Morgan Stanley Direct Lending Fund Announces March 31, 2024 Financial Results and Declares Second 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 first quarter ended March 31, 2024. “MSDL generated strong first quarter operating results, supported by continued stable credit performance,” said Jeffrey Levin, President and Chief Executive Officer of Morgan Stanley Direct Lending Fund. “We have constructed what we believe to be a resilient middle-market portfolio of senior, sponsor-backed loans and believe we are well positioned to generate strong risk-adjusted returns for our investors as market trends evolve.” QUARTERLY HIGHLIGHTS Net investment income of $54.7 million, or $0.63 per share; Net asset value of $20.67 per share, unchanged as compared to December 31, 2023, despite dilution from our Initial Public Offering (“IPO”); Debt-to-equity was 0.81x as of March 31, 2024, as compared to 0.87x as of December 31, 2023; New investment commitments of $232.1 million, fundings of $168.4 million and sales and repayments of $71.7 million, resulting in net funded portfolio increase of $96.7 million; and The Company’s Board of Directors (the “Board”) declared a regular dividend of $0.50 per share, paid on April 25, 2024 to stockholders of record as of March 29, 2024. SELECTED FINANCIAL HIGHLIGHTS   For the Quarter Ended   March 31, 2024   December 31, 2023 Net investment income per share $0.63   $0.67 Net realized and unrealized gains (losses) per share 1 ($0.05)   $0.03 Earnings per share $0.59   $0.70 Regular dividend per share $0.50   $0.50 Special dividend per share -   $0.10   As of ($ in thousands, except per share information) March 31, 2024   December 31, 2023 Investments, at fair value $3,293,205   $3,193,561 Total debt outstanding, at principal $1,492,257   $1,502,263 Net assets $1,837,027   $1,721,151 Net asset value per share $20.67   $20.67 Debt to equity 0.81x   0.87x Net debt to equity 0.77x   0.83x 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 first quarter ended March 31, 2024 was $99.1 million, compared to $100.8 million for the fourth quarter ended December 31, 2023. The slight decrease was driven by a reduction in non-recurring repayment related income. Total operating expenses for the quarter ended March 31, 2024 were $44.5 million, compared to $45.3 million for the quarter ended December 31, 2023. The decrease in operating expenses quarter over quarter was attributable to lower interest and other financing expenses and lower incentive fees due to the partial incentive fee waiver for one year after the Company’s IPO and partially offset by higher management fees. Net investment income for the quarter ended March 31, 2024 was $54.7 million, or $0.63 per share, compared to $55.5 million, or $0.67 per share, for the quarter ended December 31, 2023. For the quarter ended March 31, 2024, net change in unrealized appreciation on investments was $2.7 million offset by realized losses of $5.6 million. PORTFOLIO AND INVESTMENT ACTIVITY As of March 31, 2024, the Company’s investment portfolio had a fair value of approximately $3.3 billion, comprised of 178 portfolio companies across 31 industries, with an average investment size of $18.5 million, or 0.6% of our total portfolio on a fair value basis. The composition of the Company’s investments was the following:   March 31, 2024   December 31, 2023 ($ in thousands)   Cost   Fair Value   % of Total Investments at Fair Value   Cost   Fair Value   % of Total Investments Fair Value First Lien Debt   $ 3,131,129   $ 3,115,404   94.6 %   $ 3,027,413   $ 3,004,544   94.1 % Second Lien Debt     136,708     118,107   3.6       146,014     132,415   4.1   Other Investments     55,930     59,694   1.8       53,349     56,602   1.8   Total   $ 3,323,767   $ 3,293,205   100.0 %   $ 3,226,776   $ 3,193,561   100.0 % Investment activity for the three months ended March 31, 2024 and December 31, 2023, was as follows: Investment Activity: March 31, 2024 December 31, 2023 New investment commitments, at par $232,120 $242,891 Investment fundings $168,357 $253,867 Number of new Investment commitments in portfolio companies 9 12 Number of portfolio companies exited or fully repaid 3 5 Total weighted average yield of investments in debt securities at amortized cost and fair value was 11.9% and 12.0%, respectively, as of March 31, 2024, compared to 12.0% and 12.1%, respectively as of December 31, 2023. Floating rate debt investments as a percentage of total portfolio on a fair value basis remained unchanged from December 31, 2023 at 99.9% as of March 31, 2024. As of March 31, 2024, three investments were on non-accrual status, representing approximately 0.4% of total investments at amortized cost. CAPITAL AND LIQUIDITY As of March 31, 2024, the Company had total principal debt outstanding of $1,492.3 million, including $300.0 million outstanding in the Company’s BNP funding facility, $492.3 million outstanding in the Company’s Truist credit facility, $275.0 million outstanding in the Company’s senior unsecured notes due September 2025, and $425.0 million outstanding in the Company’s senior unsecured notes due February 2027. The combined weighted average interest rate on debt outstanding was 6.69% for the quarter ended March 31, 2024. As of March 31, 2024, the Company had $923.7 million of availability under its credit facilities and $64.8 million in cash. Debt to equity was 0.81x and 0.87x as of March 31, 2024 and December 31, 2023, respectively, with the decline primarily attributable to the IPO being executed during the first quarter. RECENT DEVELOPMENTS On May 8, 2024, the Board declared a distribution of $0.50 per share, which is payable on July 25, 2024 to shareholders of record as of June 28, 2024. On April 19, 2024, the Company executed an amendment to its Senior Secured Revolving Credit Facility with Truist Bank, extending the maturity from January 2028 to April 2029. As part of the amendment, the total commitment was increased from $1.12 to $1.30 billion and pricing terms were maintained. In late March, Fitch Ratings affirmed MSDL’s BBB- (stable) rating. CONFERENCE CALL INFORMATION Morgan Stanley Direct Lending Fund will host a conference call on Friday, May 10, 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: 888-256-1007 International: 323-701-0225 Passcode: 6641924 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     March 31, 2024   December 31, 2023     (Unaudited)   (Audited) Assets         Non-controlled/non-affiliated investments, at fair value (amortized cost of $3,323,767 and $3,226,776)   $ 3,293,205   $ 3,193,561 Cash     64,762     69,705 Deferred financing costs     13,391     14,317 Interest and dividend receivable from non-controlled/non-affiliated investments     29,341     28,884 Subscription receivable     —     41 Receivable for investments sold/repaid     348     173 Prepaid expenses and other assets     300     53 Total assets     3,401,347     3,306,734           Liabilities         Debt (net of unamortized debt issuance costs of $4,982 and $5,564)     1,486,661     1,496,032 Payable for investment purchased     2,972     8 Payable to affiliates (Note 3)     2,511     2,870 Dividends payable     44,447     49,968 Management fees payable     5,132     2,012 Income based incentive fees payable     10,126     11,766 Interest payable     8,963     18,823 Accrued expenses and other liabilities     3,508     4,104 Total liabilities     1,564,320     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; 88,894,490 and 83,278,831 shares issued and outstanding)     89     83 Paid-in capital in excess of par value     1,821,242     1,712,609 Total distributable earnings (loss)     15,696     8,459 Total net assets   $ 1,837,027   $ 1,721,151 Total liabilities and net assets   $ 3,401,347   $ 3,306,734 Net asset value per share   $ 20.67   $ 20.67   Consolidated Statements of Operations (unaudited) (In thousands, except share amounts)       For the Three Months Ended     March 31, 2024   March 31, 2023 Investment Income:         From non-controlled/non-affiliated investments:         Interest income   $ 94,631     $ 81,717   Payment-in-kind     2,644       441   Dividend income     565       496   Other income     1,261       985   Total investment income     99,101       83,639             Expenses:         Interest and other financing expenses     27,260       26,667   Management fees     8,230       7,304   Income based incentive fees     11,336       9,381   Professional fees     1,217       1,241   Directors’ fees     146       80   Administrative service fees     25       54   General and other expenses     108       168   Total expenses     48,322       44,895   Management fees waiver (Note 3)     (3,098 )     (5,478 ) Incentive fees waiver (Note 3)     (1,210 )     —   Net expenses     44,014       39,417   Net investment income (loss) before taxes     55,087       44,222   Excise tax expense     436       —   Net investment income (loss) after taxes     54,651       44,222             Net realized and unrealized gain (loss):         Net realized gain (loss) on non-controlled/non-affiliated investments     (5,625 )     122   Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliated investments     2,658       (567 ) Net realized and unrealized gain (loss)     (2,967 )     (445 ) Net increase (decrease) in net assets resulting from operations   $ 51,684     $ 43,777             Net investment income (loss) per share (basic and diluted)   $ 0.63     $ 0.62   Earnings per share (basic and diluted)   $ 0.59     $ 0.62   Weighted average shares outstanding:     87,358,527       70,863,184     View source version on businesswire.com: https://www.businesswire.com/news/home/20240509710535/en/

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