NEW YORK, Aug. 7, 2024 -- Blue Owl Capital Corporation III (NYSE: OBDE, or the "Company") today announced financial results for its second quarter ended June 30, 2024.
SECOND QUARTER 2024 HIGHLIGHTS
- Second quarter net investment income ("NII") per share of $0.41, which exceeds the second quarter regular dividend of $0.35 per share by over 15%
- As previously announced in January, the Board of Directors (the "Board") declared five special dividends of $0.06 per share; the second of which will be payable on or before September 13, 2024 to shareholders of record as of August 30, 2024
- 10.5% annualized dividend yield based on second quarter net asset value ("NAV") per share1
- NAV per share of $15.56, up $0.28 compared to June 30, 2023
- Net debt-to-equity increased to 1.22x for quarter ending June 30, 2024, up from 1.04x as of March 31, 2024
- Also announced today that OBDE entered into a definitive merger agreement with Blue Owl Capital Corporation (NYSE: OBDC)
"In our first full quarter as a publicly traded company, we continued to make significant progress towards growing our portfolio, deploying capital into attractive opportunities which enabled OBDE to deliver a strong return on equity of 10.5%," commented Craig W. Packer, Chief Executive Officer.
OBDC to Merge with OBDE
OBDC and OBDE today announced that they have entered into a definitive merger agreement, with OBDC as the surviving company, subject to certain shareholder approvals and other customary closing conditions. Following the recommendation of each of their special committees, the boards of directors of both OBDC and OBDE have unanimously approved the transaction. A separate press release and investor presentation can be found on the Company's website, www.BlueOwlCapitalCorporationIII.com.
Dividend Declarations
The Company's Board declared a third quarter 2024 dividend of $0.35 per share for stockholders of record as of September 30, 2024, payable on or before October 15, 2024.
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 second special dividend of $0.06 per share will be payable on or before September 13, 2024 to shareholders of record as of August 30, 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 June 30, 2024, new investment commitments totaled $1.0 billion across 31 new portfolio companies and 24 existing portfolio companies. This compares to $736.4 million for the three months ended March 31, 2024 across 43 new portfolio companies and 14 existing portfolio companies.
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.
For the three months ended March 31, 2024, the principal amount of new investments funded was $630.9 million. For this period, the Company had $232.9 million aggregate principal amount in sales and repayments.
As of June 30, 2024 and March 31, 2024, the Company had investments in 207 and 188 portfolio companies with an aggregate fair value of $4.3 billion and $4.0 billion, respectively. As of June 30, 2024, the average investment size in each portfolio company was $21.0 million based on fair value.
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 March 31, 2024, based on fair value, the portfolio consisted of 82.3% first lien senior secured debt investments, 6.6% second lien senior secured debt investments, 1.5% unsecured debt investments, 4.9% preferred equity investments, and 4.7% common equity investments.
As of June 30, 2024 and March 31, 2024, approximately 90.4% and 88.9% of the portfolio was invested in secured debt, respectively. As of June 30, 2024, 97.5% of the debt investments based on fair value in the portfolio were at floating rates.
As of June 30, 2024 and March 31, 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 11.5% and 11.7%, 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 11.5% and 11.7%, respectively.
As of June 30, 2024, loans on non-accrual represented 0.5% of the total fair value of the debt portfolio.
RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED JUNE 30, 2024
Investment Income
Investment income increased to $123.2 million for the three months ended June 30, 2024 from $106.2 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. Other income increased period-over-period due to an increase in prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns which are non-recurring in nature. 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.
Expenses
Total expenses increased to $72.5 million for the three months ended June 30, 2024 from $36.3 million for the same period in prior year due to an increase in management fees, incentive fees, interest expense and other expenses. The increase in interest expense was driven by an increase in 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 Resources
As of June 30, 2024, the Company had $120.3 million in cash, $2.5 billion in total principal value of debt outstanding, and $285.3 million of undrawn capacity on our credit facilities. The Company's weighted average interest rate on debt outstanding was 7.1% and 7.0% for the three months ended June 30, 2024 and March 31, 2024, respectively. Ending net debt to equity was 1.22x and 1.04x as of June 30, 2024 and March 31, 2024, respectively.
(1) | Dividend yield reflects regular Q2'24 dividend of $0.35 per share, $0.06 per share special dividend paid on 6/14/24, and Q2 2024 net asset value per share of $15.56. | |||||||||||||||||||
CONFERENCE CALL AND WEBCAST INFORMATION
Conference Call Information:
The conference call will be broadcast live on August 8, 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: 13747167
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 June 30, 2024, OBDE had investments in 207 portfolio companies with an aggregate fair value of $4.3 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, 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.
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