Blue Owl Capital Corporation III Reports Third Quarter Net Investment Income Per Share of $0.41 and Net Asset Value Per Share of $15.49
NEW YORK, Nov. 6, 2024 /PRNewswire/ -- Blue Owl Capital Corporation III (NYSE:OBDE, or the ", Company", )) today announced financial results for its third quarter ended September 30, 2024.
THIRD QUARTER 2024 HIGHLIGHTS
Third quarter net investment income ("NII") per share of $0.41, in-line with the prior quarter and exceeding the regular dividend of $0.35 per share by 17%
As previously announced in January, the Board of Directors (the "Board") declared five special dividends of $0.06 per share; the third of which will be payable on or before December 13, 2024 to shareholders of record as of November 29, 2024
10.6%1 annualized dividend yield based on third quarter net asset value ("NAV") per share
NAV per share of $15.49, as compared with $15.56 as of June 30, 2024
Originations for the third quarter were $575.1 million, offset by $649.1 million of sales and repayments, as compared with $1.0 billion of originations and $338.3 million of sales and repayments for the three months ended June 30, 2024
Investments on non-accrual decreased to 0.2% of the total fair value of the debt portfolio, as compared with 0.5% as of June 30, 2024
"We saw continued strong momentum in the third quarter, delivering stable portfolio performance to generate an attractive return on equity of 10.5%," commented Craig W. Packer, Chief Executive Officer. "Credit quality remains excellent, and our predominantly first-lien portfolio is well-positioned to produce healthy returns through all rate environments."
Merger UpdateOn August 7, 2024, OBDE entered into an agreement to merge with Blue Owl Capital Corporation (NYSE:OBDC), an affiliated business development company managed by Blue Owl Credit Advisors, LLC, with OBDC as the surviving entity.
On August 16, 2024, the Company filed a preliminary registration statement on Form N-14, which included a joint proxy statement of the Company and OBDC and the Company's prospectus. On October 11, 2024, the Company filed an amended registration statement on Form N-14. The registration statement was declared effective by the SEC on October 21, 2024, and the special meetings for each of the Company's and OBDC's shareholders are scheduled for January 8, 2025. The merger is expected to close shortly after the special meetings, subject to shareholder approvals and other customary closing conditions.
Dividend DeclarationsThe Company's Board declared a fourth quarter 2024 dividend of $0.35 per share for stockholders of record as of December 31, 2024, payable on or before January 15, 2025.
In addition, and as previously announced, the Board declared a series of five special dividends of $0.06 per share, payable to stockholders of record quarterly. The third special dividend of $0.06 per share will be payable on or before December 13, 2024 to shareholders of record as of November 29, 2024. A full schedule of the record and payment dates can be found on the Company's website.
PORTFOLIO AND INVESTING ACTIVITY
For the three months ended September 30, 2024, new investment commitments totaled $575.1 million across 21 new portfolio companies and 16 existing portfolio companies. This compares to $1.0 billion for the three months ended June 30, 2024 across 31 new portfolio companies and 24 existing portfolio companies.
For the three months ended September 30, 2024, the principal amount of new investments funded was $536.4 million. For this period, the Company had $649.1 million aggregate principal amount in sales and repayments.
For the three months ended June 30, 2024, the principal amount of new investments funded was $765.7 million. For this period, the Company had $338.3 million aggregate principal amount in sales and repayments.
As of September 30, 2024 and June 30, 2024, the Company had investments in 185 and 207 portfolio companies with an aggregate fair value of $4.2 billion and $4.3 billion, respectively. As of September 30, 2024, the average investment size in each portfolio company was $23.0 million based on fair value.
As of September 30, 2024, based on fair value, the portfolio consisted of 84.9% first lien senior secured debt investments, 5.2% second lien senior secured debt investments, 1.6% unsecured debt investments, 3.3% preferred equity investments, 4.9% common equity investments and 0.1% joint ventures.
As of June 30, 2024, based on fair value, the portfolio consisted of 85.0% first lien senior secured debt investments, 5.4% second lien senior secured debt investments, 1.5% unsecured debt investments, 3.6% preferred equity investments, and 4.5% common equity investments.
As of September 30, 2024 and June 30, 2024, approximately 90.1% and 90.4% of the portfolio was invested in secured debt, respectively. As of September 30, 2024, 97.3% of the debt investments based on fair value in the portfolio were at floating rates.
As of September 30, 2024 and June 30, 2024, the weighted average total yield of accruing debt and income-producing securities at fair value (which includes interest income and amortization of fees and discounts) was 11.1% and 11.5%, respectively, and the weighted average total yield of accruing debt and income-producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 11.1% and 11.5%, respectively.
As of September 30, 2024, loans on non-accrual represented 0.2% of the total fair value of the debt portfolio.
RESULTS OF OPERATIONS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2024
Investment IncomeInvestment income increased to $129.0 million for the three months ended September 30, 2024 from $107.2 million for the same period in the prior year primarily due to higher interest income, resulting from an increase in our debt investment portfolio at par. Included in interest income are other fees such as prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns which are non-recurring in nature. Period-over-period, these fees increased due to an increase in repayment activity for the period. We expect that investment income will vary based on a variety of factors including the pace of our originations and repayments.
ExpensesTotal expenses increased to $79.2 million for the three months ended September 30, 2024 from $37.9 million for the same period in prior year due to an increase in management fees, incentive fees and interest expense. The increase in interest expense was driven by an increase in leverage, average daily borrowings and average interest rate period-over-period. Management and incentive fees increased due to an increase in our investment portfolio at fair value as well as the increased fee rates effective as of the Company's listing date, January 25, 2024. Incentive fees were not incurred prior to the listing date. As a percentage of total assets, professional fees, directors' fees and other general and administrative expenses increased period-over-period.
Liquidity and Capital ResourcesAs of September 30, 2024, the Company had $151.3 million in cash, $2.5 billion in total principal value of debt outstanding, and $367.6 million of undrawn capacity on our credit facilities. The Company's weighted average interest rate on debt outstanding was 7.1% and 7.1% for the three months ended September 30, 2024 and June 30, 2024, respectively. Ending net debt-to-equity was 1.21x and 1.22x as of September 30, 2024 and June 30, 2024, respectively.
CONFERENCE CALL AND WEBCAST INFORMATION
Conference Call Information:The conference call will be broadcast live on November 7, 2024 at 11:00 a.m. Eastern Time on the Events section of OBDE's website at www.BlueOwlCapitalCorporationIII.com. Please visit the website to test your connection before the webcast.
Participants are also invited to access the conference call by dialing one of the following numbers:
Domestic: (877) 407-9714
International: +1 (201) 689-8865
All callers will need to reference "Blue Owl Capital Corporation III" once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected.
Replay Information:An archived replay will be available for 14 days via a webcast link located on the Events section of OBDE's website, and via the dial-in numbers listed below:
Domestic: (877) 660-6853
International: +1 (201) 612-7415
Conference ID: 13748670
ABOUT BLUE OWL CAPITAL CORPORATION III
Blue Owl Capital Corporation III (NYSE:OBDE) is a specialty finance company focused on lending to U.S. middle-market companies. As of September 30, 2024, OBDE had investments in 185 portfolio companies with an aggregate fair value of $4.2 billion. OBDE has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. OBDE is externally managed by Blue Owl Diversified Credit Advisors LLC, an SEC-registered investment adviser that is an indirect affiliate of Blue Owl Capital Inc. ("Blue Owl") (NYSE:OWL) and is a part of Blue Owl's Credit platform.
Certain information contained herein may constitute "forward-looking statements" that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about OBDE, its current and prospective portfolio investments, its industry, its beliefs and opinions, and its assumptions. Words such as "anticipates," "expects," "intends," "plans," "will," "may," "continue," "believes," "seeks," "estimates," "would," "could," "should," "targets," "projects," "outlook," "potential," "predicts" and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond OBDE's control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors identified in OBDE's filings with the SEC. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date on which OBDE makes them. OBDE does not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law.
INVESTOR CONTACTSInvestor Contact:BDC Investor RelationsMichael
Media Contact:Prosek PartnersJosh
FINANCIAL HIGHLIGHTS
For the Three Months Ended
($ in thousands, except per share amounts)
September 30, 2024
June 30, 2024
September 30, 2023
Investments at Fair Value
$ 4,249,075
$ 4,346,302
$ 3,565,615
Total Assets
$ 4,464,334
$ 4,502,757
$ 3,672,136
Net Asset Value Per Share
$ 15.49
$ 15.56
$ 15.40
Investment Income
$ 129,042
$ 123,175
$ 107,216
Net Investment Income
$ 50,493
$ 50,381
$ 69,083
Net Income
$ 42,161
$ 39,615
$ 73,493
Net Investment Income Per Share
$ 0.41
$ 0.41
$ 0.56
Net Realized and Unrealized Gains (and Losses) Per Share
$ (0.07)
$ (0.09)
$ 0.04
Net Income Per Share
$ 0.34
$ 0.32
$ 0.60
Distributions Declared from Net Investment Income Per Share
$ 0.35
$ 0.35
$ 0.48
Weighted Average Yield of Accruing Debt and Income Producing Securities at Fair Value
11.1 %