Morgan Stanley Direct Lending Fund Announces June 30, 2024 Financial Results and Declares Third Quarter 2024 Dividend of $0.50 per Share

About this update from Morgan Stanley Direct Lending Fund

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, 2024. “In the second quarter of 2024, our first full quarter operating as a public company, MSDL generated strong operating results,” said Jeffrey Levin, President and Chief Executive Officer of Morgan Stanley Direct Lending Fund. “This performance was supported by continued credit stability in our portfolio of senior, sponsor-backed middle market loans.” QUARTERLY HIGHLIGHTS Net investment income of $56.1 million, or $0.63 per share; Net asset value of $20.83 per share, as compared to $20.67 as of March 31, 2024; Debt-to-equity was 0.90x as of June 30, 2024, as compared to 0.81x as of March 31, 2024; New investment commitments of $673.9 million, fundings of $499.7 million and sales and repayments of $289.3 million, resulting in net funded deployment of $210.4 million; and The Company’s Board of Directors (the “Board”) declared a regular dividend of $0.50 per share, paid on July 25, 2024 to stockholders of record as of June 28, 2024. SELECTED FINANCIAL HIGHLIGHTS For the Quarter Ended   June 30, 2024 March 31, 2024 Net investment income per share $0.63 $0.63 Net realized and unrealized gains (losses) per share 1 $0.03 ($0.05) Earnings per share $0.66 $0.59 Regular dividend per share $0.50 $0.50   As of ($ in thousands, except per share information) June 30, 2024 March 31, 2024 Investments, at fair value $3,514,286 $3,293,205 Total debt outstanding, at principal $1,675,474 $1,492,257 Net assets $1,861,961 $1,837,027 Net asset value per share $20.83 $20.67 Debt to equity 0.90x 0.81x Net debt to equity 0.85x 0.77x 1 Amount shown may not correspond for the period as it includes the effect of the timing of the distribution and the issuance of common stock. RESULTS OF OPERATIONS Total investment income for the second quarter ended June 30, 2024 was $104.2 million, compared to $99.1 million for the first quarter ended March 31, 2024. The increase was driven by deployment of capital and prepayment related income. Total expenses for the quarter ended June 30, 2024 were $48.1 million, compared to $44.5 million for the quarter ended March 31, 2024. The increase in expenses quarter over quarter was attributable to higher interest and other financing expenses driven by an increase in weighted average debt outstanding. Net investment income for the quarter ended June 30, 2024 was $56.1 million, or $0.63 per share, compared to $54.7 million, or $0.63 per share, for the quarter ended March 31, 2024. For the quarter ended June 30, 2024, net change in unrealized appreciation on investments was $2.8 million. PORTFOLIO AND INVESTMENT ACTIVITY As of June 30, 2024, the Company’s investment portfolio had a fair value of approximately $3.5 billion, comprised of 192 portfolio companies across 34 industries, with an average investment size of $18.3 million, or 0.5% of our total portfolio on a fair value basis. The composition of the Company’s investments was the following:     June 30, 2024 March 31, 2024 ($ in thousands)   Cost   Fair Value   % of Total Investments at Fair Value   Cost   Fair Value   % of Total Investments at Fair Value First Lien Debt   $3,356,586   $3,345,743   95.3%   $3,131,129   $3,115,404   94.6% Second Lien Debt   122,416   103,144   2.9   136,708   118,107   3.6 Other Debt Investments   9,289   8,467   0.2   3,430   2,163   0.1 Equity   53,735   56,932   1.6   52,500   57,531   1.7 Total   $3,542,035   $3,514,286   100.0%   $3,323,767   $3,293,205   100.0% Investment activity for the three months ended June 30, 2024 and March 31, 2024, was as follows: Investment Activity: June 30, 2024 March 31, 2024 New investment commitments, at par $673,902 $232,120 Investment fundings $499,684 $168,357 Number of new Investment commitments in portfolio companies 22 9 Number of portfolio companies exited or fully repaid 8 3 Total weighted average yield of investments in debt securities at amortized cost and fair value was 11.6% and 11.7%, respectively, as of June 30, 2024, compared to 11.9% and 12.0%, respectively, as of March 31, 2024. Floating rate debt investments as a percentage of total portfolio on a fair value basis was 99.6% as of June 30, 2024, compared to 99.9% as of March 31, 2024. As of June 30, 2024, portions of two portfolio companies were on non-accrual status, representing approximately 0.3% of total investments at amortized cost. CAPITAL AND LIQUIDITY As of June 30, 2024, the Company had total principal debt outstanding of $1,675.5 million, including $194.0 million outstanding in the Company’s BNP funding facility, $431.5 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 newly issued senior unsecured notes due May 2029. The combined weighted average interest rate on debt outstanding was 6.57% for the quarter ended June 30, 2024. As of June 30, 2024, the Company had $1,270.4 million of availability under its credit facilities and $93.0 million in unrestricted cash. Debt to equity was 0.90x and 0.81x as of June 30, 2024 and March 31, 2024, respectively. OTHER DEVELOPMENTS On August 6, 2024, the Board declared a distribution of $0.50 per share, which is payable on October 25, 2024 to shareholders of record as of September 30, 2024. The Board previously declared a $0.10 per share special dividend to shareholders of record as of August 5, 2024. In July, Moody’s affirmed MSDL’s Baa3 (stable) rating. CONFERENCE CALL INFORMATION Morgan Stanley Direct Lending Fund will host a conference call on Friday, August 9, 2024 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: 888-394-8218 Passcode: 5963189 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, 2024   December 31, 2023     (Unaudited)   (Audited) Assets         Non-controlled/non-affiliated investments, at fair value (amortized cost of $3,542,035 and $3,226,776)   $ 3,514,286   $ 3,193,561 Cash and cash equivalents (restricted cash of $2,000 and $0)     94,966     69,705 Deferred financing costs     17,000     14,317 Interest and dividend receivable from non-controlled/non-affiliated investments     27,594     28,884 Subscription receivable     —     41 Receivable for investments sold/repaid     136     173 Prepaid expenses and other assets     1,917     53 Total assets     3,655,899     3,306,734           Liabilities         Debt (net of unamortized debt issuance costs of $8,331 and $5,564)     1,664,423     1,496,032 Payable for investment purchased     31,469     8 Payable to affiliates (Note 3)     1,508     2,870 Dividends payable     44,704     49,968 Management fees payable     6,479     2,012 Income based incentive fees payable     9,903     11,766 Interest payable     20,664     18,823 Accrued expenses and other liabilities     14,788     4,104 Total liabilities     1,793,938     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; 89,407,009 and 83,278,831 shares issued and outstanding)     89     83 Paid-in capital in excess of par value     1,831,835     1,712,609 Total distributable earnings (loss)     30,037     8,459 Total net assets   $ 1,861,961   $ 1,721,151 Total liabilities and net assets   $ 3,655,899   $ 3,306,734 Net asset value per share   $ 20.83   $ 20.67   Consolidated Statements of Operations (unaudited) (In thousands, except share amounts)       For the Three Months Ended   For the Six Months Ended     June 30, 2024   June 30, 2023   June 30, 2024   June 30, 2023 Investment Income:                 From non-controlled/non-affiliated investments:                 Interest income   $ 99,072     $ 86,573     $ 193,703     $ 168,290   Payment-in-kind     2,850       622       5,494       1,063   Dividend income     646       504       1,211       1,000   Other income     1,620       1,195       2,881       2,180   Total investment income     104,188       88,894       203,289       172,533                     Expenses:                 Interest and other financing expenses     29,302       27,907       56,562       54,574   Management fees     8,639       7,446       16,869       14,750   Income based incentive fees     11,554       10,138       22,890       19,519   Professional fees     1,687       847       2,904       2,088   Directors’ fees     128       88       274       168   Administrative service fees     17       60       42       114   General and other expenses     51       197       159       365   Total expenses     51,378       46,683       99,700       91,578   Management fees waiver (Note 3)     (2,160 )     (5,584 )     (5,257 )     (11,062 ) Incentive fees waiver (Note 3)     (1,651 )     —       (2,862 )     —   Net expenses     47,567       41,099       91,581       80,516   Net investment income (loss) before taxes     56,621       47,795       111,708       92,017   Excise tax expense     500       —       936       —   Net investment income (loss) after taxes     56,121       47,795       110,772       92,017                     Net realized and unrealized gain (loss):                 Net realized gain (loss) on non-controlled/non-affiliated investments     108       —       (5,517 )     122   Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliated investments     2,816       8,647       5,474       8,080   Net realized and unrealized gain (loss)     2,924       8,647       (43 )     8,202   Net increase (decrease) in net assets resulting from operations   $ 59,045     $ 56,442     $ 110,729     $ 100,219                     Net investment income (loss) per share (basic and diluted)   $ 0.63     $ 0.67     $ 1.25     $ 1.29   Earnings per share (basic and diluted)   $ 0.66     $ 0.79     $ 1.25     $ 1.41   Weighted average shares outstanding     89,271,839       71,337,323       88,315,183       71,101,563     View source version on businesswire.com: https://www.businesswire.com/news/home/20240808695411/en/

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