HPS Corporate Capital Solutions Fund

03/24/2026 | Press release | Distributed by Public on 03/24/2026 14:34

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 discussion and analysis contained in this section refers to our financial condition, results of operations and cash flows. The information contained in this section should be read in conjunction with the financial statement and notes thereto in Part II, Item 8 of this Form 10-K "Consolidated Financial Statements and Supplementary Data." This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to those described in Part I, Item 1A of this Form 10-K "Risk Factors." Our actual results could differ materially from those anticipated by such forward-looking information due to factors discussed under "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" appearing elsewhere in this Form 10-K. Dollar amounts are in thousands, except per share data, percentages and as otherwise noted.
Overview and Investment Framework
We are an externally managed, non-diversified closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. Formed as a Delaware statutory trust on August 10, 2023, we are externally managed by the Adviser, which is responsible for determining the portfolio composition, making investment decisions, monitoring investments, performing due diligence on prospective portfolio companies and providing us with such other investment advisory and related services as may reasonably be required for the investment of capital. We have elected to be treated for federal income tax purposes as a RIC under Subchapter M of the Code beginning with our tax year ended December 31, 2024, and we intend to operate in a manner so as to continue to qualify as a RIC in each taxable year thereafter.
On July 1, 2025, BlackRock acquired the business and assets of HPS, with 100% of consideration paid in BlackRock equity. Grishma Parekh and Colbert Cannon resigned from the Board effective upon the closing of the HPS/Blackrock Transaction to comply with the Section 15(f) safe harbor provisions of the 1940 Act. Mr. Cannon and Ms. Parekh continue to serve in their existing roles at HPS and the Adviser and, with respect to Mr. Cannon, as our President and a member of our Investment Committee. See "Risk Factors-Risks Related to the HPS/BlackRock Transaction" for further details.
We are a privately placed, perpetual-life BDC, which is a BDC whose shares are not listed for trading on a stock exchange or other securities market. We use the term "perpetual-life BDC" to describe an investment vehicle of indefinite duration, whose Common Shares are intended to be sold on a continuous basis at regular frequency by the BDC at a price generally equal to the BDC's NAV per share. The Common Shares described herein have not been registered under the Securities Act, the securities laws of any other state or the securities laws of any other jurisdiction. The Common Shares will be offered and sold under the exemptions from registration under the Securities Act under Regulation D and Regulation S. Each purchaser will be required to represent that it is (i) either an "accredited investor" as defined in Rule 501 of Regulation D under the Securities Act or, in the case of Common Shares sold outside the United States, not a "U.S. person" in accordance with Regulation S of the Securities Act and (ii) acquiring the Common Shares purchased by it for investment and not with a view to resale or distribution.
We do not intend to list our Common Shares on any securities exchange and our Common Shares will not be publicly traded. Subscriptions to purchase our Common Shares may be made on an ongoing basis, but investors currently may only purchase our Common Shares pursuant to accepted monthly subscription orders effective as of the first calendar day of each month. The purchase price for the Common Shares in the Initial Closing was $25.00 per share. Thereafter, the purchase price per share equals the NAV per share, as of the last calendar day of the month immediately prior to the effective date of the share purchase. The Managing Dealer and the participating brokers will use their best efforts to sell shares, but are not obligated to purchase or sell any specific amount of shares. The Managing Dealer intends to enter into additional placement agreements with broker-dealers in connection with the Private Offering.
On May 13, 2025, the SEC issued an order (the "Multi-Class Order") granting our application for exemptive relief from sections 18(a)(2), 18(c), 18(i) and 61(a) of the 1940 Act. Under the terms of the Multi-Class Order, we are permitted to offer multiple classes of our Common Shares with varying sales loads and/or asset-based service and/or distribution fees.
As of July 1, 2025, in reliance upon exemptive relief issued to us by the Securities and Exchange Commission (the "SEC"), all of our outstanding Common Shares were converted into three separate classes (the "Share Class Conversion"); Class I common shares ("Class I Common Shares"), Class D common shares ("Class D Common Shares") and Class S common shares ("Class S Common Shares"). All outstanding Common Shares immediately prior to the Share Class Conversion were subject to the same shareholder servicing and/or distribution fee as those applicable to the Class D Common Shares. Accordingly, for all periods prior to July 1, 2025, all share class activities for the existing Common Shares are presented under Class D Common Shares.
Under our Investment Advisory Agreement, we have agreed to pay the Adviser a fee for its services. The fee consists of two components: a management fee and an incentive fee. The cost of both the management and incentive fee will ultimately be borne by the shareholders. Also, under the Administration Agreement, we have agreed to reimburse the Administrator for the costs and expenses
incurred by the Administrator in performing its obligations under the Administration Agreement. Such reimbursement includes our allocable portion of compensation (including salaries, bonuses and benefits), overhead (including rent, office equipment and utilities) and other expenses incurred by the Administrator in performing its administrative obligations under the Administration Agreement, including but not limited to compensation paid to: (i) our chief compliance officer, chief financial officer and their respective staffs; (ii) investor relations, legal, operations and other non-investment professionals at the Administrator that perform duties for us; and (iii) any internal audit group personnel of the Administrator or any of its affiliates, subject to the limitations described in the Investment Advisory and Administration Agreements. In addition, pursuant to the terms of the Administration Agreement, the Administrator may delegate its obligations under the Administration Agreement to an affiliate or to a third party and we will reimburse the Administrator for any services performed for us by such affiliate or third party.
Our investment objective is to produce attractive, risk-adjusted returns in the form of current income and long-term capital appreciation by investing primarily in newly originated, privately negotiated senior secured debt and junior capital of upper middle market and larger scale companies predominantly in the U.S. We use the term "upper middle market" to generally refer to companies with EBITDA of $75 million to $1 billion annually or revenue of $250 million to $5 billion annually at the time of our investment.
We have and may continue to invest in smaller or larger companies if the opportunity presents attractive investment characteristics and risk-adjusted returns. While our investment strategy focuses primarily on companies in the United States, we also intend to leverage HPS's global presence to invest in companies in Europe, Australia and other locations outside of the U.S. subject to compliance with BDC requirements to invest at least 70% assets in "eligible portfolio companies".
We intend to invest across most of the sub-segments of the private credit market rather than focusing only on leveraged buyout ("LBO") driven direct lending. We intend to allocate our private investment capital dynamically across the senior secured direct lending, junior capital, and special situations segments of the private credit market to seek to capture what HPS believes are compelling risk-adjusted return opportunities within different market environments. Specifically, we will seek to achieve our investment objective by pairing a primary allocation to current income focused, first lien, senior secured, and (to a lesser extent) unsecured private credit investments with a smaller, dynamic allocation to more capital-appreciation oriented private junior capital investments.
The income-oriented portion of our portfolio primarily focuses on direct lending investments with some element of perceived business or transactional complexity that require a high degree of structuring expertise to mitigate potential risk. In connection with this portion of the portfolio, we will seek to invest primarily in directly originated, privately negotiated senior secured debt of upper-middle market and large-scale borrowers with more complicated business models or capital structures, esoteric collateral, and/or that face timing pressures associated with strategic or refinancing needs. The loans within this portion of the portfolio are expected to be primarily floating rate instruments that typically pay current income on a quarterly basis. As a result, returns associated with this portion of the strategy are expected to be largely current income-oriented and to be derived predominately from contractual coupons, upfront fees/original issue discounts and, in some instances, prepayment penalties. To a lesser extent, we also participate in privately negotiated special situation opportunities. These investments are typically senior secured, but may also take the form of subordinated debt or preferred equity and may often be accompanied by equity or equity-linked securities as a form of potential return enhancement. The debt investments within this portion of the strategy may be floating or fixed rate and coupons may be paid in the form of cash or PIK interest.
The capital appreciation portion of HCAP's portfolio focuses on investments in privately negotiated junior capital investments, including preferred equity, convertible preferred equity, and to a lesser extent, select common or other equity investments, or select junior debt or debt-like securities. In connection with this portion of the portfolio, the C will seek to invest primarily in large scale companies (average EBITDA typically in excess of $400mm) in developed markets that operate in industries we believe are less cyclical and have relatively low capital intensity. Returns associated with this portion of the portfolio are also expected to be derived primarily from realized and unrealized gains and losses, including through preference accruals received at investment realization.
Finally, our investment portfolio also includes a smaller allocation to more liquid credit investments such as non-investment grade broadly syndicated loans, leveraged loans, secured and unsecured corporate bonds, and securitized credit. We intend to use these investments to maintain liquidity for our share repurchase program and manage cash before investing subscription proceeds into originated loans, while seeking attractive risk-adjusted investment returns. We may also invest in publicly traded securities of larger corporate issuers on an opportunistic basis when market conditions create compelling potential return opportunities, subject to compliance with BDC requirements to invest at least 70% of assets in "eligible portfolio companies."
Under normal circumstances, we will invest at least 80% of our net assets plus borrowings for investment purposes in capital instruments (securities throughout the capital structure of a company) issued by corporate issuers (including loans, notes, bonds and other corporate debt or equity securities).
We have used and intend to continue to use leverage to seek to enhance our returns. Our leverage levels will vary over time in response to general market conditions, the size and composition of our investment portfolio and the views of our Adviser and Board. We expect that our debt-to-equity ratio will generally range between 0.5x and 1.0x. While our leverage employed may be greater or less than these levels from time to time, we are subject to the limitations set forth in the 1940 Act, which currently allows us to borrow up to a 2:1 debt-to-equity ratio.
Our leverage may take the form of revolving or term loans from financial institutions, secured or unsecured bonds, or securitization of portions of our investment portfolio via collateralized loan obligations or preferred shares. When determining whether to borrow money and assessing the various borrowing structure alternatives, we analyze the maturity, rate structure and covenant package of the proposed borrowings in the context of our investment portfolio, pre-existing borrowings and market outlook.
We and certain affiliates of the Adviser have received an exemptive order from the SEC that permits us to co-invest with certain other persons, including, but not limited to, certain affiliates of the Adviser and certain funds and accounts managed and controlled by the Adviser or its affiliates. Subject to the 1940 Act and the conditions of any such co-investment order issued by the SEC, we may, under certain circumstances, co-invest with certain affiliated accounts in investments that are suitable for us and one or more of such affiliated accounts.
Key Components of Our Results of Operations
Investments
We focus primarily on senior secured loans and securities of private U.S. companies. Our level of investment activity (both the number of investments and the size of each investment) can and will vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to private companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make.
Revenues
We generate revenues in the form of interest and fee income on debt investments, capital gains, and dividend income from our equity investments in our portfolio companies. Our senior and subordinated debt investments are expected to bear interest at a fixed or floating rate. Interest on debt securities is generally payable monthly, quarterly or semiannually. In some cases, some of our investments may provide for deferred interest payments or PIK interest. The principal amount of the debt securities and any accrued but unpaid PIK interest generally will become due at the maturity date. In addition, we may generate revenue from various fees in the ordinary course of business in connection with transactions. Original issue discounts and market discounts or premiums will be capitalized, and we will accrete or amortize such amounts as interest income. We will record prepayment premiums on loans and debt securities as interest income. Dividend income, if any, will be recognized on an accrual basis to the extent that we expect to collect such amounts.
Expenses
Except as specifically provided below, all investment professionals and staff of the Adviser, when and to the extent engaged in providing investment advisory services to us, and the base compensation, bonus and benefits, and the routine overhead expenses, of such personnel allocable to such services, will be provided and paid for by the Adviser. We will bear all other costs and expenses of our operations, administration and transactions, including, but not limited to:
•investment advisory fees, including management fees and incentive fees, to the Adviser, pursuant to the Investment Advisory Agreement;
•our allocable portion of compensation (including salaries, bonuses and benefits), overhead (including rent, office equipment and utilities) and other expenses incurred by the Administrator in performing its administrative obligations under the Administration Agreement, including but not limited to: (i) our chief compliance officer, chief financial officer and their respective staffs; (ii) investor relations, legal, operations and other non-investment professionals at the Administrator that perform duties for us; and (iii) any internal audit group personnel of HPS or any of its affiliates; and
•all other expenses of our operations, administrations and transactions.
Under the Expense Support Agreement, the Adviser agreed to advance all of our organization and offering expenses on our behalf through the Initial Closing. We are obligated to reimburse the Adviser for such advanced expenses (including any additional expenses the
Adviser elects to pays on our behalf), subject to the provisions of the Expense Support Agreement. Any reimbursements will not exceed actual expenses incurred by the Adviser and its affiliates.
From time to time, the Adviser, the Administrator or their affiliates may pay third-party providers of goods or services. We will reimburse the Adviser, the Administrator or such affiliates thereof for any such amounts paid on our behalf. From time to time, the Adviser and the Administrator may defer or waive fees and/or rights to be reimbursed for expenses. All of the foregoing expenses will ultimately be borne by our shareholders.
Costs and expenses of the Adviser and the Administrator that are eligible for reimbursement by us will be reasonably allocated to us on the basis of time spent, assets under management, usage rates, proportionate holdings, a combination thereof or other reasonable methods determined by the Administrator.
Expense Support and Conditional Reimbursement Agreement
We have entered into an Expense Support Agreement with the Adviser. For additional information see "Note 3. Fees, Expenses, Agreements and Related Party Transactions"to the consolidated financial statements.
Portfolio and Investment Activity
Our investment activity is presented below (information presented herein is at amortized cost unless otherwise indicated):
As of and for the year ended December 31,
2025 2024
Total investments, beginning of period $ 982,565 $ -
New investments purchased 1,369,731 1,039,618
Payment-in-kind interest and dividends capitalized 19,773 8,223
Net accretion of discount on investments 7,432 3,429
Net realized gain (loss) on investments (4,240) (69)
Investments sold or repaid (237,057) (68,636)
Total investments, end of period $ 2,138,204 $ 982,565
The following table presents certain selected information regarding our investment portfolio:
December 31, 2025 December 31, 2024
Weighted average yield on debt and income producing investments, at amortized cost(1)
10.4 % 11.2 %
Weighted average yield on debt and income producing investments, at fair value(1)
10.3 % 11.2 %
Weighted average yield on total portfolio, at amortized cost(2)
9.3 % 10.4 %
Weighted average yield on total portfolio, at fair value(2)
9.1 % 10.4 %
Number of portfolio companies 188 94
Weighted average EBITDA (in millions)(3)
$ 229 $ 182
Weighted average loan-to-value ("LTV")(4)
46 % 51 %
Percentage of performing debt investments bearing a floating rate, at fair value 94.3 % 94.4 %
Percentage of performing debt investments bearing a fixed rate, at fair value 5.7 % 5.6 %
(1)Computed as (a) the annual stated interest rate or yield plus the annual accretion of discounts and less any annual amortization of premiums, as applicable, on accruing (i) debt and (ii) other income producing securities, divided by (b) total accruing (i) debt and (ii) other income producing securities (at fair value or amortized cost, as applicable). Actual yields earned over the life of each investment could differ materially from the yields presented above.
(2)Computed as the annual stated interest rate or yield plus the annual accretion of discounts and less any annual amortization of premiums, as applicable, on all of our investments, divided by our total investments (at fair value or amortized cost, as applicable). Actual yields earned over the life of each investment could differ materially from the yields presented above.
(3)Calculated with respect to all level 3 investments in our investment portfolio for which fair value is determined by the Adviser (in its capacity as our investment adviser, with assistance, at least quarterly, from a third-party valuation firm, and overseen by our Board), and excludes quoted assets, restructured debt and equity, investments on non-accrual status, and investments with no reported EBITDA or where EBITDA, in the Adviser's judgment made in its discretion, was not a material component of the original investment thesis, such as LTV-based loans and NAV-based loans. Weighted average EBITDA is weighted based on the fair value of the total applicable level 3 investments. Figures are derived from the most recent financial statements from portfolio companies.
(4)Calculated with respect to all level 3 debt investments in our investment portfolio for which fair value is determined by the Adviser (in its capacity as our investment adviser, with assistance, at least quarterly, from a third-party valuation firm, and overseen by our Board), and excludes quoted assets, restructured debt and
investments on non-accrual status. LTV is calculated as net debt through each respective investment tranche in which we hold an investment divided by enterprise value or value of underlying collateral of the portfolio company. Weighted average LTV is weighted based on the fair value of the total applicable level 3 debt investments. Figures are derived from the most recent financial statements from portfolio companies.
Our investments consisted of the following:
December 31, 2025 December 31, 2024
Amortized Cost Fair Value % of Total
Investments at
Fair Value 		Amortized Cost Fair Value % of Total
Investments at
Fair Value
First lien debt $ 1,781,224 $ 1,795,053 82.42 % $ 870,389 $ 870,467 88.38 %
Second lien debt 7,894 7,906 0.36 5,329 5,329 0.54
Other secured debt 63,601 64,380 2.96 17,911 17,960 1.82
Unsecured debt 47,040 48,111 2.21 16,624 17,385 1.77
Structured finance investments 17,013 17,206 0.79 - - -
Preferred equity 179,845 196,010 9.00 26,650 28,588 2.90
Other equity investments 41,587 49,155 2.26 45,662 45,225 4.59
Total $ 2,138,204 $ 2,177,821 100.00 % $ 982,565 $ 984,954 100.00 %
As of December 31, 2025 and 2024, we had certain investments in one and zero portfolio companies on non-accrual status, respectively. The following table shows the fair value of our performing and non-accrual debt and other income producing investments as of December 31, 2025 and 2024:
December 31, 2025 December 31, 2024
Fair Value Percentage Fair Value Percentage
Performing debt and income producing investments $ 1,920,208 99.71 % $ 912,649 100.00 %
Non-accrual(1)
5,570 0.29 - -
Total $ 1,925,778 100.00 % $ 912,649 100.00 %
(1)Investments on non-accrual represented 0.35% and 0.00% of amortized cost of total debt and other income producing investments as of December 31, 2025 and 2024, respectively.
The table below describes investments by industry composition based on fair value as of December 31, 2025 as compared to 2024:
December 31, 2025 December 31, 2024
Aerospace & Defense 7.02 % 5.36 %
Asset Based Lending and Fund Finance 1.01 1.80
Automobile Components 1.41 0.49
Beverages 3.40 3.46
Building Products - 0.71
Capital Markets 1.33 -
Chemicals 1.23 2.43
Commercial Services & Supplies 3.96 5.10
Communications Equipment 0.63 1.40
Construction & Engineering 0.12 0.28
Consumer Staples Distribution & Retail 1.93 2.54
Containers & Packaging 1.96 3.53
Distributors 0.62 1.39
Diversified Consumer Services 1.08 1.20
Diversified Telecommunication Services 0.14 -
Electric Utilities 0.47 0.48
Electrical Equipment 0.39 -
Electronic Equipment, Instruments & Components 0.26 0.31
December 31, 2025 December 31, 2024
Entertainment 2.29 2.69
Financial Services 3.85 3.24
Food Products 0.03 -
Health Care Equipment & Supplies 4.16 4.04
Health Care Providers & Services 10.17 9.59
Health Care Technology 0.85 1.52
Hotels, Restaurants & Leisure 6.06 3.71
Household Durables 0.09 0.24
Independent Power and Renewable Electricity Producers 9.80 5.16
Insurance 2.97 3.71
IT Services 0.61 2.02
Leisure Products 0.54 -
Life Sciences Tools & Services 0.14 -
Machinery 0.41 0.23
Media 1.11 2.15
Metals & Mining 0.78 1.71
Multi-Utilities 0.12 -
Pharmaceuticals 4.98 4.72
Professional Services 0.68 1.10
Real Estate Management & Development 0.12 0.18
Software 13.87 12.21
Specialty Retail 2.73 4.19
Structured Finance 0.79 -
Textiles, Apparel & Luxury Goods 1.52 2.65
Trading Companies & Distributors 0.98 2.60
Transportation Infrastructure 0.80 1.86
Wireless Telecommunication Services 2.59 -
Total 100.00 % 100.00 %

The table below describes investments by geographic composition based on fair value:
December 31, 2025 December 31, 2024
United States 84.53 % 89.36 %
United Kingdom 7.94 5.25
Austria 1.85 3.53
Australia 1.55 0.23
Spain 1.36 0.74
Canada 1.15 -
France 1.07 0.58
Germany 0.41 -
Taiwan 0.14 0.31
Total 100.00 % 100.00 %
Our Adviser monitors the financial trends of each portfolio company on an ongoing basis to determine if it is meeting its respective business plan and to assess the appropriate course of action for each company. Our Adviser has several methods of evaluating and monitoring the performance and fair value of our investments, which may include, but are not limited to, the following:
•assessment of success in adhering to the portfolio company's business plan and compliance with covenants;
•periodic or regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor to discuss financial position, requirements and accomplishments;
•comparisons to our other portfolio companies in the industry, if any;
•attendance at and participation in board meetings or presentations by portfolio companies; and
•review of monthly and quarterly financial statements and financial projections of portfolio companies.
Results of Operations
The following table represents our operating results:
Year Ended December 31,
2025 2024
Total investment income $ 167,461 $ 61,475
Net expenses 66,501 13,370
Net investment income before excise tax 100,960 48,105
Excise tax expense 1,273 83
Net investment income after excise tax 99,687 48,022
Net realized gain (loss) (10,479) 372
Net change in unrealized appreciation (depreciation) 29,073 5,605
Net increase (decrease) in net assets resulting from operations $ 118,281 $ 53,999
Net increase (decrease) in net assets resulting from operations can vary from period to period as a result of various factors, including acquisitions, the level of new investment commitments, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio. As a result, comparisons may not be meaningful.
Investment Income
Investment income was as follows:
Year Ended December 31,
2025 2024
Interest income $ 143,837 $ 52,421
Payment-in-kind interest income 21,682 9,014
Dividend income 1,196 -
Other income 746 40
Total investment income $ 167,461 $ 61,475
Total investment income increased to $167.5 million for the year ended December 31, 2025 from $61.5 million for in the prior year, primarily driven by our deployment of capital and the increased balance of our investments. Interest income increased as a result of an increase in our accruing debt investment's funded par, which increased to $1,946.3 million as of December 31, 2025, from $924.4 million in the prior year. This was partially offset by a decline in benchmark interest rates during the year ended December 31, 2025, as compared to the prior year. The size of our performing debt and income producing investments at fair value was $1,920.2 million and our weighted average yield on debt and income producing securities at fair value was 10.3%.
For the years ended December 31, 2025 and 2024, PIK income represented 12.9% and 14.7% of total investment income, respectively. We expect that PIK income will vary based on the elections of certain borrowers.
Expenses
Expenses were as follows:
Year Ended December 31,
2025 2024 2023
Interest expense $ 42,230 $ 12,557 $ -
Management fees 12,325 4,585 -
Income based incentive fee 15,488 5,737 -
Capital gains incentive fee 2,789 896 -
Shareholder servicing and/or distribution fees
Class D 2,106 922 -
Class S 0 - -
Professional fees 2,679 1,184 81
Board of Trustees' fees 353 289 34
Administrative service expenses 2,197 1,238 -
Other general & administrative 2,451 1,177 20
Organization expenses - 150 544
Amortization of continuous offering costs 703 1,288 -
Excise tax expense 1,273 83 -
Total expenses (including excise tax expense) 84,594 30,106 679
Expense Support (4,421) (5,409) (679)
Shareholder servicing and/or distribution fees waived (462) (922) -
Management fees waived (5,243) (4,585) -
Income based incentive fees waived (6,694) (5,737) -
Net expenses (including excise tax expense) $ 67,774 $ 13,453 $ -
Interest Expense
Total interest expense (including unused fees, amortization of deferred financing costs and debt issuance costs, and the net interest on interest rate swaps accounted for as hedges) increased to $42.2 million for the year ended December 31, 2025 from $12.6 million in the prior year, primarily driven by increased borrowings and issuance of unsecured notes. The average principal debt outstanding increased to $627.6 million for the year ended December 31, 2025 from $94.9 million in the prior year.
Total interest expense (including unused fees, amortization of deferred financing costs, financing fees and backstop fees) of $12.6 million for the year ended December 31, 2024 was driven by $94.9 million of average borrowings under our credit facility and expenses incurred related to the investments funded by the Financing Providers under the Warehousing Transactions (as defined below).
Management Fees
Management fees increased to $12.3 million for the year ended December 31, 2025 from $4.6 million in the prior year primarily due to an increase in net assets. Management fees arepayable quarterly in arrears at an annual rate of 1.25% of the value of our net assets as of the beginning of the first calendar day of the applicable quarter, as adjusted for any share issuances or repurchases during the quarter that do not occur on the first calendar day of the quarter. The Adviser agreed to waive its base management fee from the Initial Closing through June 30, 2025.
Income Based Incentive Fees
Income based incentive fees increased to $15.5 million for the year ended December 31, 2025 from $5.7 million in the prior year primarily due to our deployment of capital and an increase in Pre-Incentive Fee Net Investment Income Returns. The Adviser agreed to waive its income based incentive fee from the Initial Closing through June 30, 2025.
Capital Gains Incentive Fees
U.S. GAAP requires that the capital gains incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Advisory Agreement. This U.S. GAAP accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital depreciation included in the calculation of the capital gains incentive fee plus the aggregate cumulative unrealized capital appreciation, net of any expense associated with cumulative unrealized capital depreciation or appreciation. If such amount is positive at the end of a period, then U.S. GAAP requires us to record a capital gains incentive fee equal to 15.0% of such cumulative amount, less the aggregate amount of actual capital gains incentive fees paid or capital gains incentive fees accrued under U.S. GAAP in all prior periods.
Capital gains based incentive fees were $2.8 million for the year ended December 31, 2025, as compared to $0.9 million in the prior year primarily due to net unrealized gains on investments, none of which were payable under the Investment Advisory Agreement. The accrual for any capital gains incentive fee under U.S. GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less in the prior period. If such cumulative amount is negative, then there is no accrual.
Shareholder Servicing and/or Distribution Fees
Shareholder servicing and/or distribution fees increased to $2.1 million for the year ended December 31, 2025 from $0.9 million in the prior year primarily due to an increase in shares outstanding. The Managing Dealer has agreed to waive the shareholder servicing and/or distribution fees from the Initial Closing through March 31, 2025.
Other Expenses
Organization costs and offering costs include expenses incurred in our initial formation and our continuous offering. Professional fees include legal, audit, tax, and other professional fees incurred related to our management. Administrative service expenses represent fees paid to the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of the cost of certain of our executive officers, their respective staff and other non-investment professionals that perform duties for us. Other general and administrative expenses include valuation, insurance, filing, research, our sub-administrator, subscriptions and other costs.
Total other expenses increased to $8.4 million for the year ended December 31, 2025, from $5.3 millionfor the prior year primarily driven by an increase of professional fees, administrative service expenses and other general & administrative expenses due to servicing a growing portfolio.
Under the terms of the Prior Administration Agreement, the Administration Agreement, the Prior Investment Advisory Agreement and the Investment Advisory Agreement, we reimburse the Administrator and Adviser, respectively, for services performed for us. In addition, pursuant to the terms of these agreements, the Administrator and Adviser may delegate their obligations under these agreements to an affiliate or to a third party and we reimburse the Administrator and Adviser for any services performed for us by such affiliate or third party. For the year ended December 31, 2025, the Administrator charged $2.2 million, an increase from $1.2 million in the prior year, for certain costs and expenses allocable to us under the terms of the Administration Agreement.
We entered into an Expense Support Agreement with the Adviser. Certain other expenses were borne by the Adviser, subject to future reimbursement pursuant to terms of the Expense Support Agreement. For additional information see "Note 3. Fees, Expenses, Agreements and Related Party Transactions"to the consolidated financial statements.
Income Taxes, Including Excise Taxes
We have elected to be treated for federal income tax purposes as a RIC under Subchapter M of the Code beginning with our tax year ended December 31, 2024, and we intend to operate in a manner so as to continue to qualify as a RIC in each taxable year thereafter. To qualify for tax treatment as a RIC, we must, among other things, distribute to our shareholders 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-exempt income (if any) for that taxable year. To maintain our tax treatment as a RIC, we, among other things, intend to make the requisite distributions to our shareholders, which generally relieve us from corporate-level U.S. federal income taxes.
Depending on the level of taxable income earned in a tax year, we may carry forward taxable income (including net capital gains, if any) in excess of current year distributions from the current tax year into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such taxable income, as required. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year distributions from such income, we will accrue excise tax on estimated excess taxable income.
For the years ended December 31, 2025 and 2024 we incurred U.S. federal excise tax of $1.3 million and $0.1 million, respectively.
Net Realized Gain (Loss)
Net realized gains and losses were comprised of the following:
Year Ended December 31,
2025 2024
Non-controlled/non-affiliated investments $ (4,240) $ (69)
Foreign currency forward contracts (6,085) 197
Foreign currency transactions (154) 244
Net realized gain (loss) $ (10,479) $ 372
For the year ended December 31, 2025, we generated net realized gains (losses) on investments of $(4.2) million, primarily driven by realized losses of $(3.7) million on the restructuring of private debt investments (realized loss of $(0.3) million on Lasko Operating Holdings, LLC and of $(3.4) million on New Era Technology, Inc.) and net realized losses of $(0.5) million primarily from the sale of syndicated loans. We generated realized losses of $(6.1) million on foreign currency forwards contracts, primarily as a result of fluctuations in the EUR and GBP exchange rates, which was largely offset by unrealized gains on foreign currency as described below.
For the year ended December 31, 2024, we generated net realized gains (losses) of $0.4 million, which was primarily comprised of net realized gains on foreign currency transactions, as a result of fluctuations in the GBP and EUR exchange rates partially offset by net realized losses on investments.
Net Change in Unrealized Appreciation (Depreciation)
Net change in unrealized appreciation (depreciation) was comprised of the following:
Year Ended December 31,
2025 2024
Non-controlled/non-affiliated investments $ 38,149 $ 2,389
Non-controlled/affiliated investments (921) -
Foreign currency forward contracts (5,673) 2,579
Translation of assets and liabilities in foreign currencies (2,482) 637
Net change in unrealized appreciation (depreciation) $ 29,073 $ 5,605
For the year ended December 31, 2025, the change in unrealized appreciation (depreciation) on the investment portfolio was $22.4 million (excluding the impact of foreign currency) due to spread tightening in the private credit markets and foreign currency unrealized gains of $14.8 million on investments (included in unrealized gains on investments) primarily as a result of fluctuations in the EUR, GBP and AUD exchange rates. The remaining $(8.2) million of the net unrealized appreciation (depreciation) represents the net unrealized losses as a result of foreign currency fluctuations impacting the value of our foreign currency forward contracts, foreign debt and cash balances.
For the year ended December 31, 2024, the fair value of the investment portfolio increased $5.3 million (excluding the impact of foreign currency) primarily due to spread tightening in the private credit markets. The remaining $0.3 million represents the net unrealized gains as a result of foreign currency fluctuations impacting the value of the investment portfolio, foreign currency forward contracts, foreign debt and cash balances.
For the years ended December 31, 2025 and 2024, we generated net realized and unrealized gains (losses) on the investment portfolio (excluding the impact of foreign currency) of $18.2 million, and $5.3 million, respectively.
Realized and Unrealized Gains/(Losses) on Foreign Currency
In the ordinary course of business, we may invest in securities denominated in foreign currencies. This exposes us to foreign exchange rate risk should the value of local currencies decline relative to the United States dollar. As a result, we aim to hedge substantially all of our foreign currency exposure by entering into foreign currency forward contracts and borrowing in foreign currency from our credit facilities, which reduces our exposure to foreign currency exchange rate fluctuations in the value of foreign currencies.
Year Ended December 31,
2025 2024
Realized gain/(losses) on:
Investments $ 2 $ (3)
Foreign currency forward contracts (6,085) 197
Translation of assets and liabilities in foreign currencies (154) 244
Net realized gains/(losses) $ (6,237) $ 438
Unrealized gain/(losses) on:
Investments $ 14,802 $ (2,959)
Foreign currency forward contracts (5,673) 2,579
Translation of assets and liabilities in foreign currencies (2,482) 637
Net unrealized gains/(losses) $ 6,647 $ 257
Net realized and unrealized gains/(losses): $ 410 $ 695
For the years ended December 31, 2025 and 2024, the net realized and unrealized gains/(losses) on foreign currency fluctuations impacting the value of the investment portfolio, foreign currency forward contracts, and foreign debt and cash balances was $0.4 million and $0.7 million, respectively. When we are hedging foreign currency exposure through forward contracts and the local currency base rate (i.e., funding cost) is lower or higher than our functional currency, there is positive or negative "carry" embedded in the forward contract. For the years ended December 31, 2025 and 2024, the net gains on foreign currency were driven primarily by the positive carry from base rate differentials on forward contracts for local currencies versus the U.S. Dollar.
Interest Rate Swaps
We use interest rate swaps to mitigate interest rate risk associated with our fixed rate liabilities. We have designated certain interest rate swaps to be in a hedge accounting relationship. See "Item 8. Consolidated Financial Statements and Supplementary Data-Notes to Consolidated Financial Statements-Note 2. Significant Accounting Policies" for additional disclosure regarding our accounting for derivative instruments designated in a hedge accounting relationship. See our schedule of investments for additional disclosure regarding these derivative instruments. See "Item 8. Consolidated Financial Statements and Supplementary Data-Notes to Consolidated Financial Statements-Note 7. Borrowings" for additional disclosure regarding the carrying value of our debt.
Financial Condition, Liquidity and Capital Resources
We generate cash primarily from the net proceeds of our continuous offering of Common Shares, proceeds from net borrowings on our credit facility, unsecured note issuances, short-term borrowings, income earned and repayments on principal on our investments. The primary uses of our cash and cash equivalents are for (i) originating and purchasing investments, (ii) funding the costs of our operations (including fees paid to our Adviser and expense reimbursements paid to our Administrator), (iii) debt service, repayment and other financing costs of our borrowings, (iv) funding repurchases under our share repurchase program and (v) cash distributions to our shareholders.
As of December 31, 2025, we had one corporate-level revolving credit facility and unsecured note issuances. As of December 31, 2024, we had one corporate-level revolving credit facility. From time to time, we may enter into additional credit facilities, increase the size of our existing credit facilities and/or issue debt securities, including unsecured notes. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to incur borrowings, issue debt securities or issue preferred stock, if immediately after the borrowing or issuance, the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock, is at least 150%. As of December 31, 2025 and December 31, 2024, we had an aggregate amount of $928.7 million and $289.8 million, respectively, of debt outstanding and our asset coverage ratio was 234.4% and 325.0%, respectively. We seek to carefully consider our unfunded commitments for the purpose of planning our ongoing financial leverage.
Cash and cash equivalents as of December 31, 2025, taken together with our $546.3 million of available capacity under our credit facility (subject to borrowing base availability) and the continuous offering of our Common Shares is expected to be sufficient for our investing activities and to conduct our operations in the near term and for the foreseeable future. This determination is based in part on our expectations for the timing of funding investment purchases and the timing and amount of future proceeds from sales of our Common Shares and the use of existing and future financing arrangements. As of December 31, 2025, we had significant amounts payable and commitments for existing and new investments, which we planned to fund using available borrowing capacity under our credit facility. Additionally, we held $313.6 million of Level 2 investments as of December 31, 2025, which could provide additional liquidity if necessary.
Although we have historically been able to obtain sufficient borrowing capacity, any disruption in the financial markets or any other negative economic development could restrict our access to financing in the future. We may not be able to find new financing for future investments or liquidity needs and, even if we are able to obtain such financing, such financing may not be on as favorable terms as we could have obtained in the past. These factors may limit our ability to make new investments and adversely impact our results of operations.
As of December 31, 2025, we had $24.1 million in cash and cash equivalents. During the year ended December 31, 2025, cash used in operating activities was $1,076.2 million, primarily as a result of funding portfolio investments of $1,360.3 million, partially offset by proceeds from sale of investments and principal repayments of $227.7 million and other operating sources of $56.4 million. Cash provided by financing activities was $1,090.0 million during the period, primarily as a result of new share issuances related to $527.5 million of subscriptions and net borrowings of $636.4 million.
Equity
The following table summarizes transactions in Common Shares during the year ended December 31, 2025:
Shares Amount
CLASS I
Subscriptions 2,496,703 $ 67,044
Share transfers between classes 8,838,263 233,869
Distributions reinvested 60,330 1,616
Share repurchases (4,262) (115)
Early repurchase deduction - 1
Net increase (decrease) 11,391,034 $ 302,415
CLASS D
Subscriptions 17,454,736 $ 460,484
Share transfers between classes (8,838,778) (233,883)
Distributions reinvested 1,907,689 50,216
Share repurchases (903,346) (24,167)
Early repurchase deduction - 4
Net increase (decrease) 9,620,301 $ 252,654
CLASS S
Subscriptions - $ -
Share transfers between classes 515 14
Distributions reinvested - -
Share repurchases - -
Early repurchase deduction - -
Net increase (decrease) 515 $ 14
Total net increase (decrease) 21,011,850 $ 555,083
The following table summarizes transactions in Common Shares during the year ended December 31, 2024:
Shares Amount
CLASS D
Subscriptions 25,590,878 $ 656,237
Share transfers between classes - -
Distributions reinvested 398,126 10,413
Share repurchases (904,819) (23,516)
Early repurchase deduction - 456
Net increase (decrease) 25,084,185 $ 643,590
Distributions and Distribution Reinvestment
The following tables summarize our distributions declared and payable for the year ended December 31, 2025 (dollar amounts in thousands, except per share amounts), and the record date for each distribution was the last calendar date of the month in which such distribution was declared:
Class I
Declaration Date Payment Date Base Distribution Per Share Special Distribution Per Share Total Distribution Per Share Distribution Amount
July 23, 2025 October 31, 2025 $ 0.1380 $ - $ 0.1380 $ 1,098
August 26, 2025 October 31, 2025 0.1380 - 0.1380 1,136
September 24, 2025 October 29, 2025 0.1380 - 0.1380 1,297
September 24, 2025 October 31, 2025 - 0.1000 0.1000 940
October 27, 2025 January 30, 2026 0.1380 - 0.1380 1,366
November 26, 2025 January 30, 2026 0.1390 - 0.1390 1,391
December 24, 2025 January 28, 2026 0.1390 - 0.1390 1,584
December 24, 2025 January 30, 2026 - 0.1000 0.1000 1,139
Total $ 0.8300 $ 0.2000 $ 1.0300 $ 9,951
Class D
Declaration Date Payment Date
Base Distribution Per Share(1)
Special Distribution Per Share
Total Distribution Per Share(1)
Distribution Amount
January 29, 2025 April 30, 2025 $ 0.1340 $ - $ 0.1340 $ 3,620
February 26, 2025 April 30, 2025 0.1340 - 0.1340 3,777
March 27, 2025 April 28, 2025 0.1340 - 0.1340 4,142
March 27, 2025 April 30, 2025 - 0.1000 0.1000 3,091
April 25, 2025 July 31, 2025 0.1326 - 0.1326 4,562
May 28, 2025 July 31, 2025 0.1324 - 0.1324 4,814
June 24, 2025 July 29, 2025 0.1326 - 0.1326 4,931
June 24, 2025 July 31, 2025 - 0.1500 0.1500 5,579
July 23, 2025 October 31, 2025 0.1324 - 0.1324 4,025
August 26, 2025 October 31, 2025 0.1324 - 0.1324 4,178
September 24, 2025 October 29, 2025 0.1325 - 0.1325 4,200
September 24, 2025 October 31, 2025 - 0.1000 0.1000 3,170
October 27, 2025 January 30, 2026 0.1323 - 0.1323 4,396
November 26, 2025 January 30, 2026 0.1335 - 0.1335 4,600
December 24, 2025 January 28, 2026 0.1333 - 0.1333 4,678
December 24, 2025 January 30, 2026 - 0.1000 0.1000 3,510
Total $ 1.5960 $ 0.4500 $ 2.0460 $ 67,273

Class S
Declaration Date Payment Date
Base Distribution Per Share(1)
Special Distribution Per Share
Total Distribution Per Share(1)
Distribution Amount
July 23, 2025 October 31, 2025 $ 0.1189 $ - $ 0.1189 $ 0
August 26, 2025 October 31, 2025 0.1188 - 0.1188 0
September 24, 2025 October 29, 2025 0.1194 - 0.1194 0
September 24, 2025 October 31, 2025 - 0.1000 0.1000 0
October 27, 2025 January 30, 2026 0.1187 - 0.1187 0
November 26, 2025 January 30, 2026 0.1202 - 0.1202 0
December 24, 2025 January 28, 2026 0.1195 - 0.1195 0
December 24, 2025 January 30, 2026 - 0.1000 0.1000 0
Total $ 0.7155 $ 0.2000 $ 0.9155 $ 0
(1)Base distributions per share are net of shareholder servicing and/or distribution fees. The Managing Dealer agreed to waive the shareholder servicing and/or distribution fee from the Initial Closing through March 31, 2025.
The following tables summarize our distributions declared and payable for the year ended December 31, 2024 (dollar amounts in thousands, except per share amounts), and the record date for each distribution was the last calendar date of the month in which such distribution was declared:
Class D
Declaration Date Payment Date Base Distribution Per Share Special Distribution Per Share Total Distribution Per Share Distribution Amount
April 30, 2024 July 31, 2024 $ 0.1000 $ - $ 0.1000 $ 883
May 29, 2024 July 31, 2024 0.1310 - 0.1310 1,634
June 26, 2024 July 31, 2024 0.1320 - 0.1320 2,059
July 24, 2024 October 31, 2024 0.1320 - 0.1320 2,430
August 27, 2024 October 31, 2024 0.1330 - 0.1330 2,678
September 26, 2024 October 28, 2024 0.1330 - 0.1330 2,845
September 26, 2024 October 31, 2024 - 0.2000 0.2000 4,278
October 23, 2024 January 30, 2025 0.1330 - 0.1330 3,156
November 27, 2024 January 28, 2025 0.1330 - 0.1330 3,287
November 27, 2024 January 30, 2025 - 0.4000 0.4000 9,889
December 23, 2024 January 28, 2025 0.1340 - 0.1340 3,483
December 23, 2024 January 30, 2025 - 0.3500 0.3500 9,096
Total $ 1.1610 $ 0.9500 $ 2.1110 $ 45,718
With respect to distributions, we have adopted an "opt out" distribution reinvestment plan for shareholders. As a result, in the event of a declared cash distribution or other distribution, each shareholder that has not "opted out" of the distribution reinvestment plan will have their distributions automatically reinvested in additional shares rather than receiving cash distributions. Shareholders who receive distributions in the form of shares will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.
Sources of distributions, other than net investment income and realized gains on a U.S. GAAP basis, include required adjustments to U.S. GAAP net investment income in the current period to determine taxable income available for distributions. The following table reflects the sources of cash distributions on a U.S. GAAP basis that we declared on our Common Shares during the year ended December 31, 2025:
Class I Class D Class S
Source of Distribution Per Share Amount Per Share Amount Per Share Amount
Net investment income $ 1.0300 $ 9,951 $ 2.0460 $ 67,273 $ 0.9155 $ 0
Net realized gains - - - - - -
Total $ 1.0300 $ 9,951 $ 2.0460 $ 67,273 $ 0.9155 $ 0
The following table reflects the sources of cash distributions on a U.S. GAAP basis that we declared on our Common Shares during the year ended December 31, 2024:
Class D
Source of Distribution Per Share Amount
Net investment income $ 2.1110 $ 45,718
Net realized gains - -
Total $ 2.1110 $ 45,718
For additional information on our distributions and dividend reinvestment plan, see "Note 9. Net Assets" to the consolidated financial statements.
Share Repurchase Program
We have commenced a share repurchase program in which we intend to repurchase, in each quarter, up to 5% of our Common Shares outstanding (by number of shares) as of the close of the previous calendar quarter. Our Board may amend, suspend or terminate the share repurchase program at any time in its discretion. As a result, share repurchases may not be available each quarter. Upon a suspension of our share repurchase program, our Board will consider at least quarterly whether the continued suspension of our share repurchase program remains in our best interest and the best interest of our shareholders. However, our Board is not required to authorize the recommencement of our share repurchase program within any specified period of time. Our Board may also determine to terminate our share repurchase program if required by applicable law or in connection with a transaction in which our shareholders receive liquidity for their Common Shares, such as a sale or merger of us or listing of our Common Shares on a national securities exchange.
Under the share repurchase program, to the extent we offer to repurchase shares in any particular quarter, we expect to repurchase shares pursuant to tender offers each quarter using a purchase price equal to the NAV per share as of the last calendar day of the applicable quarter, except that shares that have not been outstanding for at least one year (or, in the case of shareholders who purchased shares in the Initial Closing, until at least March 31, 2025) will be repurchased at 98% of the applicable NAV per share (the "Early Repurchase Deduction"). The one-year holding period is measured as of the subscription closing date immediately following the prospective repurchase date. The Early Repurchase Deduction may be waived, at our discretion, in the case of repurchase requests arising from the death, divorce or qualified disability of the holder. The Early Repurchase Deduction will be retained by us for the benefit of remaining shareholders. We intend to conduct the repurchase offers in accordance with the requirements of Rule 13e-4 promulgated under the Exchange Act and the 1940 Act. All shares purchased by us pursuant to the terms of each tender offer will be retired and thereafter will be authorized and unissued shares.
The following table summarizes the share repurchases completed during the year ended December 31, 2025:
Repurchase Deadline Request
Percentage of
Outstanding Shares We Offered to Repurchase(1)
Repurchase Pricing Date
Amount Repurchased
(all classes)(2)
Number of Shares Repurchased
(all classes)
Percentage of Outstanding Shares Repurchased(1)
March 4, 2025 5.00 % March 31, 2025 $ - - - %
May 30, 2025 5.00 % June 30, 2025 $ 10,734 405,989 1.31 %
August 29, 2025 5.00 % September 30, 2025 $ 2,817 105,214 0.29 %
December 2, 2025 5.00 % December 31, 2025 $ 10,731 396,405 0.97 %
The following table summarizes the share repurchase completed during the year ended December 31, 2024:
Repurchase Deadline Request
Percentage of Outstanding Shares the Company Offered to Repurchase(1)
Repurchase Pricing Date
Amount Repurchased(2)
Number of Shares Repurchased
Percentage of Outstanding Shares Repurchased(1)
August 29, 2024 5.00 % September 30, 2024 $ - - - %
December 2, 2024 5.00 % December 31, 2024 $ 23,516 904,819 4.23 %
(1)Percentage is based on total shares as of the close of the previous calendar quarter. All repurchase requests were satisfied in full.
(2)Amounts not inclusive of Early Repurchase Deduction, if applicable.
For additional information on our share repurchases see "Note 9. Net Assets" to the consolidated financial statements.
Borrowings
As of December 31, 2025 and December 31, 2024, we had an aggregate principal amount of $928.7 million and $289.8 million, respectively, of debt outstanding. Additionally, as of December 31, 2025 and December 31, 2024, the unused portion of the Revolving Credit Facility was $546.3 million and $360.2 million, respectively.

A summary of our contractual payment obligations under our Revolving Credit Facility and unsecured notes as of December 31, 2025, is as follows:
December 31, 2025
Total Less than 1 year 1-3 years 3-5 years After 5 years
Revolving Credit Facility $ 578,709 $ - $ - $ 578,709 $ -
August 2028 Notes 150,000 - 150,000 - -
August 2030 Notes 200,000 - - 200,000 -
Total $ 928,709 $ - $ 150,000 $ 778,709 $ -
For additional information on our debt obligations see "Note 7. Borrowings" to the consolidated financial statements.
Off-Balance Sheet Arrangements
Portfolio Company Commitments
Our investment portfolio contains and is expected to continue to contain debt investments which are in the form of lines of credit or delayed draw commitments, which require us to provide funding when requested by portfolio companies in accordance with underlying loan agreements. As of December 31, 2025 and 2024, we had unfunded delayed draw term loans, revolvers, and structured finance obligationswith an aggregate principal amount of $247.4million and $85.4 million, respectively.
Warehousing Transactions
We entered into warehouse transactions whereby we agreed, subject to certain conditions, to purchase certain assets from parties unaffiliated with HPS (the "Warehousing Transactions"). Such warehousing transactions were designed to assist us in deploying capital upon receipt of subscriptions. The portfolio investments primarily consisted of newly originated, privately negotiated senior secured term loans and junior capital commitments to middle market companies consistent with our investment strategy. For additional information, see "Note 8. Commitment and Contingencies" to the consolidated financial statements.
Other Commitments and Contingencies
From time to time, we may become a party to certain legal proceedings incidental to the normal course of our business. At December 31, 2025, management is not aware of any material pending or threatened litigation.
Related-Party Transactions
We entered into a number of business relationships with affiliated or related parties, including the following:
•the Investment Advisory Agreement;
•the Administration Agreement;
•the Expense Support Agreement; and
•the Managing Dealer Agreement
In addition to the aforementioned agreements, we and affiliates of the Adviser have received an exemptive order from the SEC that permits us, among other things, to co-invest with certain other persons, including certain affiliates of the Adviser and certain funds and accounts managed and controlled by the Adviser and its affiliates, subject to certain terms and conditions and in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. For additional information, see "Note 3. Fees, Expenses, Agreements and Related Party Transactions" to the consolidated financial statements.
Recent Developments
See "Item 8. Consolidated Financial Statements - Notes to Consolidated Financial Statements - Note 12. Subsequent Events"for a summary of recent developments.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires management 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 materially.
For a description of our critical accounting policies, see "Note 2. Significant Accounting Policiesin our consolidated financial statements included in this report. We consider the most significant accounting policies to be those related to our Investments, Revenue Recognition, Distributions, and Income Taxes. We consider the most significant critical estimate to be the fair value measurement of investments. The critical accounting policies and estimates should be read in connection with our risk factors listed under "Risk Factors" in Part I, Item 1A of this annual report on Form 10-K.
Investments and Fair Value Measurements
Consistent with U.S. GAAP and the 1940 Act, we conduct a valuation of our investments, pursuant to which our NAV is determined. Our investments are valued on a quarterly basis, or more frequently if required under the 1940 Act. The determination of fair value involves subjective judgments and estimates. The majority of investments are not quoted or traded in an active market, and as such, their fair values are determined using valuation techniques, primarily discounted cash flows, and to a lesser extent, market multiples and recent comparable transactions. The most significant inputs in applying the discounted cash flow approach and the market multiples approach are the selected discount rates and multiples, respectively. The selection of these inputs is based on a combination of factors that are specific to the underlying portfolio companies such as financial performance and certain factors that are observable in the market, such as current interest rates. Accordingly, the notes to our consolidated financial statements express the uncertainty with respect to the possible effect of these valuations, and any change in these valuations on the consolidated financial statements. For further details of our investments and fair value measurement accounting policy, see "Note 2. Significant Accounting Policies-Investments"and "Note 5. Fair Value Measurements".
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