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Morgan Stanley Direct Lending Fund Announces June 30, 2025 Financial Results and Declares Third Quarter 2025 Regular Dividend of $0.50 per Share

via 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 second quarter ended June 30, 2025.

QUARTERLY HIGHLIGHTS

  • Net investment income of $43.7 million, or $0.50 per share, as compared to $46.2 million, or $0.52 per share, for the quarter ended March 31, 2025;
  • Net asset value of $20.59 per share, as compared to $20.65 as of March 31, 2025;
  • Debt-to-equity was 1.15x as of June 30, 2025, as compared to 1.11x as of March 31, 2025;
  • New investment commitments of $149.1 million (net of any syndications), fundings of $204.0 million and sales and repayments of $207.5 million, resulting in net funded deployment of ($3.5) million;
  • The Company’s Board of Directors (the “Board”) declared a regular dividend of $0.50 per share to shareholders of record as of June 30, 2025; and
  • The Company successfully priced $350 million of 6.00% Notes due May 2030 and swapped the fixed rate coupon to floating rate. In connection with the issuance, the Company fully redeemed the $275 million of 7.55% Notes due September 2025.

SELECTED FINANCIAL HIGHLIGHTS

For the Quarter Ended

($ in thousands, except per share information)

June 30, 2025

 

March 31, 2025

Net investment income per share

$0.50

 

$0.52

Net realized and unrealized gains (losses) per share1

($0.09)

 

($0.18)

Earnings per share

$0.41

 

$0.34

Regular dividend per share

$0.50

 

$0.50

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)

June 30, 2025

 

March 31, 2025

Investments, at fair value

$3,785,496

 

$3,788,178

Total debt outstanding, at principal

$2,054,188

 

$2,013,588

Net assets

$1,790,299

 

$1,817,807

Net asset value per share

$20.59

 

$20.65

Debt to equity

1.15x

 

1.11x

Net debt to equity

1.10x

 

1.07x

RESULTS OF OPERATIONS

Total investment income for the quarter ended June 30, 2025 was $99.5 million, compared to $101.5 million for the quarter ended March 31, 2025. The decrease was primarily driven by lower base rates as well as lower repayment related income as compared to the prior period.

Total net expenses for the quarter ended June 30, 2025 were $55.9 million, compared to $55.2 million for the quarter ended March 31, 2025. The increase in net expenses quarter over quarter was primarily attributable to higher net management and income based incentive fees incurred following the expiration of the Adviser’s waiver of a portion of the base management and incentive fees in connection with the Company’s initial public offering, which expired in January 2025.

Net investment income for the quarter ended June 30, 2025 was $43.7 million, or $0.50 per share, compared to $46.2 million, or $0.52 per share, for the quarter ended March 31, 2025.

For the quarter ended June 30, 2025, net change in unrealized depreciation was $7.7 million, partially offset by net realized gains of $0.1 million.

PORTFOLIO AND INVESTMENT ACTIVITY

As of June 30, 2025, the Company’s investment portfolio had a fair value of approximately $3.8 billion, comprised of 214 portfolio companies across 34 industries, with an average investment size of $17.7 million, or 0.5% of our total portfolio on a fair value basis. The composition of the Company’s investments was the following:

 

June 30, 2025

 

March 31, 2025

($ in thousands)

 

 

Cost

 

Fair Value

 

% of Total

Investments at

Fair Value

 

 

Cost

 

Fair Value

 

% of Total

Investments at

Fair Value

First Lien Debt

 

 

$3,682,846

 

$3,650,847

 

96.4%

 

 

$3,679,424

 

$3,652,320

 

96.3%

Second Lien Debt

 

 

82,435

 

71,721

 

1.9

 

 

82,134

 

71,190

 

1.9

Other Debt Investments

 

 

11,280

 

9,773

 

0.3

 

 

11,008

 

9,603

 

0.3

Equity

 

 

54,646

 

53,155

 

1.4

 

 

54,165

 

55,065

 

1.5

Total

 

 

$3,831,207

 

$3,785,496

 

100.0%

 

 

$3,826,731

 

$3,788,178

 

100.0%

 

Investment activity was as follows:

Investment Activity:

Three Months Ended

June 30, 2025

Three Months Ended

March 31, 2025

New investment commitments, at par (net of syndications)

$149,054

$233,368

Investment fundings

$204,003

$205,647

Number of new investment commitments in portfolio companies

9

9

Number of portfolio companies exited or fully repaid

5

7

Total weighted average yield of investments in debt securities at amortized cost and fair value was 10.1% and 10.2%, respectively, as of June 30, 2025, compared to 10.2% and 10.3%, respectively, as of March 31, 2025. Floating rate debt investments as a percentage of total portfolio on a fair value basis was 99.6% as of June 30, 2025, unchanged compared to March 31, 2025. As of June 30, 2025, certain investments in four portfolio companies were on non-accrual status, representing approximately 0.7% of total investments at amortized cost.

CAPITAL AND LIQUIDITY

As of June 30, 2025, the Company had total principal debt outstanding of $2,054.2 million, including $316.0 million outstanding in the Company’s BNP funding facility, $613.2 million outstanding in the Company’s Truist credit facility, $425.0 million outstanding in the Company’s senior unsecured notes due February 2027, $350.0 million outstanding in the Company’s senior unsecured notes due May 2029 and $350.0 million outstanding in the Company’s newly issued senior unsecured notes due May 2030. During the quarter, the Company redeemed the $275.0 million senior unsecured notes due September 2025. The combined weighted average interest rate on debt outstanding was 6.02% for the quarter ended June 30, 2025. As of June 30, 2025, the Company had $1,113.0 million of availability under its credit facilities and $75.8 million in unrestricted cash and short term, liquid investments. Debt to equity was 1.15x and 1.11x as of June 30, 2025 and March 31, 2025, respectively.

SHARE REPURCHASES

On February 27, 2025, the Board authorized an amended and restated share repurchase program, which has a maximum size of $100.0 million, exclusive of prior repurchases. For the three months ended June 30, 2025, the Company repurchased 1,057,127 shares at an average price of $18.92 per share.

ATM OFFERING

On March 28, 2025, the Company entered into equity distribution agreements pursuant to which the Company may sell shares of the Company’s common stock having an aggregate offering price of up to $300.0 million.

For the quarter ended June 30, 2025 there were no shares issued through the ATM offering.

OTHER DEVELOPMENTS

  • On August 5, 2025, the Board declared a regular distribution of $0.50 per share, which is payable on or around October 24, 2025 to shareholders of record as of September 30, 2025.
  • On August 6, 2025, the Company successfully priced its inaugural CLO with approximately $400 million of aggregate principal amount, at an efficient cost of funding.

CONFERENCE CALL INFORMATION

Morgan Stanley Direct Lending Fund will host a conference call on Friday, August 8, 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:

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

 

 

June 30, 2025

 

December 31, 2024

 

 

(Unaudited)

 

(Audited)

Assets

 

 

 

 

Non-controlled/non-affiliated investments, at fair value (amortized cost of $3,826,123 and $3,813,127)

 

$

3,780,373

 

$

3,791,494

Non-controlled/affiliated investments, at fair value (amortized cost of $5,084 and $0)

 

 

5,123

 

 

—

Total investments, at fair value (amortized cost of $3,831,207 and $3,813,127)

 

 

3,785,496

 

 

3,791,494

Cash and cash equivalents (restricted cash of $3,820 and $2,000)

 

 

52,216

 

 

63,396

Investments in unaffiliated money market fund (cost of $27,410 and $8,976)

 

 

27,410

 

 

8,976

Deferred financing costs

 

 

18,853

 

 

16,498

Interest and dividend receivable from non-controlled/non-affiliated investments

 

 

25,253

 

 

30,554

Interest and dividend receivable from non-controlled/affiliated investments

 

 

46

 

 

—

Receivable for investments sold/repaid

 

 

134

 

 

470

Prepaid expenses and other assets

 

 

12,482

 

 

630

Total assets

 

 

3,921,890

 

 

3,912,018

 

 

 

 

 

Liabilities

 

 

 

 

Debt (net of unamortized debt issuance costs of $8,773 and $6,527)

 

 

2,050,254

 

 

1,973,479

Payable for investment purchased

 

 

—

 

 

192

Payable to affiliates (Note 3)

 

 

96

 

 

29

Dividends payable

 

 

43,575

 

 

53,229

Management fees payable

 

 

9,624

 

 

7,042

Income based incentive fees payable

 

 

9,279

 

 

8,956

Interest payable

 

 

16,218

 

 

21,205

Accrued expenses and other liabilities

 

 

2,545

 

 

5,730

Total liabilities

 

 

2,131,591

 

 

2,069,862

 

 

 

 

 

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 (500,000,000 shares authorized; 86,962,629 and 88,511,089 shares issued and outstanding)

 

 

87

 

 

89

Paid-in capital in excess of par value

 

 

1,782,313

 

 

1,812,443

Total distributable earnings (loss)

 

 

7,899

 

 

29,624

Total net assets

 

$

1,790,299

 

$

1,842,156

Total liabilities and net assets

 

$

3,921,890

 

$

3,912,018

Net asset value per share

 

$

20.59

 

$

20.81

 

Consolidated Statements of Operations (unaudited)

(In thousands, except share amounts)

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

June 30, 2025

 

June 30, 2024

 

June 30, 2025

 

June 30, 2024

 

 

 

 

 

 

 

 

 

Investment Income:

 

 

 

 

 

 

 

 

From non-controlled/non-affiliated investments:

 

 

 

 

 

 

 

 

Interest income

 

$

93,752

 

 

$

99,072

 

 

$

188,693

 

 

$

193,703

 

Payment-in-kind

 

 

3,815

 

 

 

2,850

 

 

 

8,003

 

 

 

5,494

 

Dividend income

 

 

650

 

 

 

646

 

 

 

1,244

 

 

 

1,211

 

Other income

 

 

1,175

 

 

 

1,620

 

 

 

2,870

 

 

 

2,881

 

From non-controlled/affiliated investments:

 

 

 

 

 

 

 

 

Interest income

 

 

44

 

 

 

—

 

 

 

70

 

 

 

—

 

Payment-in-kind

 

 

72

 

 

 

—

 

 

 

86

 

 

 

—

 

Total investment income

 

 

99,508

 

 

 

104,188

 

 

 

200,966

 

 

 

203,289

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

Interest and other financing expenses

 

 

34,707

 

 

 

29,302

 

 

 

68,886

 

 

 

56,562

 

Management fees

 

 

9,624

 

 

 

8,639

 

 

 

19,242

 

 

 

16,869

 

Income based incentive fees

 

 

9,279

 

 

 

11,554

 

 

 

19,122

 

 

 

22,890

 

Professional fees

 

 

1,698

 

 

 

1,687

 

 

 

3,306

 

 

 

2,904

 

Directors’ fees

 

 

130

 

 

 

128

 

 

 

259

 

 

 

274

 

Administrative service fees

 

 

85

 

 

 

17

 

 

 

145

 

 

 

42

 

General and other expenses

 

 

128

 

 

 

51

 

 

 

310

 

 

 

159

 

Total expenses

 

 

55,651

 

 

 

51,378

 

 

 

111,270

 

 

 

99,700

 

Management fees waiver (Note 3)

 

 

—

 

 

 

(2,160

)

 

 

(641

)

 

 

(5,257

)

Incentive fees waiver (Note 3)

 

 

—

 

 

 

(1,651

)

 

 

(375

)

 

 

(2,862

)

Net expenses

 

 

55,651

 

 

 

47,567

 

 

 

110,254

 

 

 

91,581

 

Net investment income (loss) before taxes

 

 

43,857

 

 

 

56,621

 

 

 

90,712

 

 

 

111,708

 

Excise tax expense

 

 

200

 

 

 

500

 

 

 

827

 

 

 

936

 

Net investment income (loss) after taxes

 

 

43,657

 

 

 

56,121

 

 

 

89,885

 

 

 

110,772

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gain (loss):

 

 

 

 

 

 

 

 

Realized gain (loss):

 

 

 

 

 

 

 

 

Net realized gain (loss) on non-controlled/non-affiliated investments

 

 

25

 

 

 

108

 

 

 

587

 

 

 

(5,517

)

Foreign currency and other transactions

 

 

66

 

 

 

—

 

 

 

53

 

 

 

—

 

Net realized gain (loss)

 

 

91

 

 

 

108

 

 

 

640

 

 

 

(5,517

)

Net change in unrealized appreciation (depreciation):

 

 

 

 

 

 

 

 

Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliated investments

 

 

(7,751

)

 

 

2,816

 

 

 

(24,899

)

 

 

5,474

 

Net change in unrealized appreciation (depreciation) on non-controlled/affiliated investments

 

 

(2

)

 

 

—

 

 

 

40

 

 

 

—

 

Translation of assets and liabilities in foreign currencies

 

 

101

 

 

 

—

 

 

 

100

 

 

 

—

 

Net unrealized appreciation (depreciation)

 

 

(7,652

)

 

 

2,816

 

 

 

(24,759

)

 

 

5,474

 

Net realized and unrealized gain (loss)

 

 

(7,561

)

 

 

 

 

2,924

 

 

 

 

(24,119

)

 

 

(43

)

Net increase (decrease) in net assets resulting from operations

 

$

36,096

 

 

$

59,045

 

 

$

65,766

 

 

$

110,729

 

 

 

 

 

 

 

 

 

 

Net investment income (loss) per share (basic and diluted)

 

$

0.50

 

 

$

0.63

 

 

$

1.02

 

 

$

1.25

 

Earnings per share (basic and diluted)

 

$

0.41

 

 

$

0.66

 

 

$

0.75

 

 

$

1.25

 

Weighted average shares outstanding

 

 

87,189,801

 

 

 

89,271,839

 

 

 

87,798,346

 

 

 

88,315,183

 

 

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