MSDL Morgan Stanley Direct Lending Fund

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

 

 

FORM 8-K 

 

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): May 9, 2024 

 

 

Morgan Stanley Direct Lending Fund

(Exact name of registrant as specified in its charter) 

 

 

Delaware	814-01332	84-2009506
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

 

1585 Broadway New York, NY	10036
(Address of principal executive offices)	(Zip Code)

 

1 (212) 761-4000

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former Name or Former Address, if changed since last report) 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	MSDL	The New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

 

 

 

Item 2.02. Results of Operations and Financial Condition.

 

On May 9, 2024, Morgan Stanley Direct Lending Fund (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2024. The text of the press release is included as Exhibit 99.1 to this Form 8-K.

 

The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being “furnished” and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 7.01. Regulation FD Disclosure.

 

On May 8, 2024, the Board of Directors of the Company declared a regular distribution to stockholders in the amount of $0.50 per share. The distribution will be payable on or around July 25, 2024 to stockholders of record as of June 28, 2024.

 

The information disclosed under this Item 7.01, including Exhibit 99.1 hereto, is being “furnished” and shall not be deemed “filed” by the Company for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section, and shall not be deemed incorporated by reference into any filing under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits:

 

Exhibit Number		Description
99.1		Press Release of Morgan Stanley Direct Lending Fund, dated May 9, 2024.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: May 9, 2024	MORGAN STANLEY DIRECT LENDING FUND
	By:	/s/ David Pessah
		David Pessah
		Chief Financial Officer

 

 

 

 

Exhibit 99.1

 

 

 

Morgan Stanley Direct Lending Fund Announces March 31, 2024 Financial Results and Declares Second Quarter 2024 Dividend of $0.50 per Share

 

NEW YORK, NY, May 9, 2024 — 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 share1		$	(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			0.81	x			0.87	x
Net debt to equity			0.77	x			0.83	x

 

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.

 

Contacts

 

Investors
Michael Occi
msdl@morganstanley.com

 

Media
Alyson Barnes
212-762-0514
alyson.barnes@morganstanley.com

 

 

 

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

 

 

v3.24.1.u1

Cover	May 09, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 09, 2024
Entity File Number	814-01332
Entity Registrant Name	Morgan Stanley Direct Lending Fund
Entity Central Index Key	0001782524
Entity Tax Identification Number	84-2009506
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	1585 Broadway
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10036
City Area Code	212
Local Phone Number	761-4000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	MSDL
Security Exchange Name	NYSE
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	true

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