, respectively, of net realized losses from these sales. During the years ended December 31, 2023 and 2022, we purchased $85 million and $27 million, respectively, of investments from IHAM or certain IHAM Vehicles.
Current wording
From time to time, IHAM or certain IHAM Vehicles may purchase investments from, or sell investments to, us. For any such sales or purchases by the IHAM Vehicles to or from us, the IHAM Vehicle must obtain approval from third parties unaffiliated with us or IHAM, as applicable. During the years ended December 31, 2024 and 2023, IHAM or certain of the IHAM Vehicles purchased $759 million and $1.2 billion, respectively, of loans from us. For the years ended December 31, 2024 and 2023, we recognized $1 million and $13 million, respectively, of net realized losses from these sales. During the years ended December 31, 2024 and 2023, IHAM or certain IHAM Vehicles sold $32 million and $85 million, respectively, of investments to us.
Previous wording
(1)Represents the yield on our equity investment in IHAM, which is computed as (a) the annualized amount of the dividend received by us related to our equity investment in IHAM during the most recent quarter end, divided by (b) the amortized cost or fair value of our equity investment in IHAM, as applicable.
Current wording
(1)Represents the yield on our equity investment in IHAM, which is computed as (a) the annualized amount of the regular dividend received by us related to our equity investment in IHAM during the most recent quarter end, divided by (b) the amortized cost or fair value of our equity investment in IHAM, as applicable.
Previous wording
(2)The determination of such fair value is determined in accordance with IHAM’s valuation procedures (separate and apart from our valuation process described elsewhere herein). The amortized cost of IHAM’s total investments as of December 31, 2023 and 2022 was $2,288 million and $2,370 million, respectively. The amortized cost of the total investments of IHAM on a consolidated basis as of December 31, 2023 and 2022 was $9,619 million and $9,306 million, respectively.
Current wording
(2)The determination of such fair value is determined in accordance with IHAM’s valuation process (separate and apart from our valuation process described elsewhere herein). The amortized cost of IHAM’s total investments as of December 31, 2024 and 2023 was $2,237 million and $2,288 million, respectively. The amortized cost of the total investments of IHAM on a consolidated basis as of December 31, 2024 and 2023 was $8,343 million and $9,619 million, respectively.
Previous wording
(4)Non-controlling interests in Consolidated IHAM Vehicles includes net unrealized depreciation in the Consolidated IHAM Vehicles of $221 million and $309 million as of December 31, 2023 and 2022, respectively.
Current wording
(5)Non-controlling interests in Consolidated IHAM Vehicles includes net unrealized depreciation in the Consolidated IHAM Vehicles of $171 million and $221 million as of December 31, 2024 and 2023, respectively.
Previous wording
The SDLP Certificates pay a coupon equal to SOFR plus 8.0% and also entitle the holders thereof to receive a portion of the excess cash flow from the loan portfolio, after expenses, which may result in a return to the holders of the SDLP Certificates that is greater than the stated coupon. The SDLP Certificates are junior in right of payment to the senior notes and intermediate funding notes.
Current wording
The SDLP Certificates pay a coupon equal to Secured Overnight Financing Rate (“SOFR”) plus 8.0% and also entitle the holders thereof to receive a portion of the excess cash flow from the loan portfolio, after expenses, which may result in a return to the holders of the SDLP Certificates that is greater than the stated coupon. The SDLP Certificates are junior in right of payment to the senior notes and intermediate funding notes.
Previous wording
The interest income from our investment in the SDLP Certificates and capital structuring service and other fees earned for the years ended December 31, 2023 and 2022 were as follows:
Current wording
The interest income from our investment in the SDLP Certificates and capital structuring service fees and other income earned for the years ended December 31, 2024 and 2023 were as follows:
Previous wording
As of December 31, 2023 and 2022, the SDLP portfolio was comprised entirely of first lien senior secured loans primarily to U.S. middle-market companies and were in industries similar to the companies in our portfolio. As of December
Current wording
As of December 31, 2024 and 2023, the SDLP portfolio was comprised entirely of first lien senior secured loans primarily to U.S. middle-market companies and were in industries similar to the companies in our portfolio. As of
Previous wording
31, 2023 and 2022, one of the loans was on non-accrual status. Below is a summary of the SDLP’s portfolio as of December 31, 2023 and 2022:
Current wording
December 31, 2024, two of the loans were on non-accrual status. As of December 31, 2023, one of the loans was on non-accrual status. Below is a summary of the SDLP’s portfolio as of December 31, 2024 and 2023:
Previous wording
(2)First lien senior secured loans include certain loans that the SDLP classifies as “unitranche” loans. As of December 31, 2023 and 2022, the total principal amount of loans in the SDLP portfolio that the SDLP classified as “unitranche” loans was $4,558 million and $4,108 million, respectively.
Current wording
(2)First lien senior secured loans include certain loans that the SDLP classifies as “unitranche” loans. As of December 31, 2024 and 2023, the total principal amount of loans in the SDLP portfolio that the SDLP classified as “unitranche” loans was $3,937 million and $4,558 million, respectively.
Previous wording
Pursuant to Rule 4-08(g) of Regulation S-X, selected financial information of the SDLP, in conformity with GAAP, as of and for the years ended December 31, 2023 and 2022 are presented below:
Current wording
Pursuant to Rule 4-08(g) of Regulation S-X, selected financial information of the SDLP, in conformity with GAAP, as of December 31, 2024 and 2023 and for the years ended December 31, 2024 and 2023 are presented below:
Previous wording
(1)Represents the weighted average annual stated interest rate as of December 31, 2022. All interest rates are payable in cash, except for portions of the stated interest rates which are PIK for investments in Emergency Communications Network, LLC and Towne Holdings, Inc.
Current wording
(1)Represents the weighted average annual stated interest rate as of December 31, 2024. All interest rates are payable in cash, except for portions of the stated interest rates which are PIK for investments in Arrowhead Holdco Company.
Previous wording
Interest income from investments for the year ended December 31, 2023 increased from the comparable period in 2022 primarily as a result of the impact of rising interest rates as well as an increase in the average size of our portfolio. The average size and weighted average yield of our portfolio at amortized cost for the years ended December 31, 2023 and 2022 were as follows:
Current wording
Interest income from investments for the year ended December 31, 2024 increased from the comparable period in 2023 primarily due to the increase in the average size of our portfolio. The average size and weighted average yield of our portfolio at amortized cost for the years ended December 31, 2024 and 2023 were as follows:
Previous wording
Capital structuring service fees for the year ended December 31, 2023 decreased from the comparable period in 2022 primarily due to a decrease in new investment commitments. The lower weighted average capital structuring service fee percentage during the year ended December 31, 2023 was primarily due to lower fee opportunities as compared to the comparable period in 2022. The new investment commitments and weighted average capital structuring service fee percentages for the years ended December 31, 2023 and 2022 were as follows:
Current wording
Capital structuring service fees for the year ended December 31, 2024 increased from the comparable period in 2023 primarily due to an increase in new investment commitments. The lower weighted average capital structuring service fee percentage during the year ended December 31, 2024 was primarily due to a general decline in market fee levels and a higher percentage of new investment commitments to existing portfolio companies, which generally resulted in lower fee opportunities as compared to the comparable period in 2023. The new investment commitments and weighted average capital structuring service fee percentages for the years ended December 31, 2024 and 2023 were as follows:
Previous wording
Dividend income received from IHAM for the year ended December 31, 2023 increased from the comparable period in 2022 primarily due to the continued increase in IHAM's earnings given the increase in its assets under management, which generally has been supported by our additional investments in IHAM. Recurring dividend income for the year ended December 31, 2023 increased from the comparable period in 2022 primarily due to an increase in yielding preferred equity investments.
Current wording
Dividend income received from IHAM for the year ended December 31, 2024 increased from the comparable period in 2023 primarily due to the increased earnings from the IHAM Vehicles as a result of higher interest rates. Dividend income received from IHAM for the year ended December 31, 2024 includes a non-recurring special dividend of $10 million. Recurring dividend income for the year ended December 31, 2024 increased from the comparable period in 2023 primarily due to an increase in yielding preferred equity investments.
Previous wording
(1)Includes the net interest expense related to the interest rate swaps for the year ended December 31, 2023.
Current wording
(1)Includes the impact of the interest rate swaps for the years ended December 31, 2024 and 2023.
Previous wording
Stated interest expense for the year ended December 31, 2023 increased from the comparable period in 2022 primarily due to the impact of rising interest rates on our floating rate revolving facilities. Our weighted average stated interest rate on debt outstanding for the year ended December 31, 2023 increased from the comparable period in 2022 due to the impact of rising interest rates and higher utilization of our floating rate revolving facilities. Average debt outstanding and weighted average stated interest rate on our debt outstanding for the years ended December 31, 2023 and 2022 were as follows:
Current wording
Stated interest expense for the year ended December 31, 2024 increased from the comparable period in 2023 primarily due to the increase in the average principal amount of debt outstanding and the impact of higher interest rates on our floating debt obligations. Average debt outstanding and weighted average stated interest rate on our debt outstanding for the years ended December 31, 2024 and 2023 were as follows:
Previous wording
(1)The weighted average stated interest rate on our debt outstanding for the year ended December 31, 2023 includes the impact of interest rate swaps. See Note 6 to our consolidated financial statements for the year ended December 31, 2023, for more information on the interest rate swaps.
Current wording
(1)The weighted average stated interest rate on our debt outstanding for the years ended December 31, 2024 and 2023 includes the impact of interest rate swaps. See Note 6 to our consolidated financial statements for the year ended December 31, 2024, for more information on the interest rate swaps.
Previous wording
Base management fees for the year ended December 31, 2023 increased from the comparable period in 2022 primarily due to the increase in the average size of our portfolio.
Current wording
The base management fee for the year ended December 31, 2024 increased from the comparable period in 2023 primarily due to the increase in the average size of our portfolio.
Previous wording
Income based fees for the year ended December 31, 2023 increased from the comparable period in 2022 primarily due to the pre-incentive fee net investment income, as defined in the investment advisory and management agreement, for the year ended December 31, 2023 being higher than in the comparable period in 2022.
Current wording
The income based fee for the year ended December 31, 2024 increased from the comparable period in 2023 primarily due to the pre-incentive fee net investment income, as defined in the investment advisory and management agreement, for the year ended December 31, 2024 being higher than in the comparable period in 2023.
Showing the first 40 of 85 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The net realized losses on investments during the year ended December 31, 2023 consisted of the following:
Current report — wording carried from elsewhere
During the year ended December 31, 2024, we also recognized net unrealized gains on foreign currency and other transactions of $50 million.
Current report — wording carried from elsewhere
We and our consolidated subsidiary, Ares Capital CP Funding LLC (“Ares Capital CP”), are party to a revolving funding facility (as amended, the “Revolving Funding Facility”), that allows Ares Capital CP to borrow up to $2.2 billion at any one time outstanding. The Revolving Funding Facility is secured by all of the assets held by, and the membership interest in, Ares Capital CP. The end of the reinvestment period and the stated maturity date for the Revolving Funding Facility are
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
The net realized gains on investments during the year ended December 31, 2022 consisted of the following:
Previous report — wording carried elsewhere
Financial Condition and Results of Operations, which is incorporated herein by reference.
Previous report — wording carried elsewhere
Certain key terms related to the convertible features for the 2024 Convertible Notes as of December 31, 2023 are listed below.
Previous report — wording carried elsewhere
See Note 5 to our consolidated financial statements for the year ended December 31, 2023 for more information on our debt obligations.