Morgan Stanley Direct Lending Fund Announces September 30, 2024 Financial Results and Declares Fourth Quarter 2024 Regular 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 third quarter ended September 30, 2024. QUARTERLY HIGHLIGHTS Net investment income of $58.7 million, or $0.66 per share, as compared to $56.1 million, or $0.63 per share, for the quarter ended June 30, 2024; Net asset value of $20.83 per share, flat as compared to June 30, 2024; Debt-to-equity was 0.99x as of September 30, 2024, as compared to 0.90x as of June 30, 2024; New investment commitments of $455.4 million, fundings of $377.0 million and sales and repayments of $252.9 million, resulting in net funded deployment of $124.1 million; and The Company’s Board of Directors (the “Board”) declared a regular dividend of $0.50 per share to shareholders of record as of September 30, 2024 as well as a special dividend, which was previously declared by the Board on January 11, 2024, of $0.10 per share to stockholders of record as of August 5, 2024. SELECTED FINANCIAL HIGHLIGHTS For the Quarter Ended   September 30, 2024 June 30, 2024 Net investment income per share $0.66 $0.63 Net realized and unrealized gains (losses) per share 1 ($0.06) $0.03 Earnings per share $0.60 $0.66 Regular dividend per share $0.50 $0.50 Special dividend per share $0.10 - 1 Amount shown may not correspond for the period as it includes the effect of the timing of the distribution and the issuance of common stock.   As of ($ in thousands, except per share information) September 30, 2024 June 30, 2024 Investments, at fair value $3,640,324 $3,514,286 Total debt outstanding, at principal $1,841,987 $1,675,474 Net assets $1,853,722 $1,861,961 Net asset value per share $20.83 $20.83 Debt to equity 0.99x 0.90x Net debt to equity 0.94x 0.85x RESULTS OF OPERATIONS Total investment income for the third quarter ended September 30, 2024 was $109.8 million, compared to $104.2 million for the second quarter ended June 30, 2024. The increase was driven by deployment of capital and repayment related income. Total expenses for the quarter ended September 30, 2024 were $51.0 million, compared to $48.1 million for the quarter ended June 30, 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 September 30, 2024 was $58.7 million, or $0.66 per share, compared to $56.1 million, or $0.63 per share, for the quarter ended June 30, 2024. For the quarter ended September 30, 2024, net change in unrealized appreciation on investments was $5.4 million, offset by realized losses of $11.0 million. PORTFOLIO AND INVESTMENT ACTIVITY As of September 30, 2024, the Company’s investment portfolio had a fair value of approximately $3.6 billion, comprised of 200 portfolio companies across 33 industries, with an average investment size of $18.2 million, or 0.5% of our total portfolio on a fair value basis. The composition of the Company’s investments was the following:     September 30, 2024 June 30, 2024 ($ in thousands)   Cost   Fair Value   % of Total Investments at Fair Value   Cost   Fair Value   % of Total Investments at Fair Value First Lien Debt   $3,506,164   $3,492,302   96.0%   $3,356,586   $3,345,743   95.3% Second Lien Debt   93,422   84,074   2.3   122,416   103,144   2.9 Other Debt Investments   9,525   8,809   0.2   9,289   8,467   0.2 Equity   53,507   55,139   1.5   53,735   56,932   1.6 Total   $3,662,618   $3,640,324   100.0%   $3,542,035   $3,514,286   100.0% Investment activity for the three months ended September 30, 2024 and June 30, 2024, was as follows: Investment Activity: September 30, 2024 June 30, 2024 New investment commitments, at par $455,365 $673,902 Investment fundings $377,019 $499,684 Number of new Investment commitments in portfolio companies 19 22 Number of portfolio companies exited or fully repaid 11 8 Total weighted average yield of investments in debt securities at amortized cost and fair value was 11.0% and 11.0%, respectively, as of September 30, 2024, compared to 11.6% and 11.7%, respectively, as of June 30, 2024. Floating rate debt investments as a percentage of total portfolio on a fair value basis was 99.6% as of September 30, 2024, unchanged compared to June 30, 2024. As of September 30, 2024, certain investments in two portfolio companies were on non-accrual status, representing approximately 0.2% of total investments at amortized cost. CAPITAL AND LIQUIDITY As of September 30, 2024, the Company had total principal debt outstanding of $1,842.0 million, including $246.0 million outstanding in the Company’s BNP funding facility, $546.0 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 senior unsecured notes due May 2029. Additionally, on August 21, 2024, the Company executed an amendment to the BNP Funding Facility, which extended the maturity from September 2028 to August 2029 and reduced the applicable margin on borrowings from 2.85% to 2.25%. The combined weighted average interest rate on debt outstanding was 6.45% for the quarter ended September 30, 2024. As of September 30, 2024, the Company had $1,102.7 million of availability under its credit facilities and $88.4 million in unrestricted cash. Debt to equity was 0.99x and 0.90x as of September 30, 2024 and June 30, 2024, respectively. SHARE REPURCHASES On January 25, 2024, the Company entered into a share repurchase plan to acquire up to $100 million in the aggregate of the Company’s Common Stock at prices below NAV. For the three months ended September 30, 2024, the Company purchased 429,653 shares at an average price of $20.06 per share. OTHER DEVELOPMENTS On November 4, 2024, the Board declared a regular distribution of $0.50 per share, which is payable on January 24, 2025 to shareholders of record as of December 31, 2024. The Board previously declared a $0.10 per share special dividend to shareholders of record as of November 4, 2024, which is payable on January 24, 2025. CONFERENCE CALL INFORMATION Morgan Stanley Direct Lending Fund will host a conference call on Friday, November 8, 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: 1797706 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     September 30, 2024   December 31, 2023     (Unaudited)   (Audited) Assets         Non-controlled/non-affiliated investments, at fair value (amortized cost of $3,662,618 and $3,226,776)   $ 3,640,324   $ 3,193,561 Cash and cash equivalents (restricted cash of $2,000 and $0)     90,428     69,705 Deferred financing costs     17,499     14,317 Interest and dividend receivable from non-controlled/non-affiliated investments     31,793     28,884 Subscription receivable     —     41 Receivable for investments sold     1,869     173 Prepaid expenses and other assets     11,455     53 Total assets     3,793,368     3,306,734           Liabilities         Debt (net of unamortized debt issuance costs of $7,420 and $5,564)     1,841,565     1,496,032 Payable for investment purchased     7,101     8 Payable to affiliates (Note 3)     173     2,870 Dividends payable     53,527     49,968 Management fees payable     6,825     2,012 Income based incentive fees payable     8,448     11,766 Interest payable     16,824     18,823 Accrued expenses and other liabilities     5,713     4,104 Total liabilities     1,939,646     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; 89,008,972 and 83,278,831 shares issued and outstanding)     89     83 Paid-in capital in excess of par value     1,823,833     1,712,609 Total distributable earnings (loss)     29,800     8,459 Total net assets   $ 1,853,722   $ 1,721,151 Total liabilities and net assets   $ 3,793,368   $ 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 Nine Months Ended     September 30, 2024   September 30, 2023   September 30, 2024   September 30, 2023 Investment Income:                 From non-controlled/non-affiliated investments:                 Interest income   $ 105,129     $ 90,977     $ 298,832     $ 259,267   Payment-in-kind     2,150       1,141       7,644       2,204   Dividend income     670       564       1,881       1,564   Other income     1,803       1,769       4,684       3,949   Total investment income     109,752       94,451       313,041       266,984                     Expenses:                 Interest and other financing expenses     33,153       29,686       89,715       84,260   Management fees     9,100       7,754       25,969       22,503   Income based incentive fees     10,128       10,727       33,018       30,246   Professional fees     1,708       1,296       4,612       3,385   Directors’ fees     130       85       404       253   Administrative service fees     138       27       180       141   General and other expenses     120       118       279       483   Total expenses     54,477       49,693       154,177       141,271   Management fees waiver (Note 3)     (2,275 )     (5,816 )     (7,532 )     (16,878 ) Incentive fees waiver (Note 3)     (1,680 )     —       (4,542 )     —   Net expenses     50,522       43,877       142,103       124,393   Net investment income (loss) before taxes     59,230       50,574       170,938       142,591   Excise tax expense     501       —       1,437       —   Net investment income (loss) after taxes     58,729       50,574       169,501       142,591                     Net realized and unrealized gain (loss):                 Net realized gain (loss) on non-controlled/non-affiliated investments     (10,965 )     5       (16,482 )     127   Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliated investments     5,442       22,829           10,916         30,909   Net realized and unrealized gain (loss)     (5,523 )     22,834       (5,566 )     31,036   Net increase (decrease) in net assets resulting from operations   $ 59,045     $ 73,408     $ 163,935     $ 173,627                     Net investment income (loss) per share (basic and diluted)   $ 0.66     $ 0.70     $ 1.91     $ 2.00   Earnings per share (basic and diluted)   $ 0.60     $ 1.02     $ 1.85     $ 2.43   Weighted average shares outstanding     89,264,686       71,874,113       88,633,994       71,361,910     View source version on businesswire.com: https://www.businesswire.com/news/home/20241107601356/en/

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