PIMCO Capital Solutions BDC Corp.

03/24/2026 | Press release | Distributed by Public on 03/24/2026 10:13

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following analysis of the Company's financial condition and results of operations should be read in conjunction with the Company's consolidated financial statements and the related notes thereto contained elsewhere in this Report on Form 10-K.

Overview

The Company was established as a Delaware corporation on December 23, 2021, has filed an election to be treated as a BDC under 1940 Act, and has filed an election to be treated as a RIC for federal income tax purposes. As such, the Company is required to comply with various regulatory requirements, such as the requirement to invest at least 70% of the Company's assets in "qualifying assets," source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of the Company's taxable income and tax-exemptinterest.

Revenues

The Company generates revenue primarily in the form of interest income on debt investments it holds. In addition, the Company generates income from dividends or distributions on income on direct equity investments, capital gains on the sales of loans and equity securities and various loan origination and other fees. The Company's debt investments generally have a stated term of five to eight years and typically bear interest at a floating rate usually determined on the basis of a benchmark such as SOFR. Interest on these debt

investments is paid quarterly. In some instances, the Company receives payments on its debt investments based on scheduled amortization of the outstanding balances. In addition, the Company may receive repayments of some of its debt investments prior to their scheduled maturity date. The frequency or volume of these repayments is expected to fluctuate significantly from period to period. The Company's portfolio activity also reflects the proceeds of sales of securities. The Company may also generate revenue in the form of commitment, origination, amendment, structuring, syndication or due diligence fees, fees for providing managerial assistance and consulting fees.

Investments are placed on non-accrualstatus when it is probable that principal, interest or dividends will not be collected according to contractual terms. Interest or dividend payments received on non-accrualinvestments may be recognized as income or applied to principal depending upon management's judgement. Non-accrualinvestments are restored to accrual status when past due principal and interest or dividends are paid and, in management's judgement, principal and interest or dividend payments are likely to remain current. We may make exceptions to this treatment if the loan has sufficient collateral value and is in the process of collection.

Expenses

The Company's primary operating expenses include the payment of: (i) investment advisory fees to the Advisor pursuant to the Advisory Agreement between the Company and the Advisor (unless waived); (ii) administrative fees payable to the Administrator in performing its administrative obligations under the Administration Agreement between the Company and the Administrator; and (iii) other operating expenses as detailed below:

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salaries and other compensation or expenses, including travel expenses, of any of the Company's executive officers, directors and employees, if any, who are not officers, directors, stockholders, members, partners or employees of PIMCO or its subsidiaries or affiliates;

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taxes and governmental fees, if any, levied against the Company;

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brokerage fees and commissions, and other portfolio transaction expenses incurred by or for the Company (including, fees and expenses of outside legal counsel or third-party consultants retained in connection with reviewing, negotiating and structuring loans and other investments made by the Company, and any costs associated with originating loans (such as third-party sourcing fees, due diligence expenses and travel, lodging and meal expenses related thereto), asset securitizations, alternative lending-related strategies and so-called "broken-dealcosts" (e.g., fees, costs, expenses and liabilities, including, for example, due diligence-related fees, costs, expenses and liabilities, with respect to unconsummated investments));

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expenses related to SPVs (including, without limitation, overhead expenses related thereto);

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expenses of the Company's securities lending (if any), including any securities lending agent fees, as governed by a separate securities lending agreement;

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costs, including interest expenses, of borrowing money or engaging in other types of leverage financing including, without limitation, through the use by the Company of reverse repurchase agreements, dollar rolls/buy backs, bank borrowings, credit facilities and tender option bonds;

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costs, including dividend and/or interest expenses and other costs (including, without limitation, offering and related legal costs, fees to brokers, fees to auction agents, fees to transfer agents, fees to ratings agencies and fees to auditors associated with satisfying ratings agency requirements for preferred shares or other securities issued by the Company and other related requirements in the Company's organizational documents) associated with the Company's issuance, offering, redemption and maintenance of preferred shares, commercial paper or other instruments (such as the use of reverse repurchase agreements, dollar rolls/buy backs, bank borrowings, credit facilities and tender option bonds) for the purpose of incurring leverage;

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fees and expenses of any underlying funds or other pooled vehicles in which the Company invests;

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expenses of any third party valuation agent engaged to assist in valuing the Company's assets;

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dividend and interest expenses on short positions taken by the Company;

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extraordinary expenses, including extraordinary legal expenses, as may arise, including, without limitation, expenses incurred in connection with litigation, proceedings, other claims, and the legal obligations of the Company to indemnify its Directors, officers, employees, stockholders, distributors, and agents with respect thereto;

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fees and expenses, including legal, printing and mailing, solicitation and other fees and expenses associated with and incident to stockholder meetings and proxy solicitations;

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organizational and offering expenses of the Company, including registration (including Share registration fees), legal, marketing, printing, accounting and other expenses associated with organizing the Company in its state of jurisdiction and in connection with the initial election of the Company to be regulated under the 1940 Act and, as applicable, the initial registration of its Shares under the Securities Act and fees and expenses associated with seeking, applying for and obtaining formal exemptive, no-action and/orother relief from the SEC;

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expenses incurred in connection with a stockholder that defaults in respect of a Capital Commitment;

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allocated costs incurred by PIMCO in providing managerial assistance to those companies in which the Company has invested who request it;

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all other expenses incurred by the Company in connection with maintaining its status as a BDC;

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expenses payable under any underwriting agreement, including associated fees, expenses and any indemnification obligations;

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any expenses allocated or allocable to a specific class of Shares, including, as applicable, sub-transfer agencyexpenses and distribution and/or service fees paid pursuant to a Rule 12b-1 orsimilar plan adopted by the Board of the Company for a particular share class (if any);

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the Company's pro rata portion of the fidelity bond required by Section 17(g) of the 1940 Act, or other insurance premiums (including costs relating to directors' and officers' liability insurance and errors and omissions insurance);

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all fees, costs, expenses, and liabilities relating to currency hedging and portfolio hedging transactions;

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all fees, costs, expenses and liabilities of liquidating the Company;

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all fees, costs, expenses and liabilities that are specific to the operations of the Company; and

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all expenses of the Company that are capitalized in accordance with U.S. GAAP.

The Company reimburses the Administrator and Advisor or its affiliates for amounts paid or costs borne that properly constitute Company expenses as set forth in the Administration Agreement and Advisory Agreement or otherwise. The Company expects our general and administrative expenses to be relatively stable or to decline as a percentage of total assets during periods of asset growth and to increase during periods of asset declines.

Portfolio, Investment Activity and Results of Operations

As of December 31, 2025, the Company had investments, excluding cash equivalents, in 39 portfolio companies across 17 industries. Based on fair value as of December 31, 2025, 83.8% of the Company's debt portfolio was invested in debt bearing a floating interest rate, which are primarily subject to interest rate floors. As of December 31, 2025, approximately 83.8% of the Company's debt portfolio at fair value had an interest rate floor denoted in SOFR or EURIBOR. The weighted average interest rate floor across the Company's floating-rate portfolio was approximately 0.6% as of December 31, 2025. These floors allow the Company to mitigate (to a degree) any impact of spread widening on the valuation of the Company's investments. As of December 31, 2025, the Company's estimated weighted average total yield of investments in debt securities was 6.7%. Weighted average yields are based on interest rates as of December 31, 2025.

As of December 31, 2024, the Company had investments, excluding cash equivalents, in 39 portfolio companies across 15 industries. Based on fair value as of December 31, 2024, 76.0% of the Company's debt portfolio was invested in debt bearing a floating interest rate, which are primarily subject to interest rate floors. Approximately 76.0% of the Company's debt portfolio at fair value had an interest rate floor denoted in SOFR or EURIBOR. The weighted average interest rate floor across the Company's floating-rate portfolio was approximately 0.6% as of December 31, 2024. These floors allow the Company to mitigate (to a degree) any impact of spread widening on the valuation of the Company's investments. As of December 31, 2024, the Company's estimated weighted average total yield of investments in debt securities was 10.0%. Weighted average yields are based on interest rates as of December 31, 2024.

As part of the monitoring process, the Advisor has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments. The Advisor has developed a classification system to group investments into four categories. The investments are evaluated regularly and assigned a category based on certain credit metrics. The Advisor's ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent or reflect any third-party assessment of any of our investments. Please see below for a description of the four categories of the Advisor's Internal Risk Rating system:

Category 1 - In the opinion of the Advisor, investments in Category 1 involve the least amount of risk relative to the Company's initial cost basis at the time of origination or acquisition. Category 1 investments performance is above the Company's initial underwriting expectations and the business trends and risk factors are generally favorable, which may include the performance of the portfolio company, or the likelihood of a potential exit.

Category 2 - In the opinion of the Advisor, investments in Category 2 involve a level of risk relative to the Company's initial cost basis at the time of origination or acquisition. Category 2 investments are generally performing in line with the Company's initial underwriting expectations and risk factors to ultimately recoup the cost of our principal investment are neutral to favorable. All new originated or acquired investments are initially included in Category 2.

Category 3 - In the opinion of the Advisor, investments in Category 3 indicate that the risk to the Company's ability to recoup the initial cost basis at the time of origination or acquisition has increased materially since the origination or acquisition of the investment, such as declining financial performance and non-compliancewith debt covenants; however, principal and interest payments are not more than 120 days past due.

Category 4 - In the opinion of the Advisor, investments in Category 4 involve a borrower performing substantially below expectations and indicate that the loan's risk has increased substantially since origination or acquisition. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. For Category 4 investments, it is anticipated that the Company will not recoup the Company's initial cost basis and may realize a substantial loss of the Company's initial cost basis at the time of origination or acquisition upon exit.

Investments at fair value and cost consisted of the following as of December 31, 2025 and 2024:

December 31, 2025 December 31, 2024

(Amounts in thousands)

Cost Fair Value Cost Fair Value

First Lien Senior Secured

$ 128,991 $ 127,576 $ 131,893 $ 129,359

Second Lien Senior Secured

6,770 6,620 7,838 8,212

Senior Unsecured

16,662 16,724 49,521 48,562

Corporate Bonds

-  -  18,452 18,732

Common Stock

680 1,231 681 891

Preferred Stock

2,000 2,000 -  - 

Warrants

2,491 387 2,491 1,480

Short-Term Investments

28,516 28,518 18,378 18,381

Total investments

$ 186,110 $ 183,056 $ 229,254 $ 225,617

The industry composition of investments as a percentage of total investments based on fair value as of December 31, 2025 and 2024 was as follows:

December 31, 2025 December 31, 2024

Automotive

-  8.3 %

Brokerage

-  3.1 %

Chemicals

6.7 % 6.0 %

Consumer Products

2.5 % - 

Consumer Services

1.2 % 17.7 %

Diversified Manufacturing

1.3 % 1.1 %

Energy

1.1 % - 

Entertainment

1.5 % - 

Financial Other

5.2 % 2.2 %

Food and Beverage

0.1 % 2.3 %

Gaming

2.7 % - 

Healthcare

4.4 % 2.2 %

Industrial Other

6.6 % 1.9 %

Insurance Life

5.0 % 4.1 %

IT Services

6.1 % 5.0 %

Packaging

1.0 % 3.0 %

Pharmaceuticals

1.2 % 1.0 %

Retailers

1.2 % 2.6 %

Technology

36.6 % 31.4 %

Treasury Bills

5.2 % 8.1 %

U.S. Government Agencies

10.4 % - 

Total

100.0 % 100.0 %

The distribution of the Company's portfolio, including cash equivalents, on the Advisor's Internal Risk Rating System is as follows:

December 31, 2025
Fair Value (amounts in thousands) % of Portfolio Number of Portfolio Companies

Risk rating 1

$ -  -  % - 

Risk rating 2

182,837 99.9 39

Risk rating 3

219 0.1 1

Risk rating 4

-  -  - 
$ 183,056 100.0 % 40
December 31, 2024
Fair Value (amounts in thousands) % of Portfolio Number of Portfolio Companies

Risk rating 1

$ -  -  % - 

Risk rating 2

217,382 96.4 39

Risk rating 3

8,235 3.6 1

Risk rating 4

-  -  - 
$ 225,617 100.0 % 40

Consolidated Results of Operations

The following table represents our operating results (amounts in thousands):

For the Year Ended
December 31, 2025 		For the Year Ended
December 31, 2024 		For the Year Ended
December 31, 2023

Total investment income

$ 22,810 $ 24,035 $ 26,484

Less: Net expenses

5,539 4,896 2,108

Net investment income (loss) before taxes

17,271 19,139 24,376

Income tax expense

24 -  - 

Net investment income (loss) after taxes

17,247 19,139 24,376

Net realized gain (loss)

(10,972 ) (197 ) (32,541 )

Net change in unrealized appreciation (depreciation)

506 1,289 21,541

(Provision) benefit for taxes on unrealized appreciation (depreciation) on investments

(210 ) -  - 

Net increase (decrease) in Net Assets resulting from operations

$ 6,571 $ 20,231 $ 13,376

Investment income was as follows (amounts in thousands):

For the Year Ended
December 31, 2025 		For the Year Ended
December 31, 2024 		For the Year Ended
December 31, 2023

Investment income:

Interest income

$ 17,195 $ 17,099 $ 19,546

Payment in-kind interest

5,523 6,780 6,874

Other income

92 156 64

Total Investment Income

$ 22,810 $ 24,035 $ 26,484

For the years ended December 31, 2025, 2024 and 2023, total investment income was driven by the Company's deployment of capital and invested balance of investments. The size of the Company's investment portfolio at fair value was approximately $183.1 million as of December 31, 2025 and $225.6 million as of December 31, 2024. As of such dates, all of the Company's debt investments were income-producing. For the years ended December 31, 2025, 2024 and 2023, PIK income represented 24.2%, 28.2% and 26.0% of total investment income, respectively. We expect that PIK income will vary based on the elections of certain borrowers.

Interest income on the Company's debt investments is dependent on the composition and credit quality of the portfolio. Generally, the Company expects the portfolio to generate predictable quarterly interest income based on the terms stated in each loan's credit agreement.

Expenses

Expenses were as follows (amounts in thousands):

For the Year Ended
December 31, 2025 		For the Year Ended
December 31, 2024 		For the Year Ended
December 31, 2023

Expenses:

Management fee

$ 2,462 $ 2,505 $ 2,955

Directors fees

451 170 245

Administration fee

294 298 355

Interest expense

4,043 3,551 469

Franchise tax expense

200 423 22

Offering costs

-  -  10

Legal expenses

313 188 153

Other expenses

238 73 43

Recoupment of prior expenses paid by the Advisor

-  193 811

Total expenses

$ 8,001 $ 7,401 $ 5,063

Waivers

(2,462 ) (2,505 ) (2,955 )

Net expenses

$ 5,539 $ 4,896 $ 2,108

Other expenses include valuation, insurance, filing, research, subscriptions and other costs. Organization and offering costs include expenses incurred in the Company's initial formation and the Company's offering of Shares.

Waivers include organizational costs and management fee waivers.

Income Taxes, Including Excise Taxes

The Company has elected, as of August 1, 2022, to be treated as a RIC under Subchapter M of the Code, and the Company intends to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify for tax treatment as a RIC, the Company must, among other things, distribute to the Company's stockholders in each taxable year generally at least 90% of the sum of our Investment Company Taxable Income, as defined by the Code (without regard to the deduction for dividends paid), and net tax-exemptincome for that taxable year. To maintain the Company's tax treatment as a RIC, the Company, among other things, intends to make the requisite distributions to its stockholders, which generally relieve the Company from corporate-level U.S. federal income taxes. Certain investments are held through wholly owned taxable subsidiaries, which are subject to U.S. federal, state and foreign income taxes. All income tax expense reflected in the consolidated financial statements relates to these taxable subsidiaries.

For the years ended December 31, 2025, 2024 and 2023, the Company did not incur any excise tax.

Financial Condition, Liquidity and Capital Resources

The Company generates cash from the net proceeds of offerings of its Shares, and from cash flows from interest and fees earned from its investments and principal repayments and proceeds from sales of its investments. The Company may also fund a portion of its investments through borrowings from banks and issuances of senior securities, including before the Company has fully invested the proceeds of any closing of the Company's continuous Private Offering of its Shares. The Company's primary use of cash will be investments in portfolio companies, payments of Company expenses and payment of cash distributions to stockholders.

On June 19, 2023, the Company entered into the Credit Facility with Massachusetts Mutual Life Insurance Company under which the Company was permitted to borrow up to $150.0 million. On June 10, 2024, the maximum aggregate committed borrowing amount was reduced to $100.0 million. On September 12, 2025, the maximum aggregate committed borrowing amount was reduced to $40.0 million.

As of December 31, 2025 and 2024, the Company had $34.6 million and $28.2 million, respectively, of outstanding borrowings. See Part I, Item 1 of this Report for more information.

The Company may also from time to time enter into new credit facilities, increase the size of existing credit facilities or issue debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors.

Off-BalanceSheet Arrangements

The Company may become a party to investment commitments and to financial instruments with off-balancesheet risk in the normal course of its business to fund investments and to meet the financial needs of its portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the Consolidated Statements of Assets and Liabilities. As of December 31, 2025 and 2024, the Company believed it had adequate resources to satisfy its unfunded commitments. The unfunded commitments to provide funds to portfolio companies were as follows (amounts in thousands):

Unfunded Commitments

As of December 31, 2025

First Lien Senior Secured

$ 18,878

Preferred Stock

8,100

Unfunded Commitments

As of December 31, 2024

First Lien Senior Secured

$ 5,542

Unregistered Sales of Equity Securities

For the years ended December 31, 2025, 2024 and 2023, the Company did not hold closings of its continuous Private Offering of Shares.

Distributions and Distribution Reinvestment

The Company's quarterly distributions, if any, will be determined by the Company's management and the Board. Any distributions to the Company's stockholders are declared out of assets legally available for distribution.

The following table summarizes distributions declared during the year ended December 31, 2025:

Date Declared Record Date Payment Date Dividend Per Share

May 8, 2025

May 20, 2025 May 22, 2025 $0.12

August 7, 2025

August 20, 2025 August 22, 2025 $0.11

November 20, 2025

November 20, 2025 November 24, 2025 $0.19

The following table summarizes distributions declared and the shares distributed pursuant to the DRIP during the year ended December 31, 2024:

Date Declared Record Date Payment Date Dividend Per Share Shares Reinvested

May 20, 2024

May 20, 2024 May 22, 2024 $0.14 - 

August 20, 2024

August 20, 2024 August 22, 2024 $0.29 - 

November 20, 2024

November 20, 2024 November 22, 2024 $0.08 - 

December 18, 2024

December 18, 2024 December 19, 2024 $0.59 1,477,482

The following table summarizes distributions declared during the year ended December 31, 2023:

Date Declared Record Date Payment Date Dividend Per Share

May 22, 2023

May 22, 2023 May 24, 2023 $0.12

August 22, 2023

August 22, 2023 August 24, 2023 $0.19

November 17, 2023

November 17, 2023 November 21, 2023 $0.14

December 20, 2023

December 20, 2023 December 22, 2023 $0.54

Critical Accounting Estimates

The preparation of the Company's financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. For a description of our critical accounting policies, see Note 2. Significant Accounting Policies to our consolidated financial statements included in this Report. We consider the most significant accounting policies to be those related to our Fair Value of Investments, Revenue Recognition, Deferred Financing Costs, Distribution Policy, and Income Taxes. There have been no material changes in our critical accounting policies and practices. The Company's critical accounting policies, including those relating to the valuation of its investment portfolio, should be read in connection with the Company's consolidated financial statements in Part I, Item 1 of this Report, "Risk Factors" in Part II, Item 1A of this Report, and "Risk Factors" in Item 1A of the Company's registration statement on Form 10 ("Form 10").

Related Party Transactions

The Company has entered into a number of business relationships with affiliated or related parties, including the following:

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the Advisory Agreement;

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the Administration Agreement; and

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the Expense Reimbursement Agreement.

See Notes to the Consolidated Financial Statements-Note 3. Related Party Transactions.

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