Morgan Stanley Direct Lending Fund Announces December 31, 2024 Financial Results and Declares First Quarter 2025 Regular Dividend of $0.50 per Share

Rhea-AI Summary

Morgan Stanley Direct Lending Fund (MSDL) reported its Q4 and fiscal year 2024 financial results. Net investment income decreased to $50.7 million ($0.57 per share) from $58.7 million ($0.66 per share) in Q3 2024. Total investment income declined to $103.0 million from $109.8 million in Q3, primarily due to lower base rates and repayment income.

The company's investment portfolio reached $3.8 billion across 208 portfolio companies in 33 industries. MSDL declared a regular dividend of $0.50 per share and a special dividend of $0.10 per share. The debt-to-equity ratio increased to 1.08x from 0.99x in Q3. The company initiated a $100 million share repurchase program, purchasing 494,943 shares at an average price of $20.20.

Positive

• Portfolio diversification across 208 companies in 33 industries
• 99.6% floating rate debt investments
• Low non-accrual rate of 0.2% of total investments
• $964.8M available credit facility
• Special dividend of $0.10 per share declared

Negative

• Net investment income decreased 13.6% QoQ to $50.7M
• Investment income declined 6.2% QoQ to $103.0M
• Debt-to-equity ratio increased to 1.08x from 0.99x
• Total expenses increased to $52.3M from $51.0M QoQ
• Weighted average yield decreased to 10.4% from 11.0%

Insights

Financial Analyst

Morgan Stanley Direct Lending Fund (MSDL) reported Q4 2024 results showing a decline in net investment income to $50.7 million ($0.57 per share) from $58.7 million ($0.66 per share) in Q3 - a 13.6% quarter-over-quarter decrease. Despite this reduction, MSDL's current NII provides 114% coverage of its declared $0.50 regular quarterly dividend, demonstrating solid distribution sustainability.

The earnings decline primarily stems from lower base interest rates and reduced repayment-related income compared to Q3. Portfolio yield on debt investments decreased to 10.4% (amortized cost) and 10.5% (fair value) from 11.0% in the previous quarter, reflecting the challenging yield environment BDCs currently face.

MSDL's investment portfolio expanded to approximately $3.8 billion across 208 companies, with new investment commitments of $188.3 million and net funded deployment of $143.7 million. This continued growth has pushed leverage slightly higher, with debt-to-equity increasing to 1.08x from 0.99x quarter-over-quarter - still moderate by BDC standards but worth monitoring.

Credit quality remains exceptionally strong with only 0.2% of investments on non-accrual status, significantly below the BDC industry average of approximately 1-2%. The portfolio maintains 99.6% floating rate exposure, which has benefited MSDL during rising rates but may create headwinds if rates continue to decline.

The company enhanced its financial flexibility by extending its Truist Credit Facility to February 2030, increasing the commitment to $1.45 billion, and reducing the spread to 1.775%. These improved terms should help offset some yield compression through lower borrowing costs.

MSDL's share repurchase activity continues to create shareholder value, with 494,943 shares repurchased at an average price of $20.20 - a 2.9% discount to the $20.81 NAV. This accretive activity, combined with the stable regular dividend and previously announced $0.10 special dividend, reflects management's commitment to shareholder returns despite the challenging yield environment.

NEW YORK--(BUSINESS WIRE)-- Morgan Stanley Direct Lending Fund (NYSE: MSDL) (“MSDL” or the “Company”), a business development company externally managed by MS Capital Partners Adviser Inc. (the “Adviser”), today announced its financial results for the fourth quarter and fiscal year ended December 31, 2024.

QUARTERLY HIGHLIGHTS

• Net investment income of $50.7 million, or $0.57 per share, as compared to $58.7 million, or $0.66 per share, for the quarter ended September 30, 2024;
• Net asset value of $20.81 per share, as compared to $20.83 as of September 30, 2024;
• Debt-to-equity was 1.08x as of December 31, 2024, as compared to 0.99x as of September 30, 2024;
• New investment commitments of $188.3 million, fundings of $187.3 million and sales and repayments of $43.6 million, resulting in net funded deployment of $143.7 million; and
• The Company’s Board of Directors (the “Board”) declared a regular dividend of $0.50 per share to shareholders of record as of December 31, 2024 as well as a special dividend, which was previously declared by the Board on January 11, 2024, of $0.10 per share to stockholders of record as of November 4, 2024.

SELECTED FINANCIAL HIGHLIGHTS

	For the Quarter Ended
($ in thousands, except per share information)	December 31, 2024		September 30, 2024
Net investment income per share	$0.57		$0.66
Net realized and unrealized gains (losses) per share1	$0.01		($0.06)
Earnings per share	$0.58		$0.60
Regular dividend per share	$0.50		$0.50
Special dividend per share	$0.10		$0.10
1 Amount shown may not correspond for the period as it includes the effect of the timing of the distribution, shares repurchased and the issuance of common stock.
	As of
($ in thousands, except per share information)	December 31, 2024		September 30, 2024
Investments, at fair value	$3,791,494		$3,640,324
Total debt outstanding, at principal	$1,983,401		$1,841,987
Net assets	$1,842,156		$1,853,722
Net asset value per share	$20.81		$20.83
Debt to equity	1.08x		0.99x
Net debt to equity	1.04x		0.94x

RESULTS OF OPERATIONS

Total investment income for the quarter ended December 31, 2024 was $103.0 million, compared to $109.8 million for the quarter ended September 30, 2024. The decrease was primarily driven by lower base rates and repayment related income as compared to the prior period.

Total net expenses for the quarter ended December 31, 2024 were $52.3 million, compared to $51.0 million for the quarter ended September 30, 2024. The increase in net expenses quarter over quarter was primarily attributable to higher net management and income based incentive fees incurred.

Net investment income for the quarter ended December 31, 2024 was $50.7 million, or $0.57 per share, compared to $58.7 million, or $0.66 per share, for the quarter ended September 30, 2024.

For the quarter ended December 31, 2024, net change in unrealized appreciation on investments was $0.9 million.

PORTFOLIO AND INVESTMENT ACTIVITY

As of December 31, 2024, the Company’s investment portfolio had a fair value of approximately $3.8 billion, comprised of 208 portfolio companies across 33 industries, with an average investment size of $18.2 million, or 0.5% of our total portfolio on a fair value basis. The composition of the Company’s investments was the following:

	December 31, 2024									September 30, 2024
($ in thousands)		Cost			Fair Value		% of Total Investments at Fair Value			Cost			Fair Value		% of Total Investments at Fair Value
First Lien Debt		$3,669,886			$3,654,538		96.5%			$3,506,164			$3,492,302		96.0%
Second Lien Debt		78,803			69,367		1.8			93,422			84,074		2.3
Other Debt Investments		9,755			9,198		0.2			9,525			8,809		0.2
Equity		54,683			58,391		1.5			53,507			55,139		1.5
Total		$3,813,127			$3,791,494		100.0%			$3,662,618			$3,640,324		100.0%

Investment activity for the year ended December 31, 2024 and for the three months ended December 31, 2024 and September 30, 2024, was as follows:

Investment Activity:	Year Ended December 31, 2024	Three Months Ended December 31, 2024	Three Months Ended September 30, 2024
New investment commitments, at par	$1,549,656	$188,269	$455,365
Investment fundings	$1,232,384	$187,324	$377,019
Number of new investment commitments in portfolio companies	60	10	19
Number of portfolio companies exited or fully repaid	24	2	11

Total weighted average yield of investments in debt securities at amortized cost and fair value was 10.4% and 10.5%, respectively, as of December 31, 2024, compared to 11.0% and 11.0%, respectively, as of September 30, 2024. Floating rate debt investments as a percentage of total portfolio on a fair value basis was 99.6% as of December 31, 2024, unchanged compared to September 30, 2024. As of December 31, 2024, certain investments in two portfolio companies were on non-accrual status, representing approximately 0.2% of total investments at amortized cost.

CAPITAL AND LIQUIDITY

As of December 31, 2024, the Company had total principal debt outstanding of $1,983.4 million, including $316.0 million outstanding in the Company’s BNP funding facility, $617.4 million outstanding in the Company’s Truist credit facility, $275.0 million outstanding in the Company’s senior unsecured notes due September 2025, $425.0 million outstanding in the Company’s senior unsecured notes due February 2027 and $350.0 million outstanding in the Company’s senior unsecured notes due May 2029. The combined weighted average interest rate on debt outstanding was 6.19% for the quarter ended December 31, 2024. As of December 31, 2024, the Company had $964.8 million of availability under its credit facilities and $70.4 million in unrestricted cash. Debt to equity was 1.08x and 0.99x as of December 31, 2024 and September 30, 2024, respectively.

SHARE REPURCHASES

On January 25, 2024, the Company entered into a share repurchase plan to acquire up to $100 million in the aggregate of the Company’s Common Stock at prices below NAV. For the three months ended December 31, 2024, the Company purchased 494,943 shares at an average price of $20.20 per share.

OTHER DEVELOPMENTS

• On February 27, 2025, the Board declared a regular distribution of $0.50 per share, which is payable on April 25, 2025 to shareholders of record as of March 31, 2025.
• On February 27, 2025, the Board authorized an amended and restated share repurchase plan, pursuant to a 10b5-1 program, which has a maximum size of $100 million and a duration of an additional twelve months; the original plan would have expired on March 25, 2025.
• On February 25, 2025, the Company executed an amendment to the Truist Credit Facility, extending the maturity to February 2030, increasing the total commitment to $1.45 billion and lowering the spread to 1.775%.

CONFERENCE CALL INFORMATION

Morgan Stanley Direct Lending Fund will host a conference call on Friday, February 28, 2025 at 10:00 am ET to review its financial results and conduct a question-and-answer session. All interested parties are invited to participate in the live earnings conference call by using the following dial-in numbers or audio webcast link available on the MSDL Investor Relations website:

• Audio Webcast
• Conference Call
• Domestic: 323-994-2093
• International: 888-254-3590
• Passcode: 4836455

To avoid potential delays, please join at least 10 minutes prior to the start of the earnings call. An archived replay will also be available on the MSDL Investor Relations website.

About Morgan Stanley Direct Lending Fund

Morgan Stanley Direct Lending Fund (NYSE: MSDL) is a non-diversified, externally managed specialty finance company focused on lending to middle-market companies. MSDL has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. MSDL is externally managed by MS Capital Partners Adviser Inc., an indirect, wholly owned subsidiary of Morgan Stanley. MSDL is not a subsidiary of or consolidated with Morgan Stanley. For more information about Morgan Stanley Direct Lending Fund, please visit www.msdl.com.

Forward-Looking Statements

Statements included herein or on the webcast/conference call may constitute “forward-looking statements,” which relate to future events or MSDL’s future performance or financial condition. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results and conditions may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in MSDL’s filings with the U.S. Securities and Exchange Commission. MSDL undertakes no duty to update any forward-looking statements made herein or on the webcast/conference call.

Consolidated Statements of Assets and Liabilities (In thousands, except share and per share amounts)
		As of
		December 31, 2024			December 31, 2023
		(Audited)			(Audited)
Assets
Non-controlled/non-affiliated investments, at fair value (amortized cost of $3,813,127 and $3,226,776)		$	3,791,494		$	3,193,561
Cash and cash equivalents (restricted cash of $2,000 and $0)			72,372			69,705
Deferred financing costs			16,498			14,317
Interest and dividend receivable from non-controlled/non-affiliated investments			30,554			28,884
Subscription receivable			—			41
Receivable for investments sold			470			173
Prepaid expenses and other assets			630			53
Total assets			3,912,018			3,306,734
Liabilities
Debt (net of unamortized debt issuance costs of $6,527 and $5,564)			1,973,479			1,496,032
Payable for investment purchased			192			8
Payable to affiliates (Note 3)			29			2,870
Dividends payable			53,229			49,968
Management fees payable			7,042			2,012
Income based incentive fees payable			8,956			11,766
Interest payable			21,205			18,823
Accrued expenses and other liabilities			5,730			4,104
Total liabilities			2,069,862			1,585,583
Commitments and contingencies (Note 7)
Net assets
Preferred stock, $0.001 par value (1,000,000 shares authorized; no shares issued and outstanding)			—			—
Common stock, par value $0.001 (100,000,000 shares authorized; 88,511,089 and 83,278,831 shares issued and outstanding)			89			83
Paid-in capital in excess of par value			1,812,443			1,712,609
Total distributable earnings (loss)			29,624			8,459
Total net assets		$	1,842,156		$	1,721,151
Total liabilities and net assets		$	3,912,018		$	3,306,734
Net asset value per share		$	20.81		$	20.67

Consolidated Statements of Operations (audited) (In thousands, except share amounts)
		For the Year Ended
		December 31, 2024			December 31, 2023			December 31, 2022
Investment Income:
From non-controlled/non-affiliated investments:
Interest income		$	396,421		$	355,530		$	223,119
Payment-in-kind			10,709			4,276			1,626
Dividend income			2,591			2,124			1,488
Other income			6,354			5,808			4,360
Total investment income			416,075			367,738			230,593
Expenses:
Interest and other financing expenses			122,928			112,883			67,182
Management fees			35,415			30,550			26,715
Income based incentive fees			43,467			42,012			26,635
Capital gains incentive fees			-			-			(2,441)
Professional fees			6,718			4,470			3,206
Directors’ fees			533			345			362
Administrative service fees			216			178			72
General and other expenses			97			633			510
Total expenses			209,374			191,071			122,241
Expense support (Note 3)			-			-			44
Management fees waiver (Note 3)			(9,936)			(22,913)			(20,036)
Incentive fees waiver (Note 3)			(6,035)			-			-
Net expenses			193,403			168,158			102,249
Net investment income (loss) before taxes			222,672			199,580			128,344
Excise tax expense			2,437			1,519			334
Net investment income (loss) after taxes			220,235			198,061			128,010
Net realized and unrealized gain (loss):
Net realized gain (loss) on non-controlled/non-affiliated investments			(16,480)			118			537
Foreign currency and other transactions			13			-			-
Net realized gain (loss)			(16,467)			118			537
Net change in unrealized appreciation (depreciation):
Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliated investments			11,904			32,835			(80,005)
Translation of assets and liabilities in foreign currencies			(108)			-			-
Net unrealized appreciation (depreciation)			11,796			32,835			(80,005)
Net realized and unrealized gain (loss)			(4,671)			32,953			(79,468)
Net increase (decrease) in net assets resulting from operations		$	215,564		$	231,014		$	48,542
Net investment income (loss) per share (basic and diluted)		$	2.48		$	2.67		$	2.08
Earnings per share (basic and diluted)		$	2.43		$	3.11		$	0.79
Weighted average shares outstanding			88,649,149			74,239,743			61,676,363

 

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Investors

Sanna Johnson

msdl@morganstanley.com

Media

Alyson Barnes

212-762-0514

alyson.barnes@morganstanley.com

Source: Morgan Stanley Direct Lending Fund

FAQ

What is MSDL's net investment income for Q4 2024?

MSDL reported net investment income of $50.7 million ($0.57 per share) for Q4 2024, down from $58.7 million ($0.66 per share) in Q3 2024.

How much dividend did MSDL declare for Q1 2025?

MSDL declared a regular dividend of $0.50 per share payable on April 25, 2025, plus a special dividend of $0.10 per share.

What is the size of MSDL's investment portfolio as of December 2024?

MSDL's investment portfolio had a fair value of approximately $3.8 billion, spread across 208 portfolio companies in 33 industries.

What is MSDL's share repurchase program details for 2024-2025?

MSDL authorized a $100 million share repurchase plan, with 494,943 shares purchased at $20.20 per share average, extended for twelve additional months.

What was MSDL's debt-to-equity ratio in Q4 2024?

MSDL's debt-to-equity ratio was 1.08x as of December 31, 2024, increased from 0.99x in Q3 2024.