Blue Owl Capital Corporation III Reports Full Year Results and Fourth Quarter Net Investment Income Per Share of $0.58 and NAV Per Share of $15.56
- Record net investment income and dividend per share reported by OBDE for full year and Q4 2023.
- NII ROE increased to 15.1% in Q4'23 from 12.9% in Q4'22.
- First quarter 2024 dividend declared at $0.35 per share; $100 million stock repurchase program approved.
- New investment commitments totaled $596.5 million for full year 2023; NAV per share increased to $15.56.
- Two portfolio companies on non-accrual status as of December 31, 2023.
- OBDE aims to deliver attractive risk-adjusted returns for shareholders in 2024.
- None.
Insights
The announcement by Blue Owl Capital Corporation III showcases a robust financial performance, with a notable increase in net investment income (NII) per share to $0.58 and an annualized NII return on equity (ROE) of 15.1% for Q4 2023, up from 12.9% in Q4 2022. The growth in NII is significant as it directly impacts the company's profitability and, by extension, shareholder value. The dividend yield of 12.7% is attractive and could influence investor sentiment positively. The declaration of a series of special dividends could be viewed as a strong signal of confidence in the company's future cash flows and financial stability.
From an investment perspective, the company's increased net asset value (NAV) per share to $15.56 indicates a positive trend in asset valuation. The stock repurchase program authorized by the Board, allowing for up to $100 million in buybacks, may support the stock price and reflects management's belief in the company's intrinsic value. The capital allocation decisions, including the mix of dividends and share repurchases, are crucial for assessing management's strategy to enhance shareholder value.
Blue Owl Capital's investment activity demonstrates a strategic focus on portfolio expansion and diversification, with $596.5 million in new investment commitments for the full year 2023. This activity is slightly lower compared to the previous year but still represents substantial growth and an active investment approach. The shift in portfolio composition towards more first lien senior secured debt investments, from 77.2% to 76.4%, suggests a conservative tilt, prioritizing loan security over potentially higher yields from riskier asset classes.
Furthermore, the floating rate nature of 98.1% of the debt investments is a critical aspect to consider, especially in a fluctuating interest rate environment, as it may protect the company's interest income against rate decreases and enhance income when rates rise. However, it also introduces variability in investment income, which could affect the company's financial performance depending on market conditions. The weighted average total yield remaining consistent at around 12.1% is an indicator of the company's ability to maintain its income-generating capacity.
The company's liquidity and capital resources, with $141.4 million in cash and significant undrawn credit facility capacity, indicate a strong liquidity position that enables the company to take advantage of new investment opportunities or weather potential market downturns. The stable net debt to equity ratio of 0.86x across the two most recent quarters suggests that the company is managing its leverage prudently, which is important for maintaining financial flexibility and solvency.
Investors should also consider the regulatory environment that affects Business Development Companies (BDCs) like Blue Owl Capital, particularly with regard to leverage limits and the types of investments they can make. The company's adherence to these regulations, while managing a diversified and largely secured portfolio, could be seen as a positive indicator of risk management and compliance practices.
HIGHLIGHTS FOR FULL YEAR AND QUARTER ENDED DECEMBER 31, 2023
- Record net investment income ("NII") per share of
$0.58 - Dividend per share of
$0.49 12.7% annualized yield based on fourth quarter net asset value ("NAV") per share- For the fourth quarter, dividend declared was
90% of estimated fourth quarter taxable income and net capital gains
- For the fourth quarter, dividend declared was
- Delivered annualized NII ROE1 of
15.1% in the fourth quarter, up from12.9% in Q4'22 - NAV per share increased to
$15.56 $15.40
"OBDE finished 2023 with strong performance and entered 2024 with momentum, successfully listing on the New York Stock Exchange in January as one of the largest BDCs in the public market," said Craig W. Packer, Chief Executive Officer. "Our portfolio has demonstrated resilience over the past year, and we expect to build on that in 2024 and continue to deliver attractive risk-adjusted returns for our shareholders."
Dividend Declarations
The Company's Board of Directors (the "Board") declared a first quarter 2024 dividend of
In addition and as previously announced, in conjunction with OBDE's listing in January 2024, the Board declared a series of five special dividends of
Stock Repurchase Program
On January 12, 2024, the Board approved a stock repurchase program under which OBDE may repurchase up to
PORTFOLIO AND INVESTING ACTIVITY
Full Year
For the full year ended December 31, 2023, new investment commitments totaled
This compares to
For the full year ended December 31, 2023, the principal amount of new investments funded was
For the full year ended December 31, 2022, the principal amount of new investments funded was
Fourth Quarter
For the three months ended December 31, 2023, new investment commitments totaled
This compares to
For the three months ended December 31, 2023, the principal amount of new investments funded was
For the three months ended September 30, 2023, the principal amount of new investments funded was
For the three months ended December 31, 2022, the principal amount of new investments funded was
As of December 31, 2023 and September 30, 2023, the Company had investments in 153 and 146 portfolio companies with an aggregate fair value of
As of December 31, 2023, based on fair value, our portfolio consisted of
As of September 30, 2023, based on fair value, our portfolio consisted of
As of December 31, 2023 and September 30, 2023, approximately
As of December 31, 2023 and September 30, 2023, 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
As of December 31, 2023, two portfolio companies with an aggregate debt investment fair value of
RESULTS OF OPERATIONS FOR THE FULL YEAR AND QUARTER ENDED DECEMBER 31, 2023
Investment Income
Investment income increased by
Investment income increased to
Expenses
Total expenses increased by
Total expenses increased to
Liquidity and Capital Resources
As of December 31, 2023, we had
(1) NII ROE is calculated as annualized quarterly net investment income divided by average beginning and ending net asset value | ||
ABOUT BLUE OWL CAPITAL CORPORATION III
Blue Owl Capital Corporation III (NYSE: OBDE) is a specialty finance company focused on lending to
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 CONTACTS
Investor Contact:
Dana Sclafani
212-419-3000
credit-ir@blueowl.com
Media Contact:
Prosek Partners
Josh
pro-blueowl@prosek.com
FINANCIAL HIGHLIGHTS | ||||||
For the three months ended | ||||||
($ in thousands, except per share amounts) | December 31, 2023 | September 30, 2023 | December 31, 2022 | |||
Investments at Fair Value | $ 3,590,701 | $ 3,565,615 | $ 3,466,765 | |||
Total Assets | $ 3,761,097 | $ 3,672,136 | $ 3,552,739 | |||
Net Asset Value Per Share | 15.56 | 15.40 | 15.03 | |||
Investment Income | $ 111,542 | $ 107,216 | $ 90,093 | |||
Net Investment Income | $ 71,647 | $ 69,083 | $ 58,402 | |||
Net Income | $ 80,557 | $ 73,493 | $ 60,440 | |||
Net Investment Income Per Share | $ 0.58 | $ 0.56 | $ 0.49 | |||
Net Realized and Unrealized Gains (and | $ 0.07 | $ 0.04 | $ 0.02 | |||
Net Income Per Share | $ 0.66 | $ 0.60 | $ 0.50 | |||
Distributions Declared from Net | $ 0.49 | $ 0.48 | $ 0.42 | |||
Weighted Average Yield of Accruing Debt | 12.1 % | 12.0 % | 11.4 % | |||
Weighted Average Yield of Accruing Debt | 12.1 % | 12.0 % | 11.3 % | |||
Percentage of Debt Investments at Floating | 98.1 % | 97.9 % | 98.2 % | |||
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (Amounts in thousands, except share and per share amounts) | ||||
December 31, 2023 | December 31, 2022 | |||
Assets | ||||
Investments at fair value | ||||
Non-controlled, non-affiliated investments (amortized cost of | $ 3,498,800 | $ 3,437,381 | ||
Non-controlled, affiliated investments (amortized cost of | 91,901 | 29,384 | ||
Total investments at fair value (amortized cost of | 3,590,701 | 3,466,765 | ||
Cash | 141,448 | 60,053 | ||
Interest receivable | 25,147 | 21,966 | ||
Prepaid expenses and other assets | 3,801 | 3,955 | ||
Total Assets | $ 3,761,097 | $ 3,552,739 | ||
Liabilities | ||||
Debt (net of unamortized debt issuance costs of | $ 1,754,496 | $ 1,660,310 | ||
Distribution payable | 60,779 | 50,425 | ||
Management fee payable | 4,517 | 4,173 | ||
Payables to affiliates | 896 | 1,926 | ||
Accrued expenses and other liabilities | 29,297 | 22,024 | ||
Total Liabilities | 1,849,985 | 1,738,858 | ||
Commitments and contingencies (Note 7) | ||||
Net Assets | ||||
Common shares | $ 1,228 | $ 1,207 | ||
Additional paid-in-capital | 1,829,029 | 1,798,712 | ||
Accumulated undistributed (overdistributed) earnings | 80,855 | 13,962 | ||
Total Net Assets | 1,911,112 | 1,813,881 | ||
Total Liabilities and Net Assets | $ 3,761,097 | $ 3,552,739 | ||
Net Asset Value Per Share | 15.56 | 15.03 | ||
CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share and per share amounts) | |||||
For the Year Ended December 31, | |||||
2023 | 2022 | 2021 | |||
Investment Income | |||||
Investment income from non-controlled, non-affiliated investments: | |||||
Interest income (excluding payment-in-kind ("PIK") interest income) | $ 345,962 | $ 227,727 | $ 85,019 | ||
PIK interest income | 45,461 | 34,570 | 10,070 | ||
Dividend income | 22,133 | — | 12,415 | — | 2,962 |
Other income | 7,291 | 3,950 | 3,180 | ||
Total investment income from non-controlled, non-affiliated investments | 420,847 | 278,662 | 101,231 | ||
Investment income from non-controlled, affiliated investments: | |||||
Interest income (excluding payment-in-kind ("PIK") interest income) | 182 | — | — | ||
Payment-in-kind ("PIK") interest income | 237 | — | — | ||
Dividend income | 1,553 | 201 | — | ||
Other income | 10 | — | — | ||
Total investment income from non-controlled, affiliated | 1,982 | 201 | — | ||
Total Investment Income | 422,829 | 278,863 | 101,231 | ||
Expenses | |||||
Interest expense | 121,679 | 64,924 | 20,113 | ||
Management fee | 17,863 | 15,360 | 5,471 | ||
Professional fees | 5,187 | 4,037 | 2,599 | ||
Directors' fees | 909 | 1,165 | 1,116 | ||
Other general and administrative | 3,397 | 2,601 | 2,063 | ||
Total Expenses | 149,035 | 88,087 | 31,362 | ||
Net Investment Income (Loss) Before Taxes | 273,794 | 190,776 | 69,869 | ||
Income tax expense (benefit), including excise tax expense (benefit) | 1,833 | 862 | 228 | ||
Net Investment Income (Loss) After Taxes | $ 271,961 | $ 189,914 | $ 69,641 | ||
Net Realized and Change in Unrealized Gain (Loss) | |||||
Net change in unrealized gain (loss): | |||||
Non-controlled, non-affiliated investments | 41,676 | (28,873) | 5,436 | ||
Non-controlled, affiliated investments | (5,547) | (34) | — | ||
Translation of assets and liabilities in foreign currencies | 710 | 608 | (804) | ||
Income tax (provision) benefit | (1) | — | — | ||
Total Net Change in Unrealized Gain (Loss) | 36,838 | (28,299) | 4,632 | ||
Net realized gain (loss): | |||||
Non-controlled, non-affiliated investments | (11,206) | 874 | 292 | ||
Non-controlled, affiliated investments | — | 319 | — | ||
Foreign currency transactions | (37) | (603) | 680 | ||
Total Net Realized Gain (Loss) | (11,243) | 590 | 972 | ||
Total Net Realized and Change in Unrealized Gain (Loss) | 25,595 | (27,709) | 5,604 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ 297,556 | $ 162,205 | $ 75,245 | ||
Earnings (Loss) Per Share - Basic and Diluted | $ 2.44 | $ 1.40 | $ 1.67 | ||
Weighted Average Shares Outstanding - Basic and Diluted | 122,045,758 | 116,045,926 | 45,110,198 | ||
PORTFOLIO AND INVESTMENT ACTIVITY | ||||||||||||||
For the Year Ended December 31, | ||||||||||||||
($ in thousands) | 2023 | 2022 | 2021 | |||||||||||
New investment commitments | ||||||||||||||
Gross originations | 598,504 | 647,766 | 2,971,231 | |||||||||||
Less: Sell downs | (2,021) | (10,903) | (47,546) | |||||||||||
Total new investment commitments | $ 596,483 | $ 636,863 | $ 2,923,685 | |||||||||||
Principal amount of investments funded: | ||||||||||||||
First-lien senior secured debt investments | 434,318 | 363,932 | 1,947,683 | |||||||||||
Second-lien senior secured debt investments | — | 26,883 | 344,453 | |||||||||||
Unsecured debt investments | — | 8,883 | 25,065 | |||||||||||
Preferred equity investments | 25,030 | 50,972 | 79,090 | |||||||||||
Common equity investments | 28,422 | 43,232 | 65,407 | |||||||||||
Total principal amount of investments funded | $ 487,770 | $ 493,902 | $ 2,461,698 | |||||||||||
Principal amount of investments sold or repaid: | ||||||||||||||
First-lien senior secured debt investments | (438,852) | (52,594) | (58,607) | |||||||||||
Second-lien senior secured debt investments | (13,268) | (1,200) | (23,556) | |||||||||||
Unsecured debt investments | (36) | (1,704) | — | |||||||||||
Preferred equity investments | (5,768) | (3,807) | — | |||||||||||
Common equity investments | (195) | (7,350) | — | |||||||||||
Total principal amount of investments sold or repaid | $ (458,119) | $ (66,655) | $ (82,163) | |||||||||||
Number of new investment commitments in new portfolio | 29 | 50 | 68 | |||||||||||
Average new investment commitment amount | $ 16,021 | $ 12,737 | $ 38,820 | |||||||||||
Weighted average term for new debt investment | 6.1 | 6.1 | 7.1 | |||||||||||
Percentage of new debt investment commitments at floating rates | 96.1 % | 95.5 % | 98.8 % | |||||||||||
Percentage of new debt investment commitments at fixed rates | 3.9 % | 4.5 % | 1.2 % | |||||||||||
Weighted average interest rate of new debt investment commitments(2)(3) | 11.4 % | 11.3 % | 7.0 % | |||||||||||
Weighted average spread over applicable base rate of new | 6.1 % | 6.7 % | 6.2 % | |||||||||||
(1) Number of new investment commitments represents commitments to a particular portfolio company. |
(2) For the year ended December 31, 2021 assumes each floating rate commitment is subject to the greater of the interest rate floor (if applicable) |
(3) For the year ended December 31, 2023 and 2022, assumes each floating rate commitment is subject to the greater of the interest rate floor (if |
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FAQ
What was Blue Owl Capital Corporation III's ticker symbol mentioned in the press release?
What was the record net investment income per share for the fourth quarter of 2023?
What was the annualized yield based on fourth quarter net asset value per share for the dividend declared in Q4 2023?
What was the NII ROE for the fourth quarter of 2023, and how did it compare to Q4'22?
What was the NAV per share as of December 31, 2023, and how did it compare to September 30, 2023?
What was the first quarter 2024 dividend declared per share, and when is it payable?
What was the total amount approved for OBDE's stock repurchase program, and when was it approved?
How much were the new investment commitments for the full year 2023, and how many portfolio companies were involved?
What percentage of OBDE's portfolio consisted of first lien senior secured debt investments as of December 31, 2023?
How did OBDE's investment income and expenses change for the year ended December 31, 2023, compared to the prior year?
