Morgan Stanley Direct Lending Fund
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
MSDL$13.62-3.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001782524-24-000029
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001782524-24-000041
Item 2. 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 143 previous paragraphs and 151 current paragraphs.
125 unchanged; 14 reworded; 10 added; 4 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 11 previous and 11 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 (10)
Current report
(1)Amount rounds to zero.
Current report
(3) Represents a special distribution declared by the board on January 11, 2024.
Current report
(5) Represents a special distribution declared by the board on January 11, 2024.
Current report
The following table summarizes the shares repurchased under our 10b5-1 Plan during the three months ended September 30, 2024:
Current report
Since September 30th, 2024, we repurchased 238,951 shares at an average price of $19.95, as part of our 10b5-1 plan.
Current report
Amendment to Dividend Reinvestment Plan
Current report
We have adopted an amendment to its “opt out” DRIP, to be effective December 7, 2024, to clarify that the DRIP plan administrator will not issue fractional shares in the DRIP and instead will issue cash in lieu of such fractional shares in an amount equal to the difference between the cash distributions declared and payable to such DRIP plan participant and the value of the whole shares of our Common Stock issued to such participant pursuant to the DRIP.
Current report
No action is required on the part of our registered stockholders to have their cash dividend or other distribution reinvested in shares of Common Stock in accordance with the terms of the DRIP, as amended as described above. A registered stockholder may elect to receive an entire distribution in cash by notifying the plan administrator and our transfer agent and registrar in writing so that such notice is received by the plan administrator no later than 10 days prior to the record date for distributions to stockholders. Those stockholders who hold shares of our Common Stock through a broker or other financial intermediary may receive dividends and other distributions in cash by notifying their broker or other financial intermediary of their election.
Current report
•the Investment Advisory Agreement; and
Current report
•the Administration Agreement
Removed paragraphs (4)
Previous report
On January 11, 2024, the Board also declared the following special distributions
Previous report
•the Investment Advisory Agreement;
Previous report
•the Administration Agreement; and
Previous report
•the License Agreement.
Reworded paragraphs (14)
Previous wording
•costs of any other offerings of our Common Stock and other securities;
Current wording
•costs of any other offerings of our common stock, par value $0.001 ("Common Stock") and other securities;
Previous wording
In the table above, total investment income increased from $88,894 and $172,533 for the three and six months ended June 30, 2023 to $104,188 and $203,289 for the three and six months ended June 30, 2024, respectively. The increase was primarily driven by our deployment of capital. The size of our investment portfolio at amortized cost increased from $3,041,700 as of June 30, 2023 to $3,542,035 as of June 30, 2024.
Current wording
In the table above, total investment income increased from $94,451 and $266,984 for the three and nine months ended September 30, 2023 to $109,752 and $313,041 for the three and nine months ended September 30, 2024, respectively. The increase was primarily driven by our deployment of capital. The size of our investment portfolio at amortized cost increased from $3,158,601 as of September 30, 2023 to $3,662,618 as of September 30, 2024.
Previous wording
In the table above, interest and other financing expenses, including unused commitment fees, amortization of debt issuance costs and deferred financing costs, increased from $27,907 and $54,574 for the three and six months ended June 30, 2023 to $29,302 and $56,562 for the three and six months ended June 30, 2024, respectively. The increase was primarily due to increased reference rates, as the combined weighted average interest rate was 6.57% and 6.63% for three and six months ended June 30, 2024 compared to 6.47% and 6.35% for the three and six months ended June 30, 2023.
Current wording
In the table above, interest and other financing expenses, including unused commitment fees, amortization of debt issuance costs and deferred financing costs, increased from $29,686 and $84,260 for the three and nine months ended September 30, 2023 to $33,153 and $89,715 for the three and nine months ended September 30, 2024, respectively. The increase was primarily driven by our increased borrowings. Our debt outstanding (at par) increased from $1,725,252 as of September 30, 2023 to $1,841,987 as of September 30, 2024.
Previous wording
Base management fees, net of waiver, were $6,479 and $1,862 for the three months ended June 30, 2024 and June 30, 2023, and $11,612 and $3,688 for the six months ended June 30, 2024 and June 30, 2023, respectively. The increases were primarily due to an increase in average gross assets. Refer to Note 3 “Related Party Transactions” for additional information about the management fee waiver.
Current wording
Base management fees, net of waiver, were $6,825 and $1,938 for the three months ended September 30, 2024 and September 30, 2023, and $18,437 and $5,625 for the nine months ended September 30, 2024 and September 30, 2023, respectively. The increases were primarily due to an increase in average gross assets as well as the management fee waiver pre and post IPO. Refer to Note 3 “Related Party Transactions” for additional information about the management fee waiver.
Previous wording
The incentive fee consists of two components: (1) income based incentive fee and (2) capital gains incentive fee. The income based incentive fees, net of waiver, were $9,903 and $10,138 for the three months ended June 30, 2024 and June 30, 2023 and $20,028 and $19,519 for the six months ended June 30, 2024 and June 30, 2023. Refer to Note 3 “Related Party Transactions” for additional information about the incentive fees waiver.
Current wording
The incentive fee consists of two components: (1) income based incentive fee and (2) capital gains incentive fee. The income based incentive fees, net of waiver, were $8,448 and $10,727 for the three months ended September 30, 2024 and September 30, 2023 and $28,476 and $30,246 for the nine months ended September 30, 2024 and September 30, 2023. Refer to Note 3 “Related Party Transactions” for additional information about the incentive fees waiver.
Previous wording
For the three and six months ended June 30, 2024 net realized losses on our investments was $108 and $(5,517), which was primarily due to the restructuring of three portfolio companies.
Current wording
For the three and nine months ended September 30, 2024 net realized losses on our investments was $(10,965) and $(16,482), which was primarily due to the restructuring of one and four portfolio companies, respectively.
Previous wording
For the three and six months ended June 30, 2024, net change in unrealized appreciation on our investments of $2,816 and $5,474, was primarily the result of the changes in spreads in the primary and secondary markets. For the three and six months ended June 30, 2023, net change in unrealized appreciation on our investments of $8,647 and $8,080, respectively, was primarily driven by changes in spreads in the primary and secondary markets.
Current wording
For the three and nine months ended September 30, 2024, net change in unrealized appreciation on our investments of $5,442 and $10,916, was primarily the result of the changes in spreads in the primary and secondary markets, partially offset by the reversal of unrealized depreciation in connection with the aforementioned restructuring. For the three and nine months ended September 30, 2023, net change in unrealized appreciation on our investments of $22,829 and $30,909, respectively, was primarily driven by changes in spreads in the primary and secondary markets.
Previous wording
As of June 30, 2024, we had approximately $93.0 million of unrestricted cash and cash equivalents, which taken together with our approximately $406.0 million and $864.4 million of availability under the BNP Funding Facility and the Truist Credit Facility (subject to borrowing base availability) (each as defined in Note 6. “Debt” in the notes to the accompanying consolidated financial statements), respectively, we expect to be sufficient for our investing activities and sufficient to conduct our operations in the near term. As of June 30, 2024, we believed we had adequate financial resources to satisfy unfunded portfolio company commitments of $511.2 million.
Current wording
As of September 30, 2024, we had approximately $88.4 million of unrestricted cash and cash equivalents, which taken together with our approximately $354.0 million and $748.7 million of availability under the BNP Funding Facility and the Truist Credit Facility (subject to borrowing base availability) (each as defined in Note 6. “Debt” in the notes to the accompanying consolidated financial statements), respectively, we expect to be sufficient for our investing activities and sufficient to conduct our operations in the near term. As of September 30, 2024, we believed we had adequate financial resources to satisfy unfunded portfolio company commitments of $552.4 million.
Previous wording
During the six months ended June 30, 2023, we did not issue any capital calls to purchase Common Stock pursuant to such subscription agreements.
Current wording
During the nine months ended September 30, 2023, we did not issue any capital calls to purchase Common Stock pursuant to such subscription agreements.
Previous wording
Prior to January 26, 2024, we had an “opt in” dividend reinvestment plan, or the DRIP. As a result, our stockholders who elected to “opt in” to the DRIP had their cash dividends or distributions automatically reinvested in additional shares of Common Stock, rather than receiving cash. We adopted an “opt out” DRIP effective as of January 26, 2024. As a result, our stockholders who have not “opted out” of the DRIP will have their cash dividends or distributions automatically reinvested in additional shares of Common Stock, rather than receiving cash. Stockholders who receive distributions in the form of shares of Common Stock will generally be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions; however, those stockholders will not receive cash with which to pay any applicable taxes.
Current wording
Prior to January 26, 2024, we had an “opt in” dividend reinvestment plan, or the DRIP. As a result, our stockholders who elected to “opt in” to the DRIP had their cash dividends or distributions automatically reinvested in additional shares of Common Stock, rather than receiving cash. We adopted an “opt out” DRIP effective as of January 26, 2024. As a result, our stockholders who have not “opted out” of the DRIP will have their cash dividends or distributions automatically reinvested in additional shares of Common Stock, rather than receiving cash. Stockholders who receive distributions in the form of shares of Common Stock will generally be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions; however, those stockholders will not receive cash with which to pay any applicable taxes. For more information, see “—Recent Developments.”
Previous wording
The following table summarize our distributions declared and payable for the six months ended June 30, 2024 and June 30, 2023, respectively:
Current wording
The following table summarize our distributions declared and payable for the nine months ended September 30, 2024 and September 30, 2023, respectively:
Previous wording
For the six months ended June 30, 2024, no shares were repurchased under the 10b5-1 Plan.
Current wording
No shares were repurchased under our 10b5-1 Plan during the six months ended June 30, 2024 and during the nine months ended September 30, 2023.
Previous wording
(1)As of June 30, 2024 and December 31, 2023, a letter of credit of $4,161 and $253, respectively, was outstanding, which reduced the unused availability under the Truist Credit Facility by the same amount. Under the Truist Credit Facility, the Company may borrow in U.S. dollars or certain other permitted currencies. As of June 30, 2024 and December 31, 2023, the Company had borrowings denominated in Euros (EUR) of 238 and 238, respectively and Canadian dollars (CAD) of $300 and 0, respectively.
Current wording
(1)As of September 30, 2024 and December 31, 2023, a letter of credit of $5,278 and $253, respectively, was outstanding, which reduced the unused availability under the Truist Credit Facility by the same amount. Under the Truist Credit Facility, the Company may borrow in U.S. dollars or certain other permitted currencies. As of September 30, 2024 and December 31, 2023, the Company had borrowings denominated in Euros (EUR) of 238 and 238, respectively and Canadian dollars (CAD) of $300 and 0, respectively.
Previous wording
(2)As of June 30, 2024, the carrying value of the Company’s 2027 Notes, 2025 Notes and 2029 Notes were presented net of unamortized debt issuance costs of $2,940, $1,461 and $3,930 and unamortized original issuance discount of $560, $0 and $3,789, respectively. As of December 31, 2023, the carrying value of the Company’s 2027 Notes, 2025 Notes and 2029 Notes were presented net of unamortized debt issuance costs of $3,499, $2,065 $0, and unamortized original issuance discount of $667, $0 and $0, respectively.
Current wording
(2)As of September 30, 2024, the carrying value of the Company’s 2027 Notes, 2025 Notes and 2029 Notes were presented net of unamortized debt issuance costs of $2,657, $1,155 and $3,608 and unamortized original issuance discount of $506, $0 and $3,594, respectively. As of December 31, 2023, the carrying value of the Company’s 2027 Notes, 2025 Notes and 2029 Notes were presented net of unamortized debt issuance costs of $3,499, $2,065 $0, and unamortized original issuance discount of $667, $0 and $0, respectively.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
(5) Includes a supplemental distribution of $0.10.
Current report — wording carried from elsewhere
On January 11, 2024, the Board declared a special distribution of $0.10 per share, which is payable on January 24, 2025 to shareholders of record as of November 4, 2024.