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Item 7. Management’s Discussion and Analysis

2022-03-18 compared with 2021-03-19 · 242 added, 157 removed, 210 unchanged (66% of the section changed)

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The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto in Part II, Item 8 of this Form 10-K, “Financial Statements and Supplementary Data.” This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to those described in Part I, Item 1A of this Form 10-K, “Risk Factors.” Our actual results could differ materially from those anticipated by such forward-looking information due to factors discussed under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this Form 10-K.

The year ended December 31, 2019 presented represents the period from May 30, 2019 (inception) to December 31, 2019.

We are an externally managed specialty finance company focused on lending to middle-market companies.

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federal income tax purposes, we have elected to be treated, and intend to comply with the requirements to qualify annually, as a RIC under Subchapter M of the Code.

We are not a subsidiary of or consolidated with Morgan Stanley.

Our investment objective is to achieve attractive risk-adjusted returns via current income and, to a lesser extent, capital appreciation by investing primarily in directly originated senior secured term loans issued by U.S.

middle-market companies backed by financial sponsors.

For the purposes of this report, “middle-market companies” refers to companies that, in general, generate annual EBITDA in the range of approximately $15 million to $100 million, which we believe is a useful proxy for cash flow.

We intend to achieve our investment objective by investing primarily in directly originated senior secured term loans including first lien senior secured term loans (including unitranche loans) and second lien senior secured term loans, with the balance of our investments expected to be in higher-yielding assets such as mezzanine debt, unsecured debt, equity investments and other opportunistic assets.

We invest primarily in directly originated senior secured term loans including first lien senior secured term loans (including unitranche loans) and second lien senior secured term loans, with the balance of our investments expected to be in higher-yielding assets such as mezzanine debt, unsecured debt, equity investments and other opportunistic asset purchases.

Typical middle-market senior loans may be issued by middle-market companies in the context of LBOs, acquisitions, debt refinancings, recapitalizations, and other similar transactions.

We expect to generate revenues primarily in the form of interest income from investments we hold.

In addition, we generate income from dividends on any direct equity investments, capital gains on the sales of loans and debt and equity investments and various other loan origination and other fees.

On September 18, 2020, the SEC granted us exemptive relief (the “Order”) that allows us to enter into certain negotiated co-investment transactions alongside certain Affiliated Investment Accounts (as defined in the Order) in a manner consistent with our investment objective, positions, policies, strategies, and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with the Order.

We generally expect our debt investments to have a stated term of five to eight years and typically bear interest at a floating rate usually determined on the basis of a benchmark such as the LIBOR or SOFR.

We generate revenues primarily in the form of interest income from investments we hold.

In addition, we generate income from dividends on any direct equity investments, capital gains on the sales of loans and debt and equity investments and various other loan origination and other fees, including commitment, origination, amendment, structuring, syndication or due diligence fees, fees for providing managerial assistance and consulting fees.

On September 18, 2020, the SEC granted us the Order that allows us to enter into certain negotiated co-investment transactions alongside certain Affiliated Investment Accounts (as defined in the Order) in a manner consistent with our investment objective, positions, policies, strategies, and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with the Order.

Pursuant to the Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.

RECENT DEVELOPMENTS

Subsequent to December 31, 2020 through March 19, 2021, the Company has closed or the Investment Adviser's Investment Committee has committed/approved approximately $538.0 million of new/add-on investments.

This includes transactions for which a formal mandate, letter of intent or a signed commitment have been issued, and therefore the Company believes are likely to close.

Of these new commitments, approximately 87.8% were first lien senior secured loans, 11.2% were second lien senior secured loans, and 1.1% were common equity investments.

100% of the senior secured loans were floating rate loans.

We remain highly focused on conducting extensive due diligence and leveraging the Morgan Stanley platform.

We continue to seek to invest in companies that are led by strong management teams, generate substantial free cash flow, have leading market positions, benefit from sustainable business models, and are well positioned to perform well despite the impact of Coronavirus.

We believe the current market environment offers opportunities to seek compelling risk adjusted returns.

Our investment pace will depend on several factors including the market environment, deal flow, and the continued impact of Coronavirus.

On January 7, 2021 and March 2, 2021, we delivered capital drawdown notices to our investors relating to the sale of shares of our Common Stock for an aggregate offering price of approximately $35.0 million and approximately $45.0 million, respectively.

The sale of approximately 1,726,689 and 2,171,816 shares of our Common Stock closed on January 20, 2021 and March 12, 2021, respectively.

On February 1, 2021, we closed new capital commitments of $50.0 million, which brings our total capital commitments to $1,495.8 million.

On March 2, 2021, DLF LLC entered into (i) an amendment (the “Second Amendment to CSA”) to the Revolving Credit and Security Agreement, dated as of October 14, 2020, as amended from time to time (the “BNP Funding Facility”), by and among DLF LLC, as the borrower, the Company, as the equityholder and servicer, BNP Paribas, as the administrative agent, U.S.

Bank National Association, as the collateral agent, and the lenders party thereto and (ii) amendments to various supporting documentation, including certain fee letters (together with the Second Amendment to CSA, the “Second Amendment”).

The Second Amendment, among other things, increased the borrowing capacity under the BNP Funding Facility from $300 million to $600 million, made certain adjustments to the borrowing base calculations, reduced the applicable margin on borrowings to a range during the reinvestment period between 1.95% and 2.75% and, after the reinvestment period, between 2.45% and 3.25%, and reduced the LIBOR (Dollar) floor on borrowings to 0.00%.

The other material terms of the BNP Funding Facility remain unchanged.

On March 18, 2021, our Board of Directors declared a distribution of $0.45 per share payable on April 22, 2021 to stockholders on record as of March 18, 2021.

KEY COMPONENTS OF OUR RESULTS OF OPERATIONS

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt available to middle-market companies, the general economic environment and the competitive environment for the type of investments we make.

We expect to generate revenue primarily in the form of interest income on debt investments we hold.

In addition, we expect to generate income from dividends on direct equity investments, capital gains on the sales of loans and debt and equity securities and various loan origination and other fees.

Our debt investments generally have a stated term of five to eight years and generally bear interest at a floating rate usually determined on the basis of a benchmark such as LIBOR.

Interest on these debt investments is generally paid quarterly.

We generate revenue primarily in the form of interest income on debt investments we hold.

In addition, we generate income from dividends on direct equity investments, capital gains on the sales of loans and debt and equity securities and various loan origination and other fees.

Our debt investments generally have a stated term of five to eight years and generally bear interest at a floating rate usually determined on the basis of a benchmark such as LIBOR or SOFR.

Interest on these debt investments is generally

paid quarterly.

In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances.

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Our portfolio activity also reflects the proceeds of sales of securities.

We may also generate revenue in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and consulting fees.

We may also generate revenue in the form of commitment, origination, amendment, structuring, syndication or due diligence fees, fees for providing managerial assistance and consulting fees.

Our primary operating expenses include the payment of:

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• all other expenses incurred by either the Administrator or us in connection with administering our business, including payments under the Administration Agreement based upon our allocable portion of the compensation paid to our Chief Financial Officer and Chief Compliance Officer and reimbursing third-party expenses incurred by the Administrator in carrying out its administrative services including, but not limited to, the fees and expenses associated with performing compliance functions.

We will reimburse the Administrator or its affiliates for amounts paid or costs borne that properly constitute Company expenses as set forth in the Administration Agreement or otherwise.

We reimburse the Administrator or its affiliates for amounts paid or costs borne that properly constitute Company expenses as set forth in the Administration Agreement or otherwise.

We expect our general and administrative expenses to be relatively stable or to decline as a percentage of total assets during periods of asset growth and to increase during periods of asset declines.

PORTFOLIO, INVESTMENT ACTIVITY AND RESULTS OF OPERATIONS

As of December 31, 2020, we had investments in thirty-six portfolio companies across nineteen industries.

As of December 31, 2021, we had investments in 98 portfolio companies across 27 industries.

Based on fair value as of December 31, 2021, 99.9% of our debt portfolio was invested in debt bearing a floating interest rate, which primarily are subject to interest rate floors.

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The weighted average LIBOR floor across our floating-rate portfolio was approximately 0.9% as of December 31, 2021.

These floors allow us to mitigate (to a degree) the impact of spread widening on the valuation of our investments.

These floors allow us to mitigate (to a degree) any impact of spread widening on the valuation of our investments.

As of December 31, 2021, our weighted average total yield of debt securities at amortized cost was 7.2%.

Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of December 31, 2021.

During the period from May 30, 2019 (inception) to December 31, 2019, we had no investment activities.

We commenced our investment operations on January 31, 2020.

Our investment activities for the year ended December 31, 2020 is presented below (information presented herein is at amortized cost unless otherwise indicated):

For the year ended December 31, 2020

As of December 31, 2020, we had investments in 36 portfolio companies across 19 industries.

Based on fair value as of December 31, 2020, 99.8% of our debt portfolio was invested in debt bearing a floating interest rate, which primarily are subject to interest rate floors.

Approximately 95.2% of our debt portfolio at fair value had a LIBOR floor.

The weighted average LIBOR floor across our floating-rate portfolio was approximately 0.9% as of December 31, 2020.

These floors allow us to mitigate (to a degree) any impact of spread widening on the valuation of our investments.

As of December 31, 2020, our weighted average total yield of debt securities at amortized cost was 7.5%.

Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of December 31, 2020.

Our portfolio as of December 31, 2021 and December 31, 2020 is presented below:

December 31, 2021 December 31, 2020

Cost Fair Value % of Total Investments at Fair Value Cost Fair Value % of Total Investments at Fair Value

First Lien Debt $ 2,213,332 $ 2,224,100 93.2 % $ 575,009 $ 580,867 91.2 %

Second Lien Debt 120,124 121,550 5.1 53,505 53,155 8.3

Other Securities 39,979 41,724 1.7 2,959 2,959 0.5

Total $ 2,373,435 $ 2,387,374 100.0 % $ 631,473 $ 636,981 100.0 %

Our investment activities for the year ended December 31, 2021 and December 31, 2020 are presented below (information presented herein is at amortized cost unless otherwise indicated):

As of and For the Year Ended

December 31, 2021 December 31, 2020

New Investments Committed/Purchased

Gross Principal Balance (1)

$ 2,908,710 $ 948,731

Syndications (422,061) —

Net New Investments Committed/Purchased 2,486,649 948,731

Investments, at Cost

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Net accretion of discount on investments 10,133 3,606

Payment-in-kind 1,179 9

Net realized gain (loss) on investments 1,895 2,154

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Investments, end of period 2,373,435 631,473

Principal amount of investments funded

First lien debt $ 678,879

Second lien debt 55,000

Unsecured debt 1,509

Common equity (3)

Amount of investments funded, at principal

First lien debt investments 2,002,574 678,879

Second lien debt investments 102,632 55,000

Other securities (2)

Total 2,143,390 736,838

Principal amount of investments sold or repaid

First lien debt $ 90,106

Amount of investments sold/fully repaid, at principal

First lien debt investments 305,942 90,106

Second lien debt investments 36,250 —

Other securities (2)

Total 345,539 90,106

As of December 31, 2020

Weighted average yield on debt and income producing investments, at cost (3)

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Number of portfolio companies 98 36

Percentage of debt investments bearing a floating rate 99.8 %

Percentage of debt investments bearing a fixed rate 0.2 %

(1) Includes new investment commitments, excluding sale/repayments and including unfunded investment commitments.

(2) Includes capitalized PIK interest.

(3) Represents dollar amount of common equity funded.

(4) Computed as (a) the annual stated spread, plus applicable Prime/LIBOR or Floor, as applicable, plus the annual accretion of discounts, as applicable, on accruing debt securities, divided by (b) total debt investments (at fair value or cost, as applicable) included in such securities.

Percentage of debt investments bearing a floating rate, at fair value 99.9 % 99.8 %

Percentage of debt investments bearing a fixed rate, at fair value 0.1 % 0.2 %

(1) Includes new investment commitments, excluding sale/repayments and including new unfunded investment commitments.

(2) Represents dollar amount of other securities funded.

(3) Computed as (a) the annual stated spread, plus Prime/LIBOR or Floor, as applicable, plus the annual accretion of discounts, as applicable, on accruing debt securities, divided by (b) total debt investments (at fair value or cost, as applicable) included in such securities.

Actual yields earned over the life of each investment could differ materially from the yields presented herein.

The distribution of our portfolio on the Adviser's Internal Risk Rating System as of December 31, 2020 is as follows (dollar amounts in thousands):

December 31, 2020

Fair Value % of Portfolio Number of Portfolio Companies

As part of the monitoring process, our Investment Adviser has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments.

Our Investment Adviser has developed a classification system to group investments into four categories.

The investments are evaluated regularly and assigned a category based on certain credit metrics.

Our Investment Adviser’s ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent or reflect any third-party assessment of any of our investments.

Please see below for a description of the four categories of the Investment Adviser’s Internal Risk Rating system:

Category 1 — In the opinion of our Investment Adviser, investments in Category 1 involve the least amount of risk relative to our initial cost basis at the time of origination or acquisition.

Category 1 investments performance is above our initial underwriting expectations and the business trends and risk factors are generally favorable, which may include the performance of the portfolio company, or the likelihood of a potential exit.

Category 2 — In the opinion of our Investment Adviser, investments in Category 2 involve a level of risk relative to our initial cost basis at the time of origination or acquisition.

Category 2 investments are generally performing in line with our initial underwriting expectations and risk factors to ultimately recoup the cost of our principal investment are neutral to favorable.

All new originated or acquired investments are initially included in Category 2.

Category 3 — In the opinion of our Investment Adviser, investments in Category 3 indicate that the risk to our ability to recoup the initial cost basis at the time of origination or acquisition has increased materially since the origination or acquisition of the investment,

such as declining financial performance and non-compliance with debt covenants;

however, principal and interest payments are not more than 120 days past due.

Category 4 — In the opinion of our Investment Adviser, investments in Category 4 involve a borrower performing substantially below expectations and indicate that the loan’s risk has increased substantially since origination or acquisition.

Most or all of the debt covenants are out of compliance and payments are substantially delinquent.

For Category 4 investments, it is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis at the time of origination or acquisition upon exit.

The distribution of our portfolio on the Adviser’s Internal Risk Rating System as of December 31, 2021 and December 31, 2020 was as follows:

December 31, 2021 December 31, 2020

Fair Value % of Portfolio Number of Portfolio Companies Fair Value % of Portfolio Number of Portfolio Companies

Risk rating 1 $ 44,355 1.9 % 1 $ 31,230 4.9 % 1

Risk rating 2 2,343,019 98.1 97 605,751 95.1 35

Risk rating 3 — — — — — —

Risk rating 4 — — — — — —

$ 2,387,374 100.0 % 98 $ 636,981 100.0 % 36

CONSOLIDATED RESULTS OF OPERATIONS

We were formed on May 30, 2019 and commenced our investment operations on January 31, 2020.

The following table represents our operating results (dollar amounts in thousands):

For the year ended December 31, 2020 From May 30, 2019 (inception) to December 31, 2019

The comparison of the fiscal years ended December 31, 2020 and 2019 can be found in our Form 10-K for the fiscal year ended December 31, 2020 under Item 7.

Management’s Discussion and Analysis of Financial Conditions and Results of Operations.

The following table represents our operating results:

For the year ended

December 31, 2021 December 31, 2020

Total investment income $ 119,816 $ 21,903

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Net investment income 73,009 10,635

Excise tax expense 80 —

Net investment income (loss) after taxes 72,929 10,635

Net change in unrealized appreciation (depreciation) 8,431 5,508

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Investment Income

Investment income was as follows (dollar amounts in thousands):

For the year ended December 31, 2020 From May 30, 2019 (inception) to December 31, 2019

Investment income was as follows:

For the year ended

December 31, 2021 December 31, 2020

Investment income:

Interest income $ 108,277 $ 20,269

Payment-in-kind interest income 1,021 9

Dividend income 409 —

Other income 10,109 1,625

Total investment income $ 119,816 $ 21,903

For the year ended December 31, 2020, total investment income was driven by our deployment of capital and invested balance of investments.

The size of our investment portfolio at fair value was $637.0 million as of December 31, 2020 and, as of such date, all our debt investments were income-producing.

The increase in total investment income from $21,903 for the year ended December 31, 2020 to $119,816 for the year ended December 31, 2021 was primarily driven by our deployment of capital and invested balance of investments, partially offset against

weighted average asset yield decrease.

The size of our investment portfolio at fair value increased from $637.0 million as of December 31, 2020 to $2,387.4 million as of December 31, 2021.

As of such dates, all our debt investments were income-producing.

Interest income on our debt investments is dependent on the composition and credit quality of the portfolio.

Generally, we expect the portfolio to generate predictable quarterly interest income based on the terms stated in each loan’s credit agreement.

As of December 31, 2020, and for the year then ended, all of our first and second lien debt investments were performing and current on their interest payments.

During the period from May 30, 2019 (inception) to December 31, 2019, we had no investment income and had not commenced our investment operations.

The Company is responsible for investment expenses, legal expenses, auditing fees and other expenses related to the Company’s operations.

During the year ended December 31, 2020 and the period from May 30, 2019 (inception) to December 31, 2019, we incurred total expenses of $13,176 (before expense waivers of $1,908) and $1,235 (before expense waiver of $79), respectively, towards organization costs, directors’ fee and other general expenses.

Expenses were as follows (dollar amounts in thousands):

For the year ended December 31, 2020 From May 30, 2019 (inception) to December 31, 2019

Interest expense $ 3,725 $ —

As of December 31, 2021 and December 31, 2020, and for the years then ended, all of our first and second lien debt investments were performing and current on their interest payments.

The Company is responsible for investment expenses, professional fees, and other general and administrative expenses related to the Company’s operations.

Expenses were as follows for the year ended December 31, 2021 and December 31, 2020, respectively:

For the year ended

December 31, 2021 December 31, 2020

Interest and other financing expenses $ 21,015 $ 3,725

Management fees 13,860 2,238

Income based incentive fees 2,517 —

Capital gains incentive fees 1,341 —

Income based incentive fee 15,852 2,517

Capital gains incentive fee 1,809 1,341

Professional fees 2,440 1,654

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Total expenses 57,104 13,176

Expense waiver (Note 3) (230) (79)

Management fees waiver (Note 3) (1,678) —

Expense support 98 (230)

Management fees waiver (10,395) (1,678)

Net expenses $ 46,807 $ 11,268

Excise tax expense $ 80 $ —

For the year ended December 31, 2021, net expenses were primarily comprised of interest expense of $21,015, gross base management fees of $13,860, income based incentive fees of $15,852, capital gains incentive fees of $1,809, administrative service expenses of $212, professional fees of $2,440, fees to independent directors of $336, organization and offering costs of $42 and other expenses of $1,538;

offset by management fee waivers and expense waivers by the Investment Adviser of $1,678 and $230, respectively.

During the period from May 30, 2019 (inception) to December 31, 2019, net expenses were primarily comprised of professional fees of $66, fees to independent directors of $43, organization costs of $1,079 and other expenses of $47;

offset by expense waivers by the Investment Adviser of $79.

Interest expense for the year ended December 31, 2020 was driven by approximately $114.4 million of average borrowings (at an average effective interest rate, of 1.93%), under our CIBC Subscription Facility related to borrowings for investments and expenses.

There was no interest expense incurred during the period from May 30, 2019 (inception) to December 31, 2019.

Professional fees include legal, audit, tax, valuation, and other professional fees incurred related to the management of our Company.

offset by management fee waiver of $10,395, and increased by expense support recoupment of previously waived organization and offering costs by the Investment Adviser of $98.

For the year ended December 31, 2020, net expenses were primarily comprised of interest expense of $3,725, gross base management fees of $2,238, income based incentive fees of $2,517, capital gains incentive fees of $1,341, administrative service expenses of $183, professional fees of $1,654, fees to independent directors of $349, organization and offering costs of $676 and other expenses of $493;

offset by management fee waiver and expense support by the Investment Adviser of $1,678 and $230, respectively.

Interest and other financing expenses increased from $3,725 for the year ended December 31, 2020 to $21,015 for the year ended December 31, 2021.

The increase was primarily driven by approximately $796.3 million of average borrowings at an average effective interest rate of 2.12% during the year ended December 31, 2021, as compared to approximately $114.4 million of average borrowings at an average effective interest rate of 1.93% during the year ended December 31, 2020.

Professional fees include legal, audit, tax, and other professional fees incurred related to the management of our Company.

Administrative service fees represent fees paid to the Administrator for our allocable portion of the cost of certain of our executive officers that perform duties for us.

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Organization costs and offering costs include expenses incurred in our initial formation and our offering of stock.

As of December 31, 2020, expense support includes the management fee waiver of $1,678 and excess organization and offering costs of $230 that the Adviser has committed to pay.

As of December 31, 2019, expense support includes excess organization and offering costs of $79 that the Adviser has committed to pay.

Excess organization and offering costs are subject to reimbursement to the Adviser at a future date.

For the year ended December 31, 2021, expense support includes recoupment of previously waived excess organization and offering costs of $98.

For the year ended December 31, 2020, expense support includes excess organization and offering costs of $230 that the Adviser committed to pay.

See “ Item 8.

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federal income taxes.

For the year ended December 31, 2021, we have accrued $80 of U.S.

federal excise tax.

No federal excise tax was accrued for the year ended December 31, 2020.

Net Realized Gain (Loss) and Unrealized Gain (Loss) on Investments

For the year ended December 31, 2020, net realized gain on our investments was $2.2 million.

We determine the fair value of our portfolio investments quarterly and any changes in fair value are recorded as unrealized gains or losses.

For the year ended December 31, 2020, net change in unrealized gain on our investments was $5.5 million.

For the period from May 30, 2019 (inception) to December 31, 2019, there were no realized gain (loss) or changes in unrealized gains/losses on investments since the Company commenced operations on January 31, 2020.

For the year ended December 31, 2020 From May 30, 2019 (inception) to December 31, 2019

For the year ended

December 31, 2021 December 31, 2020

Realized and unrealized gains (losses) on investment transactions:

Net realized gain (loss):

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Non-controlled/non-affiliated investments 8,431 5,508

Net realized and unrealized gain (loss) $ 7,662 $ —

Net realized and unrealized gains (losses) $ 10,326 $ 7,662

For the year ended December 31, 2021 and December 31, 2020, net realized gain on our investments was $1.9 million and $2.2 million, respectively, primarily driven by the sale of debt and equity investments in our investment portfolio.

We determine the fair value of our portfolio investments quarterly and any changes in fair value are recorded as unrealized gains or losses.

For the year ended December 31, 2021 and December 31, 2020, net change in unrealized gain on our investments of $8.4 million and $5.5 million were primarily driven by the increases of valuations of our debt and equity investments as a result of the tightening credit spread environment and generally strong portfolio company performance.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

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Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors.

As of December 31, 2020, we had approximately $11.3 million of cash, which taken together with our approximately $66.2 million and $300.0 million of availability under the CIBC Subscription Facility and the BNP Funding Facility (subject to borrowing base availability), respectively, and our approximately $1,148.4 million of uncalled capital commitments to purchase shares of Common Stock, or capital commitments, we expect to be sufficient for our investing activities and to conduct our operations in the near term.

As of December 31, 2020, we had received aggregate capital commitments of approximately $1,445.8 million, of which $200.0 million was from an affiliate of the Investment Adviser.

During the year ended December 31, 2020, we issued six capital calls to our stockholders.

As of December 31, 2021, we had approximately $74.2 million of cash, which taken together with our approximately $89.7 million, $136.5 million and $499.0 million of availability under the CIBC Subscription Facility, the BNP Funding Facility and the Truist Credit Facility (subject to borrowing base availability), respectively, and our approximately $425.7 million of uncalled capital commitments to purchase shares of Common Stock, or capital commitments, we expect to be sufficient for our investing activities and to conduct our operations in the near term.

As of December 31, 2021, we had received aggregate capital commitments of approximately $1,585.5 million.

During the year ended December 31, 2021, we issued eight capital calls to our stockholders.

As a result, the total shares issued and proceeds received related to capital drawdowns delivered pursuant to the Subscription Agreements for the year ended December 31, 2021 were as follows (dollar amounts in millions):

Share Issuance Date Shares Issued Amount

January 20, 2021 1,726,689 $ 35.00

March 12, 2021 2,171,816 45.00

April 12, 2021 5,326,877 110.00

May 26, 2021 4,036,582 84.97

July 16, 2021 7,161,130 149.88

October 15, 2021 7,806,514 164.02

November 12, 2021 8,182,294 173.96

December 29, 2021 4,748,891 99.63

Total 41,160,793 $ 862.46

The total shares issued and proceeds received related to capital drawdowns delivered pursuant to the Subscription Agreements for the year ended December 31, 2020 were as follows (dollar amounts in millions):

Share Issuance Date Shares Issued Amount

February 5, 2020 2,874,810 $ 57.50

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Total 14,971,159 $ 297.35

During the period from May 30, 2019 (inception) to December 31, 2019, we received seed capital of $35 from and issued 1,750 shares to MS Credit Partners Holdings.

Distributions and Dividend Reinvestment

The following table summarizes our distributions declared and payable for the year ended December 31, 2020:

Date Declared Record Date Payment Date Per Share Amount Total Amount

The following tables summarize our distributions declared and payable for the year ended December 31, 2021 and December 31, 2020, respectively:

Date Declared Record Date Payment Date Per Share Amount Dividend Yield (2)

March 18, 2021 March 18, 2021 April 22, 2021 $ 0.45 10.1 % $ 8,570

June 23, 2021 June 23, 2021 July 22, 2021 0.49 10.7 % 13,974

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Total Distributions $ 2.07 $ 72,315

(1) Includes a special distribution of $0.18 per share.

We adopted an “opt in” dividend reinvestment plan (“DRIP”).

Date Declared Record Date Payment Date Per Share Amount Dividend Yield (2)

June 19, 2020 June 19, 2020 July 15, 2020 $ 0.29 6.0 % $ 1,533

September 24, 2020 September 24, 2020 October 22, 2020 0.40 9.7 % 3,228

December 29, 2020 December 29, 2020 January 27, 2021 0.61 (1) 14.2 % 9,165

Total Distributions $ 1.30 $ 13,926

(1) Includes a special distribution of $0.11 and $0.18 per share for the year ended December 31, 2021 and December 31, 2020, respectively.

(2) Dividend yield (annualized) is calculated by dividing the declared dividend by the weighted average of the net asset value at the beginning of the quarter, the capital called and dividend reinvested during the quarter and annualizing over 4 quarterly periods.

We adopted an “opt in” DRIP.

As a result, our stockholders who elect to “opt in” to the DRIP will have their cash dividends or distributions automatically reinvested in additional shares of Common Stock, rather than receiving cash.

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Shares issued under the DRIP will not reduce an investor’s outstanding capital commitment.

The following table summarizes DRIP shares issued and amounts for the year ended December 31, 2020:

The following tables summarize DRIP shares issued and amounts for the year ended December 31, 2021 and December 31, 2020:

Payment Date DRIP Shares Value DRIP Shares Issued

January 27, 2021 $ 2,462 121,484

April 22, 2021 2,276 110,191

July 22, 2021 3,733 178,345

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Total $ 13,572 652,809

Our outstanding debt obligations were as follows (dollar amounts in thousands):

December 31, 2020

Aggregate Principal Committed Outstanding Principal Unused Portion (1)

Payment Date DRIP Shares Value DRIP Shares Issued

July 15, 2020 $ 227 11,668

October 22, 2020 796 39,848

Total $ 1,023 51,516

Our outstanding debt obligations were as follows:

December 31, 2021 December 31, 2020

Aggregate Principal Committed Outstanding Principal Unused Portion Aggregate Principal Committed Outstanding Principal Unused Portion

CIBC Subscription Facility $ 400,000 $ 310,350 $ 89,650 $ 400,000 $ 333,850 $ 66,150

BNP Funding Facility 600,000 463,500 136,500 300,000 — 300,000

Truist Credit Facility 975,000 476,000 499,000 — — —

Total $ 1,975,000 $ 1,249,850 $ 725,150 $ 700,000 $ 333,850 $ 366,150

(1) The unused portion (subject to borrowing base availability) is the amount upon which commitment fees, if any, are based.

CIBC Subscription Facility

On December 31, 2019, we entered into the CIBC Subscription Facility with CIBC Bank USA as administrative agent and arranger.

During the year ended December 31, 2020, we amended the CIBC Subscription Facility by increasing the total commitment amount to $400.0 million.

On December 31, 2019, we entered into the CIBC Subscription Facility with CIBC Bank USA as administrative agent and arranger, which was subsequently amended on February 3, 2020 and November 17, 2020.

The maximum principal amount of the CIBC Subscription Facility, which was $100.0 million as of December 31, 2019, was increased to $400.0 million on November 17, 2020.

As of December 31, 2021, the CIBC Subscription Facility allows us to borrow up to $400.0 million at any one time outstanding, subject to certain restrictions, including availability under the borrowing base, which is based on unused capital commitments.

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The CIBC Subscription Facility is secured by the unfunded commitments of certain of our investors.

We have made customary representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities.

Borrowings under the CIBC Subscription Facility are subject to the leverage restrictions contained in the 1940 Act, as amended, or the 1940 Act.

During the year ended December 31, 2020, we borrowed $612.4 million and repaid $278.5 million under the CIBC Subscription Facility.

As of December 31, 2020, we had $333.9 million outstanding under the CIBC Subscription Facility.

As of December 31, 2019, we had no amount borrowed under the CIBC Subscription Facility.

As of December 31, 2020 and December 31, 2019, we had $66.2 million and $100.0 million, respectively, of available capacity under the CIBC Subscription Facility.

As of December 31, 2020 and December 31, 2019, we were in compliance with all covenants and other requirements of the CIBC Subscription Facility.

In connection with the CIBC Subscription Facility, we have made customary representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities.

During the year ended December 31, 2021 and December 31, 2020, we borrowed $431.5 million and $612.4 million, and repaid $455.0 million and $278.5 million under the CIBC Subscription Facility, respectively.

As of December 31, 2021 and December 31, 2020, we had $310.4 million and $333.9 million outstanding debt balance, and $89.6 million and $66.2 million of available capacity, under the CIBC Subscription Facility, respectively (subject to borrowing base restrictions).

BNP Funding Facility

On October 14, 2020, DLF LLC entered into a Revolving Credit and Security Agreement (the “Credit and Security Agreement”) with DLF LLC, as the borrower, BNP, as the administrative agent and lender, the Company, as the equityholder and as the servicer, and U.S.

Bank National Association, as collateral agent, pursuant to which BNP has agreed to extend credit to DLF LLC in an aggregate principal amount up to $300 million at any one time outstanding (the “BNP Funding Facility”).

The BNP Funding Facility is a revolving funding facility with a reinvestment period ending October 14, 2023 and a final maturity date of October 14, 2025.

Subject to certain conditions, the reinvestment period and final maturity are both subject to a one-year extension.

Advances under the BNP Funding Facility are available in U.S.

dollars, pound sterling, Euro or Canadian dollars, and subject to certain exceptions, the interest charged on the BNP Funding Facility is based on LIBOR (Dollar), LIBOR (GBP), EURIBOR or CDOR, as applicable (or, if LIBOR (Dollar) is not available, a benchmark replacement or a “base rate” (which is the greater of a prime rate and the federal funds rate plus 0.50%), as applicable), plus a margin that generally ranges between 2.25% and

3.25% (depending on the types of assets such advances relate to), with a weighted average margin floor for all classes of advances of (i) 2.80% during the reinvestment period and (ii) 3.30% following the reinvestment period, with specific margins for non-U.S.

dollar advances as set forth in the Credit and Security Agreement.

The obligations of DLF LLC under the BNP Funding Facility are secured by all of the assets held by DLF LLC, including certain loans to be sold or transferred by the Company to DLF LLC pursuant to the terms of the Purchase and Sale Agreement (the “Purchase and Sale Agreement” and, together with the Credit and Security Agreement, the “Agreements”) between the Company and DLF LLC entered into in connection with the BNP Funding Facility, pursuant to which the Company will sell to DLF LLC certain loans it has originated or acquired or will originate or acquire (the “Loans”) from time to time.

Under the Agreements, the Company and DLF LLC, as applicable, have made representations and warranties regarding the Loans, as well as their businesses, and are required to comply with various covenants, servicing procedures, limitations on disposition of Loans, reporting requirements and other customary requirements for similar revolving funding facilities.

The Credit and Security Agreement includes usual and customary events of default for revolving funding facilities of this nature, including allowing BNP, upon a default, to accelerate and foreclose on the Loans and to pursue the rights under the Loans directly with the obligors thereof.

In connection with the entry into the BNP Funding Facility, DLF LLC also entered into various supporting documentation, including an account control agreement.

On October 14, 2020, DLF LLC entered into a Revolving Credit and Security Agreement, which was subsequently amended on December 11, 2020 and March 2, 2021, with DLF LLC, as the borrower, BNP Paribas (“BNP”), as the administrative agent and lender, the Company, as the equityholder and as the servicer, and U.S.

Bank National Association, as collateral agent, pursuant to which BNP has agreed to extend credit to DLF LLC (the “BNP Funding Facility”).

As of December 31, 2021, the borrowing capacity under the BNP Funding Facility is $600.0 million.

The applicable margin on borrowings during the reinvestment period ranges between 1.95% and 2.75% and, after the reinvestment period, between 2.45% and 3.25%.

The BNP Funding Facility has a maturity date of October 13, 2025.

During the year ended December 31, 2021, we borrowed $538.5 million and repaid $75.0 million under the BNP Funding Facility.

As of December 31, 2021, we had $463.5 million outstanding under the BNP Funding Facility.

During the year ended December 31, 2020, we had no amount borrowed under the BNP Funding Facility.

As of December 31, 2020, we were in compliance with all covenants and other requirements of the BNP Funding Facility, as well as the leverage restrictions contained in the 1940 Act.

OFF BALANCE SHEET ARRANGEMENTS

In the ordinary course of our business, we enter into contracts or agreements that contain indemnifications or warranties.

Future events could occur which may give rise to liabilities arising from these provisions against us.

We believe that the likelihood of such an event is remote;

however, the maximum potential exposure is unknown.

No accrual has been made in our financial statements as of December 31, 2020 and December 31, 2019 in Part II, Item 8 of this Form 10-K, for any such exposure.

We have in the past and may in the future become obligated to fund commitments such as revolving credit facilities, bridge financing commitments, or delayed draw commitments.

As of December 31, 2020, we had delayed draw and revolving senior secured loans with an aggregate of $206.5 million of unfunded commitments.

We had no unfunded commitments to fund delayed draw and revolving senior secured loans as of December 31, 2019.

Other Commitments and Contingencies

From time to time, we may become a party to certain legal proceedings incidental to the normal course of our business.

As of December 31, 2020, management is not aware of any material pending or threatened litigation relating to us.

CONTRACTUAL OBLIGATIONS

A summary of our contractual payment obligations under our credit facilities as of December 31, 2020 is as follows (dollar amounts in thousands):

Payments Due by Period

1 year 1-3 years 3-5

years After 5

CIBC Subscription Facility $ 333,850 $ — $ 333,850 $ — $ —

BNP Funding Facility — — — — —

Total Contractual Obligations $ 333,850 $ — $ 333,850 $ — $ —

As of December 31, 2019, we did not have any contractual payment obligations under our credit facilities.

CRITICAL ACCOUNTING POLICIES

As of December 31, 2021 and December 31, 2020, we had $136.5 and $300.0 of available capacity, respectively, under the BNP Funding Facility (subject to borrowing base restrictions).

Truist Credit Facility

On July 16, 2021, we entered into the Truist Credit Facility with Truist Bank, as amended on December 3, 2021.

Truist Bank serves as Administrative Agent and Truist Securities, Inc.

serves as Joint Lead Arranger and Sole Book Runner.

The maximum principal amount of the Truist Credit Facility is $975.0 million, subject to availability under the borrowing base.

The Truist Credit Facility includes an uncommitted accordion feature that allows us, under certain circumstances, to increase the borrowing capacity up to $1,000.0 million.

The availability period of the Truist Credit Facility will terminate on July 16, 2025.

The Truist Credit Facility has a maturity date of July 16, 2026.

The Truist Credit Facility is secured by a first priority security interest in substantially all of our assets and the assets of certain of our domestic subsidiaries, subject to certain exceptions.

We may borrow amounts in U.S.

dollars or certain other permitted currencies.

Borrowings under the Truist Credit Facility bear interest at a per annum rate equal to, (x) for loans for which we elect the base rate option, the “alternate base rate” (which is the highest of (a) the prime rate as publicly announced by Truist Bank, (b) the sum of (i) the weighted average of the rates on overnight federal funds transactions, as published by the Federal Reserve Bank of New York plus (ii) 0.5%, and (c) one month LIBOR plus 1% per annum) plus either (A) 0.75%, or (B) 0.875%, based on certain borrowing base conditions, and (y) for loans for which we elect the Eurocurrency option, the applicable LIBO Rate for the related Interest Period for such Borrowing plus either (A) 1.75% per annum, or (B) 1.875% per annum, based on certain borrowing base conditions.

We pay an unused fee of 0.375% per annum on the daily unused amount of the revolver commitments.

During the year ended December 31, 2021, the Company borrowed $544.0 million and repaid $68.0 million under the Truist Credit Facility.

As of December 31, 2021, we had $476.0 million outstanding and $499.0 million of available capacity, under the Truist Credit Facility (subject to borrowing base restrictions).

As of December 31, 2021, the Company was in compliance with all covenants and other requirements of each of the credit facilities.

RECENT DEVELOPMENTS

Subsequent to December 31, 2021 through March 18, 2022, the Company has closed or the Investment Committee has committed/approved approximately $178.6 million of new/add-on investments.

This includes transactions for which a formal mandate, letter of intent or a signed commitment have been issued, and therefore the Company believes are likely to close.

Of these new commitments, approximately $167.8 million were first lien senior secured loans, $10.7 million were second lien senior secured loans, and $0.1 million were common equity investments.

100% of the senior secured loans were floating rate loans.

We remain highly focused on conducting extensive due diligence and leveraging the Morgan Stanley platform.

We believe the current market environment offers opportunities to seek compelling risk adjusted returns.

Our investment pace will depend on several factors including the market environment, deal flow, and the continued impact of Coronavirus.

Effective January 18, 2022, we provided written notice to CIBC of our intent to permanently reduce the amount of the revolving commitment to $315 million from $400 million in accordance with and as permitted under the CIBC Subscription Facility The other terms of the CIBC Subscription Facility were not changed.

On February 3, 2022, we entered into Amendment No.

4 and Limited Waiver, dated as of February 3, 2022, to the CIBC Subscription Facility to, among other things, amend certain covenants in the CIBC Subscription Facility and provide for certain limited waivers.

All other material terms of the CIBC Subscription Facility remain unchanged.

On February 11, 2022, we issued $425 million in aggregate principal amount of the Notes.

The Notes will mature on February 11, 2027 and may be redeemed in whole or in part at our option at any time or from time to time at the redemption prices set forth in the indenture governing the Notes.

The Notes are general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.

The Notes were offered to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S.

persons outside the United States pursuant to Regulation S under the Securities Act.

In connection with the offering of the Notes, we entered into a Registration Rights Agreement, dated as of February 11, 2022 (the “Registration Rights Agreement”), with SMBC Nikko Securities America, Inc., J.P.

Morgan Securities LLC, MUFG Securities Americas Inc.

and Truist Securities, Inc., as the representatives of the initial purchasers of the Notes.

Pursuant to the Registration Rights Agreement, we are obligated to file with the SEC a registration statement relating to an offer to exchange the Notes for new notes issued by the Company that are registered under the Securities Act and otherwise have terms substantially identical to those of the Notes, and to use its commercially reasonable efforts to cause such registration statement to be declared effective.

If we are not able to effect the exchange offer, we will be obligated to file a shelf registration statement covering the resale of the Notes and use our commercially reasonable efforts to cause such registration statement to be declared effective.

If we fail satisfy its registration obligations by certain dates specified in the Registration Rights Agreement, we will be required to pay additional interest to the holders of the Notes.

On March 4, 2022, the Company closed new investor commitments of $40.2 million, which brings total Capital Commitments to approximately $1,625.7 million.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.

Changes in the economic environment, financial markets, and any other parameters used in

determining such estimates could cause actual results to differ.

Our critical accounting policies, including those relating to the valuation of our investment portfolio, are described below.

The critical accounting policies should be read in connection with “ Risk Factors ” in Part I, Item 1A of this Form 10-K.

We conduct the valuation of assets at all times consistent with GAAP and the 1940 Act.

Our Board of Directors, with the assistance of our Audit Committee, determines the fair value of our assets, for assets with a daily public market, and for assets with no readily available public market, on at least a quarterly basis, in accordance with the terms of Topic 820 of the Financial Accounting Standards Board's Accounting Standards Codification, as amended, Fair Value Measurement (“ASC 820”).

Valuation procedures are set forth in more detail below.

Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ.

Our critical accounting estimates, including those relating to the valuation of our investment portfolio, are described below.

The critical accounting estimates should be read in connection with “ Risk Factors ” in Part I, Item 1A of this Form 10-K.

We conduct the valuation of assets at all times consistent with U.S.

GAAP and the 1940 Act.

Our Board of Directors, with the assistance of our audit committee (our "Audit Committee"), determines the fair value of our assets, for assets with a daily public

market, and for assets with no readily available public market, on at least a quarterly basis, in accordance with the terms of Topic 820 of the Financial Accounting Standards Board’s Accounting Standards Codification, as amended, Fair Value Measurement (“ASC 820”).

Our valuation procedures are set forth in more detail below.

ASC 820 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value is a market-based measurement, not an entity-specific measurement.

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However, the objective of a fair value measurement in both cases is the same—to estimate the price when an orderly transaction to sell the asset or transfer the liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

For further information on the fair value hierarchies, our framework for determining fair value, and the composition of our portfolio, see “ Note 5 to the Consolidated Financial Statements in Part II, Item 8.

For significant accounting policies on the fair value hierarchies, our framework for determining fair value, and the composition of our portfolio, see “ Note 5 to the Consolidated Financial Statements in Part II, Item 8.

Consolidated Financial Statements and Supplementary Data ” of this Form 10-K .

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These valuation techniques may vary by investment but include comparable public market valuations, comparable precedent transaction valuations and discounted cash flow analyses.

Debt investments are generally fair valued using discounted cash flow analyses technique.

Expected cash flows are projected based on contractual terms and discounted back to the measurement date based on a discount rate.

The discount rate is determined based upon an assessment of current and expected yields for similar investments and risk profiles .

The process used to determine the applicable value is as follows:

(1) each portfolio company or investment is initially valued by the investment professionals responsible for the portfolio investment using a standardized template designed to approximate fair market value based on observable market inputs and updated credit statistics and unobservable inputs;

1) each portfolio company or investment is initially valued using a standardized template designed to approximate fair market value based on observable market inputs and updated credit statistics and unobservable inputs;

2) preliminary valuation conclusions are documented and reviewed by a valuation committee comprised of members of our Adviser’s senior management;

(3) our Board of Directors engages one independent third-party valuation firm to provide positive assurance on a portion of our illiquid investments each quarter (such that each illiquid investment will be reviewed by an independent valuation firm at least once on a rolling twelve-month basis) including review of management's preliminary valuation and conclusion of fair value;

3) our Board of Directors engages an independent third-party valuation firm to provide positive assurance on a portion of our illiquid investments each quarter (such that each illiquid investment will be reviewed by an independent valuation firm at least once on a rolling twelve-month basis) including review of management’s preliminary valuation and conclusion of fair value;

4) our Audit Committee reviews the assessments of the Adviser and the independent third-party valuation firm and provide our Board of Directors with recommendations with respect to the fair value of each investment in our portfolio;

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Investment Advisory Agreement

In October 2019, the Company’s Board of Directors, including a majority of the directors who are not “interested persons” as defined in Section 2(a)(19) of the 1940 Act (the “Independent Directors”), approved the Investment Advisory Agreement between the Company and the Investment Adviser, which was effective November 25, 2019, in accordance with, and on the basis of an evaluation satisfactory to such directors as required by, Section 15(c) of the 1940 Act.

In October 2019, the Company’s Board of Directors, including a majority of the Independent Directors, approved the Investment Advisory Agreement between the Company and the Investment Adviser, which was effective November 25, 2019, in accordance with, and on the basis of an evaluation satisfactory to such directors as required by, Section 15(c) of the 1940 Act.

The initial period of the Investment Advisory Agreement was two years.

In November 2021, following approval by the Board of Directors, including a majority of the Independent Directors, we renewed the Investment Advisory Agreement for an additional one year term.

Consolidated Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 3.

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Prior to an Exchange Listing, the Adviser has agreed to irrevocably waive the portion of the base management fee in excess of 0.25% of our average gross assets calculated in accordance with the Investment Advisory Agreement, which waived base management fees are not subject to recoupment by the Adviser.

For services rendered under the Investment Advisory Agreement, the base management fee will be payable quarterly in arrears.

For services rendered under the Investment Advisory Agreement, the base management fee will be payable quarterly in arrears, and no management fee is charged on committed but undrawn Capital Commitments.

Incentive Fee

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Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as debt instruments with pay-in-kind interest and zero coupon securities), accrued income that Company has not yet received in cash.

The Adviser is not obligated to return to us the incentive fee it receives on payment-in-kind ("PIK") interest that is later determined to be uncollectible in cash.

The Adviser is not obligated to return to us the incentive fee it receives on PIK interest that is later determined to be uncollectible in cash.

Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

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Administration Agreement

On October 14, 2019, the Company’s Board of Directors approved an administration agreement (the “Administration Agreement”) between the Company and the Administrator.

On October 14, 2019, the Company’s Board of Directors approved the Administration Agreement.

The initial period of the Administration Agreement was two years.

In November 2021, following approval by the Board of Directors, we renewed the Administration Agreement for an additional one-year term.

Pursuant to the Administration Agreement, the Administrator provides services and receives reimbursements equal to an amount that reimburses the Administrator for its costs and expenses and the Company’s allocable portion of overhead incurred by the Administrator in performing its obligations under the Administration Agreement, including the Company’s allocable portion of the compensation paid to our Chief Compliance Officer and Chief Financial Officer.

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Related Party Transactions.

Expense Support and Waiver Agreement

On December 31, 2019, the Company entered into an expense support and waiver agreement (the “Expense Support and Waiver Agreement”) with the Investment Adviser.

Under the terms of the Expense Support and Waiver Agreement, the Investment Adviser agreed to waive any reimbursement by the Company of offering and organizational expenses to be incurred by the Investment Adviser on behalf of the Company in excess of $1,000 or 0.10% of the aggregate Capital Commitments of the Company, whichever is greater.

If actual organization and offering costs incurred exceed the greater of $1,000 or 0.10% of the Company’s total Capital Commitments, the Investment Adviser or its affiliate will bear the excess costs.

The Company shall reimburse the Investment Adviser for payments of any excess costs borne by the Investment Adviser on the Company’s behalf within three years of Initial Closing Date.

License Agreement

The Company entered into a license agreement with Morgan Stanley (the “License Agreement”) under which Morgan Stanley has agreed to grant the Company a non-exclusive, royalty-free license to use the name “Morgan Stanley” for specified purposes in the Company’s business.

Under the License Agreement, the Company will have a right to use the “Morgan Stanley” name, subject to certain conditions, for so long as the Investment Adviser or one of its affiliates remains the Company’s investment adviser.

Other than with respect to this limited license, the Company will have no legal right to the “Morgan Stanley” name.

Placement Fees

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MS Credit Partners Holdings Investment

MS Credit Partners Holdings, Inc., a wholly owned subsidiary of Morgan Stanley and an affiliate of the Adviser has made an aggregate capital commitment of $200.0 million to the Company as of December 31, 2020.

MS Credit Partners Holdings, Inc., a wholly owned subsidiary of Morgan Stanley and an affiliate of the Adviser, or MS Credit Partners Holdings, invested seed capital of $35 in the Company as of December 31, 2019.

Pursuant to the terms of MS Credit Partners Holding’s subscription agreement, MS Credit Partners Holdings has made an aggregate capital commitment of $200.0 million to the Company.

As of December 31, 2021 and December 31, 2020, MS Credit Partners Holdings’ total capital commitment represented approximately 13% and 14% of aggregate capital commitments received, respectively.

Morgan Stanley has no further capital, liquidity or other financial obligation to us beyond this equity investment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis