Commonwealth Credit Partners BDC I Inc.
03/12/2026 | Press release | Distributed by Public on 03/12/2026 15:20
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 information in management's discussion and analysis of financial condition and results of operations relates to Commonwealth Credit Partners BDC I, Inc. (collectively, "we", "us", "our", or the "Company").
Forward Looking Statements
The information contained in this section should be read in conjunction with the financial data and consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K ("the Annual Report"). Some of the statements in this Annual Report (including in the following discussion) constitute forward-looking statements, which relate to future events or our future performance or our financial condition.
Forward-looking statements are identified by their use of such terms and phrases such as "anticipate", "believe", "continue", "could", "estimate", "expect", "intend", "may", "plan", "potential", "project", "seek", "should", "target", "will", "would" or similar expressions. Actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors set forth inPart I-Item 1A.-Risk Factorscontained in this Annual Report. We have based the forward-looking statements included in this Annual Report on information available to us on the date of this Annual Report. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we undertake no obligation to revise or update any forward-looking statements, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the U.S. Securities and Exchange Commission (the "SEC"), including annual reports on Form 10-K, registration statements on Form 10, quarterly reports on Form 10-Q and current reports on Form 8-K.
Overview
The Company is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company (a "BDC") under the Investment Company Act of 1940, as amended (the "1940 Act") and has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually thereafter, as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The Company was formed on January 15, 2021 ("Inception Date") as a Delaware corporation. The Company commenced investment operations on August 17, 2021.
The Company is managed by the Investment Adviser, a Delaware limited liability company and an affiliate of Comvest Capital Advisors LLC, Comvest Credit Advisors LLC, Comvest Credit Managers, LLC (collectively with their affiliates, "Comvest"), and Manulife Financial Corporation ("Manulife," and collectively with Comvest and their affiliates, "Manulife | Comvest Credit Partners"). The Investment Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended ("Advisers Act"). The Investment Adviser oversees the management of the Company's activities and is responsible for making investment decisions with respect to the Company's portfolio.
The Company's investment objective is to generate both current income and capital appreciation by investing in middle-market companies in a wide range of industries primarily structured as senior credit facilities, and to a lesser extent, junior credit facilities. The Company also may purchase interests in loans through secondary market transactions.
Macroeconomic Market Developments
The capital markets are subject to fluctuations caused by various external factors such as changes in the interest-rate environment, inflationary pressures, evolving geopolitical tensions, and broader economic conditions, among other factors. These macroeconomic developments are outside our control and could require us to adjust our plan of operations, and impact our financial position, results of operations or cash flows in the future. We monitor macroeconomic market developments and their related impact to our business, including impacts to our portfolio companies, employees, due diligence and underwriting processes, and the broader financial markets.
While our portfolio is not immune to the impact of macroeconomic events, we believe we and our portfolio are well positioned to manage the current environment. Given the unpredictability and fluidity of the macroeconomic market, neither our management nor our Board is able to predict the full impact of the macroeconomic events on our business, future results of operations, financial position, or cash flows. For additional information, see "Item 1A. Risk Factors" in this Annual Report.
Portfolio and Investment Activity
During the year ended December 31, 2025, we made $119.1 million of investments in new portfolio companies and had $100.8 million in aggregate amount of sales, restructurings, and repayments, resulting in net investments of $18.3 million for the period. The total portfolio of debt investments at fair value consisted of 98.9% bearing variable interest rates and 1.1% bearing fixed interest rates.
During the year ended December 31, 2024, we made $135.7 million of investments in new portfolio companies and had $99.2 million in aggregate amount of sales, restructurings, and repayments, resulting in net investments of $36.5 million for the period. The total portfolio of debt investments at fair value consisted of 100% bearing variable interest rates and 0% bearing fixed interest rates.
Our portfolio composition, based on fair value at December 31, 2025 was as follows. The weighted average current yield for the total portfolio is based on the stated coupon rates of both performing and non-accrual investments.
|
Percentage of Total |
Weighted Average |
||||||||
|
First Lien Senior Secured |
98.2 |
% |
9.5 |
% |
|||||
|
Equity |
0.9 |
- |
|||||||
|
Cash equivalents |
0.9 |
- |
|||||||
|
Total |
100.0 |
% |
9.5 |
% |
|||||
Our portfolio composition, based on fair value at December 31, 2024 was as follows. The weighted average current yield for the total portfolio is based on the stated coupon rates of both performing and non-accrual investments.
|
Percentage of Total |
Weighted Average |
||||||||
|
First Lien Senior Secured |
98.2 |
% |
10.6 |
% |
|||||
|
Equity |
0.9 |
- |
|||||||
|
Cash equivalents |
0.9 |
- |
|||||||
|
Total |
100.0 |
% |
10.6 |
% |
|||||
The following table shows our portfolio and investment activity for the years ended December 31, 2025 and 2024:
|
Year ended December 31, |
||||||||
|
(in millions) |
2025 |
2024 |
||||||
|
New investments |
$ |
119.1 |
$ |
135.7 |
||||
|
Non-cash investment income |
3.5 |
1.9 |
||||||
|
Debt repayments in existing portfolio companies |
(100.3 |
) |
(99.2 |
) |
||||
|
Sales/restructurings of securities in portfolio companies |
(0.5 |
) |
- |
|||||
|
Change in unrealized gain on portfolio companies |
13.4 |
13.2 |
||||||
|
Change in unrealized loss on portfolio companies |
(29.8 |
) |
(22.7 |
) |
||||
As of December 31, 2025, the Company's top five industry concentrations were Consumer Services, Health Care Equipment & Services, Financial Services, Media & Entertainment, and Software & Services. On December 31, 2025, our portfolio consisted of 67 portfolio companies and was invested 98.2% in first lien loans and 0.9% in equities. The fair value of our investments was approximately $648.1 million on December 31, 2025.
As of December 31, 2024, the Company's top five industry concentrations were Consumer Services, Health Care Equipment & Services, Financial Services, Media & Entertainment, and Software & Services. On December 31, 2024, our portfolio consisted of 63 portfolio companies and was invested 98.7% in first lien loans and 1.3% in equities. The fair value of our investments was approximately $644.2 million on December 31, 2024.
The following summarizes our portfolio company investments and the industries in which we were invested as of December 31, 2025, calculated as a percentage of fair value as of December 31, 2025:
|
Portfolio Company |
Investments and Cash Equivalents at Fair Value |
Percentage of Total Investments at Fair Value |
||||||
|
190 Octane Financing, LLC |
$ |
12,169 |
1.9 |
% |
||||
|
190 Octane Holdings, LLC |
- |
0.0 |
% |
|||||
|
Abea Acquisition, Inc. |
11,953 |
1.8 |
% |
|||||
|
ACT Acquisition Intermediate Holdco, LLC |
7,759 |
1.2 |
% |
|||||
|
AIDC IntermediateCo 2, LLC |
27,863 |
4.3 |
% |
|||||
|
Allbridge, LLC |
2,136 |
0.3 |
% |
|||||
|
Allied OMS Intermediate Company, LLC |
9,769 |
1.5 |
% |
|||||
|
Aspire General Holding Company LLC |
19,993 |
3.1 |
% |
|||||
|
Atlas US Buyer, LLC |
12,555 |
1.9 |
% |
|||||
|
Atlas US Holdings, LP |
226 |
0.0 |
% |
|||||
|
Batteries Plus Holding Corporation |
16,129 |
2.5 |
% |
|||||
|
BHP Management Holdings, LLC |
20,087 |
3.1 |
% |
|||||
|
Billhighway, LLC |
3,763 |
0.6 |
% |
|||||
|
Cardiology Management Holdings, LLC |
16,898 |
2.6 |
% |
|||||
|
Cardiology Partners Co., L.P. |
113 |
0.0 |
% |
|||||
|
CAS Acquisition, LLC |
20,573 |
3.1 |
% |
|||||
|
CheckedUp, Inc |
12,704 |
1.9 |
% |
|||||
|
CTM Acquisition, LLC |
- |
0.0 |
% |
|||||
|
CTM Group, Inc. |
18,777 |
2.9 |
% |
|||||
|
Discovery SL Management, LLC |
4,358 |
0.7 |
% |
|||||
|
Drive Assurance Corporation |
5,090 |
0.8 |
% |
|||||
|
EEP-EPS Fund I-A, LP - Series A-1 Preferred Units |
177 |
0.0 |
% |
|||||
|
Engineered Films Acquisition Inc. |
19,206 |
2.9 |
% |
|||||
|
EPS Operations, LLC |
17,964 |
2.7 |
% |
|||||
|
Fiesta Holdings, LLC |
6,666 |
1.1 |
% |
|||||
|
Firebirds Buyer, LLC |
- |
0.0 |
% |
|||||
|
Firebirds Intermediate Holdings I, LLC |
561 |
0.1 |
% |
|||||
|
Hasa Acquisition, LLC |
15,800 |
2.4 |
% |
|||||
|
Hornblower Sub LLC |
4,317 |
0.7 |
% |
|||||
|
Juvare, LLC |
9,994 |
1.5 |
% |
|||||
|
Kemper Sports Management Holdings, LLC Equity |
1,225 |
0.2 |
% |
|||||
|
Kemper Sports Management, LLC |
23,137 |
3.5 |
% |
|||||
|
Kent Water Sports Holdings, LLC |
8,203 |
1.3 |
% |
|||||
|
MerchantWise Solutions, LLC |
11,715 |
1.8 |
% |
|||||
|
Military Retail Solutions, LLC |
15,331 |
2.3 |
% |
|||||
|
Narcote, LLC |
7,495 |
1.1 |
% |
|||||
|
National Debt Relief, LLC |
26,236 |
4.0 |
% |
|||||
|
Oak Dental Partners |
16,894 |
2.6 |
% |
|||||
|
Oak Dental Partners Holding Company, LLC |
489 |
0.1 |
% |
|||||
|
OAO Acquisitions, Inc. |
7,476 |
1.1 |
% |
|||||
|
OmniMax International, LLC |
4,982 |
0.8 |
% |
|||||
|
OneCare Media, LLC |
4,496 |
0.7 |
% |
|||||
|
OpCo Borrower, LLC |
5,196 |
0.8 |
% |
|||||
|
Pansophic Learning US, LLC |
15,101 |
2.3 |
% |
|||||
|
PDDS Holdco, Inc. |
7,722 |
1.2 |
% |
|||||
|
PJW Ultimate Holdings, LLC |
13,613 |
2.1 |
% |
|||||
|
Restaurant Holding Company, LLC |
20,312 |
3.1 |
% |
|||||
|
Rushmore Intermediate II, LLC |
16,771 |
2.6 |
% |
|||||
|
Rushmore Lender Co-Invest Blocker, LLC |
393 |
0.1 |
% |
|||||
|
S4T Holdings Corp. |
32,673 |
5.0 |
% |
|||||
|
Sarasota US Intermediate, Inc. |
23,700 |
3.6 |
% |
|||||
|
SDB Partners Holdco, LLC |
- |
0.0 |
% |
|||||
|
Sea-K Investors, LLC |
- |
0.0 |
% |
|||||
|
Select Rehabilitation, LLC |
13,384 |
2.0 |
% |
|||||
|
Senior Support Holdings (Franchise) Acquisition, Inc. |
6,044 |
0.9 |
% |
|||||
|
Portfolio Company |
Investments and Cash Equivalents at Fair Value |
Percentage of Total Investments at Fair Value |
||||||
|
Senior Support Holdings, LP |
733 |
0.1 |
% |
|||||
|
Spartan CP, LLC |
7,888 |
1.2 |
% |
|||||
|
The Mutual Group LLC |
3,349 |
0.5 |
% |
|||||
|
Total Fleet Buyer, LLC |
8,343 |
1.3 |
% |
|||||
|
TVG OCM III (FT) Blocker, LLC |
- |
0.0 |
% |
|||||
|
VardimanBlack Holdings, LLC |
18,524 |
2.8 |
% |
|||||
|
Vecta Holdings, LLC |
5,160 |
0.8 |
% |
|||||
|
Vistria ESS Holdings, LLC |
792 |
0.2 |
% |
|||||
|
West Creek Financial SPV |
424 |
0.1 |
% |
|||||
|
West Creek Financial SPV- Debt Facility VI, LLC |
8,711 |
1.3 |
% |
|||||
|
Whitestone Home Furnishings, LLC |
13,943 |
2.1 |
% |
|||||
|
Cash Equivalents |
5,417 |
0.8 |
% |
|||||
|
Total |
$ |
653,472 |
100.0 |
% |
||||
|
Industry |
Investments and Cash Equivalents at |
Percentage of |
||||||
|
Health Care Equipment & Services |
$ |
129,653 |
19.8 |
% |
||||
|
Consumer Services |
136,325 |
20.9 |
% |
|||||
|
Financial Services |
68,725 |
10.5 |
% |
|||||
|
Media & Entertainment |
61,877 |
9.5 |
% |
|||||
|
Software & Services |
61,057 |
9.3 |
% |
|||||
|
Capital Goods |
55,807 |
8.5 |
% |
|||||
|
Commercial & Professional Services |
38,625 |
5.9 |
% |
|||||
|
Insurance |
28,432 |
4.4 |
% |
|||||
|
Consumer Durables & Apparel |
22,146 |
3.4 |
% |
|||||
|
Technology Hardware & Equipment |
16,129 |
2.5 |
% |
|||||
|
Consumer Staples Distribution & Retail |
15,331 |
2.4 |
% |
|||||
|
Materials |
7,495 |
1.1 |
% |
|||||
|
Cash Equivalents |
5,417 |
0.8 |
% |
|||||
|
Transportation |
4,317 |
0.7 |
% |
|||||
|
Telecommunication Services |
2,136 |
0.3 |
% |
|||||
|
$ |
653,472 |
100.0 |
% |
|||||
The following summarizes our portfolio company investments and the industries in which we were invested as of December 31, 2024, calculated as a percentage of fair value as of December 31, 2024:
|
Portfolio Company(1) |
Investments and Cash Equivalents at Fair Value |
Percentage of Total Investments at Fair Value |
||||||
|
190 Octane Financing, LLC |
$ |
12,730 |
2.0 |
% |
||||
|
190 Octane Holdings, LLC |
43 |
0.0 |
% |
|||||
|
Abea Acquisition, Inc. |
12,103 |
1.9 |
% |
|||||
|
AccessOne Medcard, Inc. |
11,470 |
1.8 |
% |
|||||
|
ACT Acquisition Intermediate Holdco, LLC |
8,024 |
1.2 |
% |
|||||
|
AIDC IntermediateCo 2, LLC |
28,150 |
4.3 |
% |
|||||
|
Allbridge, LLC |
2,158 |
0.3 |
% |
|||||
|
Atlas US Buyer, LLC |
12,793 |
2.0 |
% |
|||||
|
Atlas US Holdings, LP |
436 |
0.1 |
% |
|||||
|
Batteries Plus Holding Corporation |
16,294 |
2.5 |
% |
|||||
|
BHP Management Holdings, LLC |
20,396 |
3.1 |
% |
|||||
|
Billhighway, LLC |
3,763 |
0.6 |
% |
|||||
|
Cardiology Management Holdings, LLC |
12,212 |
1.9 |
% |
|||||
|
Cardiology Partners Co., L.P. |
124 |
0.0 |
% |
|||||
|
CAS Acquisition, LLC |
21,108 |
3.2 |
% |
|||||
|
CheckedUp, Inc |
12,255 |
1.9 |
% |
|||||
|
CTM Acquisition, LLC |
40 |
0.0 |
% |
|||||
|
CTM Group, Inc. |
18,219 |
2.8 |
% |
|||||
|
Discovery SL Management, LLC |
2,995 |
0.5 |
% |
|||||
|
Drive Assurance Corporation |
6,414 |
1.0 |
% |
|||||
|
EEP-EPS Fund I-A, LP - Series A-1 Preferred Units |
621 |
0.1 |
% |
|||||
|
Engineered Films Acquisition Inc. |
20,515 |
3.2 |
% |
|||||
|
EPS Operations, LLC |
17,173 |
2.6 |
% |
|||||
|
Fiesta Holdings, LLC |
7,740 |
1.2 |
% |
|||||
|
Firebirds Buyer, LLC |
23,613 |
3.6 |
% |
|||||
|
Firebirds Intermediate Holdings I, LLC |
508 |
0.1 |
% |
|||||
|
Hasa Acquisition, LLC |
15,193 |
2.2 |
% |
|||||
|
Hornblower Sub LLC |
4,286 |
0.7 |
% |
|||||
|
Kemper Sports Management Holdings, LLC Equity |
1,521 |
0.2 |
% |
|||||
|
Kemper Sports Management, LLC |
23,137 |
3.6 |
% |
|||||
|
Kent Water Sports Holdings, LLC |
9,586 |
1.5 |
% |
|||||
|
MerchantWise Solutions, LLC |
12,141 |
1.9 |
% |
|||||
|
Military Retail Solutions, LLC |
15,736 |
2.4 |
% |
|||||
|
Mollie Funding II, LLC |
8,689 |
1.3 |
% |
|||||
|
Narcote, LLC |
7,656 |
1.2 |
% |
|||||
|
National Debt Relief, LLC |
26,078 |
4.0 |
% |
|||||
|
Oak Dental Partners |
16,726 |
2.6 |
% |
|||||
|
Oak Dental Partners Holding Company, LLC |
401 |
0.1 |
% |
|||||
|
OAO Acquisitions, Inc. |
7,590 |
1.2 |
% |
|||||
|
OmniMax International, LLC |
2,658 |
0.4 |
% |
|||||
|
OneCare Media, LLC |
8,534 |
1.3 |
% |
|||||
|
OpCo Borrower, LLC |
2,150 |
0.3 |
% |
|||||
|
Pansophic Learning US, LLC |
15,621 |
2.4 |
% |
|||||
|
PDDS Holdco, Inc. |
16,864 |
2.6 |
% |
|||||
|
PJW Ultimate Holdings, LLC |
14,839 |
2.3 |
% |
|||||
|
Priority Holdings, LLC |
3,990 |
0.6 |
% |
|||||
|
Restaurant Holding Company, LLC |
20,871 |
3.2 |
% |
|||||
|
Rushmore Intermediate II, LLC |
15,966 |
2.5 |
% |
|||||
|
Rushmore Lender Co-Invest Blocker, LLC |
831 |
0.1 |
% |
|||||
|
S4T Holdings Corp. |
33,111 |
5.1 |
% |
|||||
|
SDB Partners Holdco, LLC |
- |
0.0 |
% |
|||||
|
Sea-K Investors, LLC |
- |
0.0 |
% |
|||||
|
Portfolio Company(1) |
Investments and Cash Equivalents at Fair Value |
Percentage of Total Investments at Fair Value |
||||||
|
Select Rehabilitation, LLC |
15,225 |
2.3 |
% |
|||||
|
Senior Support Holdings (Franchise) Acquisition, Inc. |
4,258 |
0.7 |
% |
|||||
|
Senior Support Holdings, LP |
515 |
0.1 |
% |
|||||
|
Spartan CP, LLC |
6,833 |
1.1 |
% |
|||||
|
Total Fleet Buyer, LLC |
6,859 |
1.1 |
% |
|||||
|
TVG OCM III (FT) Blocker, LLC |
- |
0.0 |
% |
|||||
|
VardimanBlack Holdings, LLC |
24,970 |
3.8 |
% |
|||||
|
Vecta Holdings, LLC |
7,374 |
1.1 |
% |
|||||
|
Vistria ESS Holdings, LLC |
750 |
0.1 |
% |
|||||
|
West Creek Financial SPV- Debt Facility VI, LLC |
6,969 |
1.1 |
% |
|||||
|
Whitestone Home Furnishings, LLC |
14,386 |
2.2 |
% |
|||||
|
Cash Equivalents |
4,857 |
0.8 |
% |
|||||
|
Total |
$ |
649,068 |
100.0 |
% |
||||
(1)
The Company updated certain descriptions of its portfolio companies presented in the consolidated financial statements as of December 31, 2024 to align with the legal issuer name, where applicable. These updates had no impact on the Consolidated Statements of Assets and Liabilities as of December 31, 2024.
|
Industry(1) |
Investments and Cash Equivalents at |
Percentage of |
||||||
|
Consumer Services |
$ |
142,554 |
22.0 |
% |
||||
|
Health Care Equipment & Services |
113,774 |
17.5 |
% |
|||||
|
Financial Services |
91,533 |
14.1 |
% |
|||||
|
Media & Entertainment |
64,866 |
10.0 |
% |
|||||
|
Software & Services |
60,918 |
9.4 |
% |
|||||
|
Capital Goods |
52,815 |
8.1 |
% |
|||||
|
Commercial & Professional Services |
41,235 |
6.4 |
% |
|||||
|
Consumer Durables & Apparel |
23,972 |
3.7 |
% |
|||||
|
Technology Hardware & Equipment |
16,294 |
2.5 |
% |
|||||
|
Consumer Staples Distribution & Retail |
15,736 |
2.4 |
% |
|||||
|
Materials |
7,656 |
1.2 |
% |
|||||
|
Insurance |
6,414 |
1.0 |
% |
|||||
|
Cash Equivalents |
4,857 |
0.7 |
% |
|||||
|
Transportation |
4,286 |
0.7 |
% |
|||||
|
Telecommunication Services |
2,158 |
0.3 |
% |
|||||
|
$ |
649,068 |
100.0 |
% |
|||||
(1)
The Company reclassified certain industry groupings of its portfolio companies presented in the consolidated financial statements as of December 31, 2024 to align with Global Industry Classification Standards ("GICS"), where applicable. These updates had no impact on the Consolidated Statements of Assets and Liabilities as of December 31, 2024.
Portfolio Asset Quality
Our Investment Adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Investment Adviser grades the credit risk of all debt investments on a scale of 1 to 6 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio debt investment relative to the inherent risk at the time the original debt investment was made (i.e., at the time of acquisition), although it may also take into account under certain circumstances the performance of the portfolio company's business, the collateral coverage of the investment and other relevant factors.
|
Loan |
Summary Description |
|
|
Investments that are performing at or above expectations. No issues or foreseen issues on performance, covenants, liquidity, etc. The credit is expected to be repaid at or prior to maturity through available cash flow or to be refinanced. |
||
|
Investments that are performing substantially within our expectations, with the risks remaining neutral or favorable. All new loans are initially rated 2. The credit is expected to be repaid at or prior to maturity through available cash flow or to be refinanced by a third party. |
||
|
Investments that are performing below our expectations and that require closer monitoring, but where we expect no loss of investment return or principal. |
||
|
Investments that are performing below our expectations and for which risk has increased since the original investment. Although the loan is underperforming, there is not a high likelihood of any loss of principal or interest but there may be a possibility for equity returns, one-time fees or capitalized interest (if applicable). |
||
|
Investments that are performing substantially below our expectations and whose risks have increased substantially since the original investment. Typically, the borrower will be in default, or the loan will have been modified to address a default or the loan may be past due. |
||
|
Investments that are performing poorly; it is unlikely that the enterprise or asset values currently exceed the debt and/or material reduction in enterprise value is reasonably foreseen. |
The Investment Adviser focuses on downside protection by leveraging existing rights available under the credit documents; however, for investments that are significantly underperforming, which may need to be restructured, the Investment Adviser's workout team partners with the investment team and all material amendments, waivers and restructurings require the approval of a majority of the Investment Committee.
As of December 31, 2025, the weighted average risk rating of our investments based on fair value was 2.5. As of December 31, 2025, the Company had six portfolio companies on non-accrual status. Refer to Note 2-Summary of Significant Accounting Policies-for additional details regarding the Company's non-accrual policy.
|
Internal Performance Rating |
Investments at Fair Value |
Percentage of Total |
||||||
|
1 |
$ |
- |
0.0 |
% |
||||
|
2 |
487,829 |
75.2 |
% |
|||||
|
3 |
52,334 |
8.1 |
% |
|||||
|
4 |
75,424 |
11.6 |
% |
|||||
|
5 |
22,812 |
3.6 |
% |
|||||
|
6 |
9,656 |
1.5 |
% |
|||||
|
Total |
$ |
648,055 |
100.0 |
% |
||||
As of December 31, 2024, the weighted average risk rating of our investments based on fair value was 2.5. As of December 31, 2024, the Company had four portfolio companies on non-accrual status. Refer to Note 2-Summary of Significant Accounting Policies for additional details regarding the Company's non-accrual policy.
|
Internal Performance Rating |
Investments at Fair Value |
Percentage of Total |
||||||
|
1 |
$ |
33,861 |
5.2 |
% |
||||
|
2 |
395,234 |
61.4 |
% |
|||||
|
3 |
128,729 |
20.0 |
% |
|||||
|
4 |
56,829 |
8.8 |
% |
|||||
|
5 |
26,228 |
4.1 |
% |
|||||
|
6 |
3,330 |
0.5 |
% |
|||||
|
Total |
$ |
644,211 |
100.0 |
% |
||||
The following table shows the amortized cost and fair value of our performing and non-accrual investments as of December 31, 2025 and December 31, 2024.
|
December 31, 2025 |
December 31, 2024 |
|||||||||||||||
|
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
|||||||||||||
|
Performing |
$ |
606,722 |
$ |
603,418 |
$ |
614,567 |
$ |
614,653 |
||||||||
|
Non-accrual |
76,552 |
44,637 |
48,502 |
29,558 |
||||||||||||
|
Total |
$ |
683,274 |
$ |
648,055 |
$ |
663,069 |
$ |
644,211 |
||||||||
As of December 31, 2025 and 2024, certain of our investments were on non-accrual status, as reflected in the Schedule of Investments. A summary of our non-accrual assets as of December 31, 2025 and 2024, is provided below. Under U.S. Generally Accepted Accounting Principles ("GAAP"), we will not recognize cash and PIK interest income on such investments for financial reporting purposes.
|
December 31, 2025 |
December 31, 2024 |
|||||||||||||||||
|
Portfolio Company |
Date of Non-Accrual Status |
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
|||||||||||||
|
190 Octane Financing LLC Equity (1) |
7/1/2025 |
$ |
13,759 |
$ |
12,169 |
$ |
- |
$ |
- |
|||||||||
|
Kent Water Sports Holdings, LLC(1) |
10/1/2023 |
12,713 |
- |
12,713 |
3,330 |
|||||||||||||
|
OneCare Media, LLC(1) |
10/1/2024 |
13,379 |
4,496 |
14,157 |
8,534 |
|||||||||||||
|
Select Rehabilitation, LLC(1) |
10/1/2024 |
6,088 |
6,965 |
18,724 |
15,225 |
|||||||||||||
|
VardimanBlack Holdings, LLC(1) |
10/1/2023 |
22,192 |
15,847 |
2,908 |
2,469 |
|||||||||||||
|
Vecta Holdings, LLC |
4/1/2025 |
8,421 |
5,160 |
- |
- |
|||||||||||||
|
Total |
$ |
76,552 |
$ |
44,637 |
$ |
48,502 |
$ |
29,558 |
||||||||||
(1)
Only certain positions are on non-accrual status.
The following table shows the weighted average rate, spread over the reference rate of floating rate, fees of debt investments originated and restructured, and the weighted average rate of sales and payoffs of portfolio companies during the year ended December 31, 2025.
|
Weighted average rate of new investment fundings and restructurings |
8.96 |
% |
||
|
Weighted average spread over Reference Rate of new floating rate investment fundings and restructurings |
4.65 |
% |
||
|
Weighted average OID fees of new investment funding and restructurings |
0.90 |
% |
||
|
Weighted average rate of sales and payoffs of portfolio investments |
10.69 |
% |
The following table shows the weighted average rate, spread over the reference rate of floating rate, fees of debt investments originated and restructured, and the weighted average rate of sales and payoffs of portfolio companies during the year ended December 31, 2024.
|
Weighted average rate of new investment fundings and restructurings |
10.33 |
% |
||
|
Weighted average spread over Reference Rate of new floating rate investment fundings and restructurings |
5.46 |
% |
||
|
Weighted average OID fees of new investment funding and restructurings |
1.24 |
% |
||
|
Weighted average rate of sales and payoffs of portfolio investments |
11.84 |
% |
The amount of the portfolio in each risk rating may vary substantially from period to period resulting primarily from changes in the composition of the portfolio as a result of new investment, restructuring, repayment and exit activities. In addition, changes in the risk ratings may be made to reflect our expectation of performance and changes in investment values.
RESULTS OF OPERATIONS
Our operating results for the years ended December 31, 2025, 2024 and 2023 were as follows (dollars in thousands):
|
For the Year Ended December 31, |
|||||||||||||
|
2025 |
2024 |
2023 |
|||||||||||
|
Total investment income |
$ |
68,020 |
$ |
79,676 |
$ |
68,090 |
|||||||
|
Less: Net expenses |
17,449 |
18,008 |
15,051 |
||||||||||
|
Net investment income (loss) |
50,571 |
61,668 |
53,039 |
||||||||||
|
Net realized gains (losses) |
(4,208 |
) |
(6,262 |
) |
(4,054 |
) |
|||||||
|
Net change in unrealized gains (losses) |
(16,362 |
) |
(9,543 |
) |
(1,836 |
) |
|||||||
|
Increase (decrease) in net assets resulting from operations |
$ |
30,001 |
$ |
45,863 |
$ |
47,149 |
|||||||
Investment Income
Investment income for the years ended December 31, 2025, 2024 and 2023, were driven by deployment of capital, interest income from our investments, and an increasing invested balance. The decrease in investment income in 2025 can be primarily attributed to an increase in portfolio companies placed on non-accrual status in 2025, from 4 in 2024 to 6 in 2025, and a decrease in the average rates for the total debt portfolio. The composition of our investment income for the years ended December 31, 2025, 2024 and 2023 were as follows (dollars in thousands):
|
For the Year Ended December 31, |
|||||||||||||
|
2025 |
2024 |
2023 |
|||||||||||
|
Investment income from non-controlled, non-affiliated investments: |
|||||||||||||
|
Interest income |
62,964 |
76,248 |
66,418 |
||||||||||
|
Paid in kind interest income |
2,557 |
1,183 |
447 |
||||||||||
|
Fee income |
1,596 |
1,493 |
1,225 |
||||||||||
|
Investment income from non-controlled, affiliated investments: |
|||||||||||||
|
Paid in kind interest income |
903 |
752 |
- |
||||||||||
|
Total investment income |
$ |
68,020 |
$ |
79,676 |
$ |
68,090 |
|||||||
Operating Expenses
Net expenses decreased for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily driven by the decrease in interest expense which can be attributed to a decrease in average debt outstanding and cost of borrowing. This was partially offset by the increase in general and administrative expenses. The composition of our operating expenses for the years ended December 31, 2025, 2024 and 2023 were as follows (dollars in thousands):
|
For the Year Ended |
|||||||||||||
|
December 31, 2025 |
December 31, 2024 |
December 31, 2023 |
|||||||||||
|
Incentive fees |
$ |
1,615 |
$ |
1,591 |
$ |
2,141 |
|||||||
|
Management fees, net |
6,456 |
6,364 |
5,410 |
||||||||||
|
Interest expense |
6,510 |
7,730 |
5,731 |
||||||||||
|
Professional fees |
845 |
817 |
562 |
||||||||||
|
Directors' fees |
88 |
84 |
94 |
||||||||||
|
Other general and administrative expenses |
1,935 |
1,422 |
1,176 |
||||||||||
|
Incentive fee waiver |
- |
- |
(63 |
) |
|||||||||
|
Net expenses |
$ |
17,449 |
$ |
18,008 |
$ |
15,051 |
|||||||
Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses) on Investments
Net realized gains (losses) and net change in unrealized gains (losses) on investments for the years ended December 31, 2025, 2024 and 2023 were as follows (dollars in thousands):
|
For the Year Ended |
|||||||||||||
|
December 31, 2025 |
December 31, 2024 |
December 31, 2023 |
|||||||||||
|
Net realized gains (losses) |
|||||||||||||
|
Non-controlled, non-affiliated investments |
$ |
(4,208 |
) |
$ |
(6,262 |
) |
$ |
(4,054 |
) |
||||
|
Total net realized gains (losses) |
(4,208 |
) |
(6,262 |
) |
(4,054 |
) |
|||||||
|
Net change in unrealized gains (losses) on investments |
|||||||||||||
|
Non-controlled, non-affiliated investments |
(13,138 |
) |
(5,199 |
) |
(1,836 |
) |
|||||||
|
Non-controlled, affiliated investments |
(3,224 |
) |
(4,344 |
) |
- |
||||||||
|
Total net change in unrealized gains (losses) on investments |
(16,362 |
) |
(9,543 |
) |
(1,836 |
) |
|||||||
|
Net realized and unrealized gains (losses) |
$ |
(20,570 |
) |
$ |
(15,805 |
) |
$ |
(5,890 |
) |
||||
During the year ended December 31, 2025, an investment restructuring resulted in the exchange of $18.35 million of senior secured debt for two new tranches of senior secured debt with a fair market value of $13.14 million, leading to a realized loss of $4.48 million. During the year ended December 31, 2024, as a result of an investment restructuring, $9.27 million of senior secured debt was exchanged for equity with a fair market value of $2.91 million, resulting in a realized loss of $6.36 million.
Recent Developments
None.
Liquidity and Capital Resources
We generate cash from (1) drawing down capital in respect of Shares, (2) cash flows from investments and operations and (3) borrowings from banks or other lenders.
As of December 31, 2025, we are party to the Goldman Credit Facility, as described in Note 6-Borrowings.
Our primary uses of cash are (1) to originate investments in portfolio companies and other investments to comply with certain portfolio diversification requirements, (2) to fund the cost of operations (including expenses, the Management Fee and, to the extent permitted under the 1940 Act, any indemnification obligations), (3) debt service of any borrowings and (4) cash distributions to our stockholders.
Operating liquidity is our ability to meet our short-term liquidity needs. The following table presents our operating liquidity position as of December 31, 2025:
|
Cash and cash equivalents |
$ |
6,349 |
||
|
Unfunded portfolio company commitments |
(43,923 |
) |
||
|
Undrawn capital commitments |
156,571 |
|||
|
Outstanding principal on credit facility |
(101,000 |
) |
||
|
Total operational liquidity |
$ |
17,997 |
The following table presents our operating liquidity position as of December 31, 2024:
|
Cash and cash equivalents |
$ |
5,334 |
||
|
Unfunded portfolio company commitments |
(48,707 |
) |
||
|
Undrawn capital commitments |
186,571 |
|||
|
Outstanding principal on credit facility |
(111,100 |
) |
||
|
Total operational liquidity |
$ |
32,098 |
Taxation as a RIC
We have elected to be treated, and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code. As a RIC, we generally will not be subject to corporate-level U.S. federal income taxes on any income that we distribute as dividends for U.S. federal income tax purposes to our stockholders. To maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, in order to maintain RIC tax treatment, we must distribute to our stockholders,
for each tax year, an amount equal to at least 90.0% of our "investment company taxable income," which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gain over realized net long-term capital loss and determined without regard to any deduction for dividends paid.
Additionally, in order to avoid the imposition of a U.S. federal excise tax, we are required to distribute, in respect of each calendar year, dividends to our stockholders of an amount at least equal to the sum of 98.0% of our calendar year net ordinary income (taking into account certain deferrals and elections); 98.2% of our capital gain net income (adjusted for certain ordinary losses) for the one year period ending on October 31 of such calendar year; and any net ordinary income and capital gain net income for preceding calendar years that were not distributed during such calendar years and on which we previously did not incur any U.S. federal income tax. If we fail to qualify as a RIC for any reason and become subject to corporate tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions.
Related Party Transactions and Agreements
We have entered into a number of business relationships with affiliated or related parties, including the Investment Advisory Agreement and the Administration Agreement. In addition to the aforementioned agreements, we, the Investment Adviser, Comvest, Manulife and certain of their affiliates intend to rely on exemptive relief (the "Co-Investment Order") granted by the SEC to certain affiliates of Manulife to co-invest with other funds managed by our Investment Adviser, Comvest, Manulife or their affiliates in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors.
See "Item 8. Financial Statements and Supplementary Data-Notes to the Consolidated Financial Statements-Note 4. Related Party Transactions."
Distributions and Dividends
We have adopted a dividend reinvestment plan ("DRIP"), pursuant to which we reinvest all cash dividends declared by the Board on behalf of our stockholders who do not elect to receive their dividends in cash. As a result, if the Board authorizes, and we declare, a cash dividend or other distribution, then our stockholders who have not opted out of our DRIP will have their cash distributions (net of applicable withholding tax) automatically reinvested in additional shares, rather than receiving the cash dividend or other distribution. Stockholders who receive dividends and other distributions in the form of Shares generally are subject to the same U.S. federal tax consequences as investors who elect to receive their distributions in cash.
Distributions declared for the year ended December 31, 2025, totaled approximately $53.4 million.
The following table reflects distributions, including dividends and returns of capital, if any, per share that have been declared by our Board for the year ended December 31, 2025:
|
Fiscal Year 2025 |
Date Declared |
Record Date |
Payment Date |
Per Share Amount |
||||||
|
First Quarter |
March 26, 2025 |
March 26, 2025 |
March 27, 2025 |
$ |
26.00 |
|||||
|
Second Quarter |
June 26, 2025 |
June 26, 2025 |
June 27, 2025 |
$ |
22.00 |
|||||
|
Third Quarter |
September 26, 2025 |
September 26, 2025 |
September 29, 2025 |
$ |
17.50 |
|||||
|
Fourth Quarter |
December 26, 2025 |
December 26, 2025 |
December 29, 2025 |
$ |
23.50 |
|||||
Distributions declared for the year ended December 31, 2024, totaled approximately $62.1 million.
The following table reflects distributions, including dividends and returns of capital, if any, per share that have been declared by our Board for the year ended December 31, 2024:
|
Fiscal Year 2024 |
Date Declared |
Record Date |
Payment Date |
Per Share Amount |
||||||
|
First Quarter |
March 28, 2024 |
March 28, 2024 |
March 28, 2024 |
$ |
24.00 |
|||||
|
Second Quarter |
June 27, 2024 |
June 27, 2024 |
June 28, 2024 |
$ |
27.00 |
|||||
|
Third Quarter |
September 26, 2024 |
September 26, 2024 |
September 27, 2024 |
$ |
30.00 |
|||||
|
Fourth Quarter |
December 27, 2024 |
December 27, 2024 |
December 30, 2024 |
$ |
28.50 |
|||||
Distributions declared for the year ended December 31, 2023, totaled approximately $54.5 million.
The following table reflects distributions, including dividends and returns of capital, if any, per share that have been declared by our Board for the year ended December 31, 2023:
|
Fiscal Year 2023 |
Date Declared |
Record Date |
Payment Date |
Per Share Amount |
||||||
|
First Quarter |
March 27, 2023 |
March 27, 2023 |
March 28, 2023 |
$ |
22.80 |
|||||
|
Second Quarter |
June 27, 2023 |
June 27, 2023 |
June 28, 2023 |
$ |
24.20 |
|||||
|
Third Quarter |
September 27, 2023 |
September 28, 2023 |
September 28, 2023 |
$ |
25.00 |
|||||
|
Fourth Quarter |
December 27, 2023 |
December 28, 2023 |
December 28, 2023 |
$ |
36.00 |
|||||
We intend to pay quarterly distributions to our stockholders in amounts sufficient to qualify as and maintain our status as a RIC. We intend to distribute approximately all of our net investment income on a quarterly basis and substantially all of our taxable income on an annual basis, except that we may retain certain net capital gains for reinvestment.
Borrowings
We are only allowed to borrow money such that our asset coverage, which, as defined in the 1940 Act, measures the ratio of total assets less total liabilities not represented by senior securities to total borrowings, equals at least 150% after such borrowing, with certain limited exceptions. As a result, in addition to the foregoing 1940 Act restriction on leverage, we do not currently expect to borrow in excess of the lesser of 20% of our Aggregate Committed Capital and $130.0 million. We may in the future, though, determine to utilize a greater amount of leverage, including for investment purposes. As of December 31, 2025, we had $101.0 million par value of outstanding borrowings and our asset coverage ratio of total assets to total borrowings was 650.27%, compliant with the minimum asset coverage level of 150% generally required for a BDC by the 1940 Act.
Goldman Credit Facility
On August 11, 2021, we entered into a credit agreement (together with the exhibits and schedules thereto, the ''Goldman Credit Facility'') as the borrower and Goldman Sachs Bank USA ("Goldman Sachs") as the lender. The Goldman Credit Facility is structured as a revolving credit facility secured by the Capital Commitments of the Company's subscribed investors and certain related assets. As part of the Goldman Credit Facility, the Company's right to make capital calls of investors may be pledged as collateral to the lender, which will be able to call for capital contributions upon the occurrence of an event of default under such credit facility. To the extent such an event of default does occur, investors could therefore be required to fund any shortfall up to their remaining Capital Commitments, without regard to the underlying value of their investment. See "Item 1A.-Risk Factors-If we are unable to comply with the covenants or restrictions in our borrowings, our business could be materially adversely affected." On September 27, 2021, the Goldman Credit Facility was amended, pursuant to which the maximum loan amount was increased to the lesser of $130.0 million and the borrowing base (the "Borrowing Base").
The Goldman Credit Facility is uncommitted and matures on the earlier of (i) the date on which either the Company or lender provide written notice of termination to the other party and (ii) the date that is 30 days prior to the last date on which the Company may issue capital drawdowns to its investors. Under the Goldman Credit Facility, the Company is permitted to borrow up to the lesser of $130 million and the Borrowing Base. The Borrowing Base is based upon the unfunded capital commitments of certain subscribed investors in the Company that have been approved by Goldman Sachs and meet certain criteria. The advance rate for such investors is currently 90% but may be subject to modification. The Goldman Credit Facility contains certain customary affirmative and negative covenants and events of default.
The Goldman Credit Facility bears interest at a rate of Term SOFR plus 2.82% per annum.
Contractual Obligations
The following table shows our payment obligations for repayment of debt and other contractual obligations as of December 31, 2025 (dollars in thousands):
|
Total Aggregate Borrowing Capacity(1) |
Total Principal Outstanding |
|||||||
|
Goldman Sachs Credit Facility |
$ |
130,000 |
$ |
101,000 |
||||
|
Total |
$ |
130,000 |
$ |
101,000 |
||||
(1)
As of December 31, 2025, we had $29.0 million in unused borrowing capacity under the Goldman Credit Facility, subject to borrowing base limits.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Commitments
In the ordinary course of business, we may enter into future funding commitments. As of December 31, 2025 and 2024, we had unfunded commitments on revolving credit lines and delayed draw loans of $43.9 million and $48.7 million, respectively. We maintain sufficient financial resources to satisfy unfunded commitments, including cash on hand, undrawn capital commitments from our investors, and available borrowings to fund such unfunded commitments. Please refer to Note 7-Commitments and Contingencies in the notes to our consolidated financial statements for further detail of these unfunded commitments.
Significant Accounting Estimates and Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we will evaluate our estimates, including those related to the matters described below. Actual results could differ from those estimates.
While our significant accounting policies are also described in Note 2 of notes to our consolidated financial statements appearing elsewhere in this report, we believe the following accounting policies require the most significant judgment in the preparation of our consolidated financial statements.
Valuation of Portfolio Investments
The Investment Adviser values our portfolio investments on a quarterly basis, or more frequently if required under the 1940 Act. For purposes of the 1940 Act, the Board has designated the Investment Adviser as the Company's "valuation designee" under Rule 2a-5 under the 1940 Act (the "Valuation Designee"). The Board provides oversight of the Investment Adviser's fair value determinations of our portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded, those whose market prices are not readily available. Security transactions are accounted for on a trade date basis.
To the extent (i) Benefit Plan Investors hold 25% or more of our outstanding Shares, and (ii) our Shares are not listed on a national securities exchange, one or more independent valuation firms (each a "Valuation Agent") are engaged to independently value our investments, in consultation with the Investment Adviser. Our quarterly valuation procedures, which are the procedures that will be followed by such Valuation Agent to the extent (i) Benefit Plan Investors hold 25% or more of our outstanding Shares, and (ii) our Shares are not listed on a national securities exchange, are described under Note 2-Summary of Significant Accounting Policies.
The income and market approaches were used in the determination of fair value of certain Level 3 assets as of December 31, 2025 and 2024. The significant unobservable inputs used in the income approach are the discount rate or market yield used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments and any other end of term fees, as applicable. Included in the consideration and selection of discount rates are factors such as risk of default, interest rate risk, and changes in credit quality. The significant unobservable inputs used in the market approach are based on market comparable transactions and market multiples of publicly traded comparable companies.
For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of commitments not completely funded may result in a negative fair value until it is called and funded.
The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period and the fluctuations could be material.
In the event Benefit Plan Investors do not hold 25% or more of our outstanding Shares, or our Shares are listed on a national securities exchange, then (i) personnel of the Investment Adviser will undertake the roles to be performed by the personnel of the Valuation Agent, as described above and (ii) if an investment falls into category (3) above for four consecutive quarters and if the investment's par value or its fair value exceeds a certain materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which we do not have a readily available market quotation will be reviewed by an independent valuation firm engaged by our Board.
For all valuations, the Valuation Committee of our Board, which consists solely of directors who are not "interested persons" of the Company, as such term is used under the 1940 Act (the "Independent Directors"), will review these preliminary valuations and our Board, a majority of whom are Independent Directors, will discuss the Investment Adviser's valuations; provided, however, that to the extent our assets are treated as "plan assets" under ERISA and/or Section 4975 of the Code, the Valuation Agent will determine valuations using only those valuation methodologies reviewed and approved by the Valuation Committee and our Board, and our Board, absent manifest error, will accept such valuations prepared by the Valuation Agent in accordance therewith.
Revenue Recognition
Interest Income
Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discount and premium on investments purchased are accreted/amortized over the expected life of the respective investment using the effective yield method. Loan origination fees, original issue discount ("OID") and market discounts or premiums are capitalized and amortized into interest income using the effective interest method. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income. The Company may have loans in its portfolio that contain a payment in kind ("PIK") interest provision. PIK interest is accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest is added to the principal balance on the capitalized date and is generally due at maturity or when deemed by the issuer.
Fee Income
Fee income, such as structuring fees, loan monitoring, amendment, syndication fees, commitment, termination, and other loan fees are recognized as income when earned, either upon receipt or amortized into fee income. Upon the re-payment of a loan or debt security, any prepayment penalties and unamortized loan fees are recorded as fee income.
Non-accrual
Investments may be placed on non-accrual status when principal or interest payments are past due and/or when there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reversed when an investment is placed on non-accrual status. Interest payments received on non-accrual investments may be recognized as income or applied to principal depending upon management's judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current.
See "Portfolio Asset Quality" above for a summary of our non-accrual assets as of December 31, 2025 and December 31, 2024.
Net Realized Gain or Loss and Net Change in Unrealized Gain or Loss
Investment transactions are accounted for on the trade date. Gain or loss on the sale of investments is calculated using the specific identification method. Net change in unrealized gain or loss will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized gain or loss, when a gain or loss is realized.
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