Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
COMMON STOCK AND HOLDERS
Our common stock is traded on the Nasdaq Global Select Market under the symbol “OFS”. The last reported sale price for our common stock on the Nasdaq Global Select Market on February 27, 2024 was $11.59 per share. As of February 27, 2024, there were two holders of record of the common stock, one of which was OFSAM Holdings. A holder of record does not identify stockholders for whom shares are held beneficially in “nominee” or “street name”.
The following table lists the high and low sale price for our common stock, NAV per share, and the cash distributions per share that we have declared on our common stock for each fiscal quarter during the last two most recently completed fiscal years. The stock quotations are inter-dealer quotations and do not include markups, markdowns or commissions.
NAV Per Share (1)
Price Range Premium (Discount) of High Sales Price to NAV Premium (Discount) of Low Sales Price to NAV Cash Distribution per Share
Period High Low
Fiscal 2023
Fourth Quarter $ 12.09 $ 12.41 $ 9.69 2.6 % - 19.9 % $ 0.34
Third Quarter
$ 12.74 $ 12.44 $ 9.51 - 2.4 % - 25.4 % $ 0.34
Second Quarter $ 12.94 $ 11.01 $ 9.10 - 14.9 % - 29.7 % $ 0.33
First Quarter $ 13.42 $ 10.92 $ 9.60 - 18.6 % - 28.5 % $ 0.33
Fiscal 2022
Fourth Quarter $ 13.47 $ 11.25 $ 8.03 - 16.5 % - 40.4 % $ 0.30
Third Quarter
$ 13.58 $ 11.50 $ 7.54 - 15.3 % - 44.5 % $ 0.29
Second Quarter $ 14.57 $ 13.47 $ 9.72 - 7.5 % - 33.3 % $ 0.29
First Quarter $ 15.52 $ 13.18 $ 9.40 - 15.1 % - 39.4 % $ 0.28
(1) NAV per share is determined as of the last day in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices. The NAVs shown are based on outstanding shares at the end of each period.
* Not determinable at the time of filing.
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Issuer Purchases of Equity Securities
Stock Repurchase Program
On May 22, 2018, the Board authorized the Stock Repurchase Program under which we could acquire up to $10.0 million of our outstanding common stock through the two-year period ending May 22, 2020. On May 4, 2020 and May 3, 2022, the Board extended the Stock Repurchase Program for additional two-year periods. Under the extended Stock Repurchase Program, we are authorized to repurchase shares in open-market transactions, including through block purchases, depending on prevailing market conditions and other factors. We expect the Stock Repurchase Program to be in place through May 22, 2024, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program does not obligate us to acquire any specific number of shares, and all repurchases will be made in accordance with SEC Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of stock repurchases. The Stock Repurchase Program may be extended, modified or discontinued at any time for any reason. We have provided our stockholders with notice of our intention to repurchase shares of our common stock in accordance with 1940 Act requirements. We retire all shares of common stock that we purchase in connection with the Stock Repurchase Program. During the year ended December 31, 2023, we did not make any repurchases of our common stock.
The following table summarizes the shares of common stock that we repurchased under the Stock Repurchase Program during the periods noted below (amounts in thousands except shares):
Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of the Program Approximate Dollar Value of Shares That May Yet be Purchased Under the Program
January 1, 2021 through January 31, 2021 700 $ 6.72 700 $ 9,992
September 1, 2022 through September 30, 2022 28,335 8.14 28,335 9,762
October 1, 2022 through October 31, 2022 13,919 8.63 13,919 9,642
January 1, 2023 through December 31, 2023 — — — 9,642
Total 42,954 $ 8.26 42,954 $ 9,642
Dividend Reinvestment Plan (DRIP)
During the year ended December 31, 2023, there was $0.3 million of distributions reinvested under the DRIP. For additional information concerning the DRIP, see Note 10 of our consolidated financial statements in “Part II, Item 8. Financial Statements and Supplementary Data.”
Sales of Unregistered Securities
We did not sell any securities during the period covered by this Annual Report that were not registered under the Securities Act of 1933, as amended.
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Stock Performance Graph
This graph compares the return on our common stock with that of the Standard & Poor’s 500 Stock Index, the Russell 1000 Index and the Standard & Poor’s BDC Index, for the last 10 fiscal years. The graph assumes that, on December 31, 2013, a person invested $10,000 in our common stock, the Standard & Poor’s 500 Stock Index, the Russell 1000 Index and the Standard & Poor’s BDC Index. The graph measures total stockholder return, which takes into account changes in stock price and assumes reinvestment of all dividends and distributions prior to any tax effect.
Annualized Total Returns
1 Year 5 Year 10 Year
OFS Capital Corporation 30.2 % 15.3 % 11.6 %
S&P 500 26.3 % 15.7 % 12.0 %
S&P BDC Index 27.6 % 13.2 % 6.8 %
Russell 1000 26.5 % 15.5 % 11.8 %
The graph and other information under the heading “Stock Performance Graph” in Part II Item 5 of this Annual Report on Form 10-K is “furnished” and shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act and shall not be deemed incorporated by reference in any filing under the Exchange Act. The stock price performance included in the above graph is not necessarily indicative of future stock price performance. The table does not reflect the deduction of taxes that a stockholder would pay on fund distributions or the sale of fund shares.
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Fees and Expenses
The following table is intended to assist you in understanding the costs and expenses that you will bear directly or indirectly. We caution you that the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this Annual Report on Form 10-K contains a reference to fees or expenses paid by “us,” “the Company” or “OFS Capital,” or that “we” will pay fees or expenses, you will indirectly bear such fees or expenses as an investor in OFS Capital.
Stockholder transaction expenses :
Sales load borne by us (as a percentage of offering price) — % (1)
Offering expenses borne by us (as a percentage of offering price) — % (1)
Dividend reinvestment plan fees (per sales transaction fee) $ 15.00 (2)
Total Stockholder transaction expenses (as a percentage of offering price) — % (1)
Annual expenses (as a percentage of net assets attributable to common stock) :
Base management fees payable under the Investment Advisory Agreement 5.21 % (3)
Incentive fees payable under the Investment Advisory Agreement 3.11 % (4)
Interest payments on borrowed funds 12.03 % (5)
Other expenses 3.11 % (6)
Total annual expenses, before base management fee reduction 23.46 %
Base management fee reduction ( 0.75 ) % (8)
Total annual expenses, net of base management fee reduction 22.71 % (7)
(1) The amounts set forth in this table do not reflect the impact of any sales load, sales commission or other offering expenses borne by the Company and its stockholders. If applicable, the prospectus or prospectus supplement relating to an offering of our common stock will disclose the offering price and the estimated offering expenses and total stockholder transaction expenses borne by the Company and its common stockholders as a percentage of the offering price. In the event that shares of our common stock are sold to or through underwriters, the applicable prospectus or prospectus supplement will also disclose the applicable sales load and the “Example” will be updated accordingly.
(2) The expenses of the DRIP are included in “other expenses.” The plan administrator’s fees will be paid by us. There will be no brokerage charges or other charges to stockholders who participate in the plan except that, if a participant elects by written notice to the plan administrator to have the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account and remit the proceeds to the participant, the plan administrator is authorized to deduct a $15.00 transaction fee plus a $0.10 per share brokerage commission from the proceeds.
(3) Our base management fee is 1.75% of the average value of our total assets (other than cash and cash equivalents) but including assets purchased with borrowed amounts, and including assets owned by any consolidated entity. This item represents actual base management fees incurred by us during the year ended December 31, 2023 before the effect of the base management fee reduction on certain assets and assumes net assets of $162.0 million and leverage of $302.4 million, which reflects our net assets and leverage as of December 31, 2023. As discussed in footnote (8), below, OFS Advisor agreed to reduce a portion of its base management fee on certain assets; the base management fees of 5.21% presented in the table above does not reflect the ( 0.75 )% effect of the base management fee reduction on certain assets. See “Management and Other Agreements—Investment Advisory Agreement.”
(4) The incentive fee in the table above is based on actual amounts incurred for the Income Incentive Fee for the year ended December 31, 2023, which includes the effects of the base management fee reduction discussed in footnote (3). The Capital Gains Fee will be accrued, but not necessarily become payable, if, on a cumulative basis, the sum of net realized capital gains and losses plus net unrealized appreciation and depreciation is positive. The amount set forth in the table assumed the Capital Gains Fee is 0.0%.
The two parts of the incentive fee follows:
• The Income Incentive Fee, payable quarterly in arrears, equals 20.0% of our pre-incentive fee net investment income (including income that is accrued but not yet received in cash), subject to a 2.0% quarterly (8.0% annualized) hurdle rate and a “catch-up” provision measured as of the end of each calendar quarter. Under this provision, in any calendar quarter, OFS Advisor receives no incentive fee until our pre-incentive fee net investment income equals the hurdle rate of 2.0% but then receives, as a “catch-up,” 100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.5%. The effect of this provision is that, if pre-incentive fee net investment income exceeds 2.5% in any calendar quarter, OFS Advisor will receive 20.0% of our pre-incentive fee net investment income as if a hurdle rate did not apply. There is no
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accumulation of amounts on the hurdle rate from quarter to quarter and accordingly there is no clawback of amounts previously paid if subsequent quarters are below the quarterly hurdle rate and there is no delay of payment if prior quarters are below the quarterly hurdle rate.
• The Capital Gains Fee, payable annually in arrears, equals 20.0% of our realized capital gains on a cumulative basis, if any (or upon the termination of the Investment Advisory Agreement, as of the termination date), computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. The incentive fee is determined on a consolidated basis. We accrue the Capital Gains Fee if, on a cumulative basis, the sum of net realized capital gains and losses plus net unrealized appreciation and depreciation is positive. See “Management and Other Agreements—Investment Advisory Agreement.”
(5) Interest payments on borrowed funds is based on our estimated cost of funds on our outstanding indebtedness as of December 31, 2023. Based on our outstanding indebtedness as of December 31, 2023, our estimated annualized cost of funds, which includes all interest and amortization of debt issuance costs is 6.01 %. As of December 31, 2023, our asset coverage ratio was 160% (which excludes the SBA debentures as a result of exemptive relief granted to us by the SEC) as permitted under Section 61(a)(2) of the 1940 Act.
We may borrow additional funds from time to time to make investments to the extent we determine that the economic situation is conducive to doing so. As of December 31, 2023, availability under the Banc of California Credit Facility and BNP Facility was $25.0 million and $59.5 million, respectively, both subject to a borrowing base and other covenants. Our stockholders will bear directly or indirectly the costs of borrowings under any debt instruments we may enter into.
(6) “Other Expenses” referenced in the table above are based on actual amounts incurred for the year ended December 31, 2023. “Other expenses” include our overhead expenses, including services under the Administration Agreement based on our allocable portion of overhead and other expenses incurred by OFS Services. See “Management and Other Agreements—Administration Agreement.” “Other Expenses” also include ongoing professional expenses to our independent accountants, legal counsel and compensation of independent directors.
(7) Our stockholders indirectly bear the expenses of underlying funds or other investment vehicles that would be investment companies under section 3(a) of the 1940 Act but for the exceptions to that definition provided for in sections 3(c)(1) and 3(c)(7) of the 1940 Act (“Acquired Funds”) in which we invest. We do not currently invest in underlying funds or other investment companies and therefore do not expect to incur any acquired fund fees and expenses. The indirect expenses that are associated with our Structured Finance Securities are not included in the fee table presentation, but if such expenses were included in the fee table presentation then our total annual expenses would have been 22.91%.
(8) OFS Advisor agreed to reduce a portion of its base management fee by reducing the portion of such fee from 1.75% to 1.00% on the average total assets (less cash) at the end of the two most recently completed quarters on assets held by the Company through OFSCC-FS, LLC, an indirect wholly owned subsidiary of the Company. The base management fee reduction is renewable on an annual basis and the amount of the base management fee reduction with respect to the OFSCC-FS Assets shall not be subject to recoupment by OFS Advisor.
Example. The following example demonstrates the projected dollar amount of total cumulative expenses over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed we would have no additional leverage and that our annual operating expenses would remain at the levels set forth in the table above. The expense amounts assume an annual base management fee 1.75% for each year. Transaction expenses are not included in the following example.
1 Year 3 Years 5 Years 10 Years
You would pay the following expenses on a $1,000 investment, assuming a 5.0% annual return
$ 171 $ 437 $ 624 $ 888
While the example assumes, as required by the applicable rules of the SEC, a 5.0% annual return, our performance will vary and may result in a return greater or less than 5.0%. The incentive fee under the Investment Management Agreement, which, assuming a 5.0% annual return, would either not be payable or would have an insignificant impact on the expense amounts shown above, is not included in the above example. The above illustration assumes that we will not realize any capital gains (computed net of all realized capital losses and unrealized capital depreciation) in any of the indicated time periods. If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, our expenses and returns to our investors would be higher. For example, if we assumed that we received our 5.0% annual return completely in the form of net realized capital gains on our investments, computed net of all cumulative unrealized depreciation on our investments, the
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projected dollar amount of total cumulative expenses set forth in the above illustration would be as follows:
1 Year 3 Years 5 Years 10 Years
You would pay the following expenses on a $1,000 investment, assuming a 5.0% annual return resulting entirely from net realized capital gains (all of which is subject to our incentive fee on capital gains) $180 $455 $644 $897
While the examples assume reinvestment of all distributions at NAV, participants in our DRIP will receive a number of shares of our common stock determined by dividing the total dollar amount of the distribution payable to a participant by the market price per share of our common stock at the close of trading on the dividend payment date. The market price per share of our common stock may be at, above or below NAV.
The example should not be considered a representation of future expenses, and actual expenses may be greater or less than those shown.
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SENIOR SECURITIES
Information about our senior securities (including preferred stock, debt securities and other indebtedness) is shown in the following table as of the end of the last ten fiscal years. The senior securities table as of December 31, 2023, 2022, 2021, 2020 and 2019 was audited by KPMG LLP and the senior securities table as of December 31, 2018, 2017, 2016, 2015 and 2014 were audited by our former independent registered public accounting firm. The “ — ” indicates information that the SEC expressly does not require to be disclosed for certain types of senior securities. KPMG LLP’s report on the senior securities table as of December 31, 2023 is included within the Report of Independent Registered Public Accounting Firm included in this Annual Report on Form 10-K.
(dollar amounts in thousands, except per unit data)
Class and Year
Total Amount Outstanding (1)
Asset Coverage Per Unit (2)
Involuntary Liquidating Preference Per Unit (3)
Average Market Value Per Unit (4)
4.75% Notes due 2026
December 31, 2023 $ 125,000 $ 3,460 — N/A
December 31, 2022 $ 125,000 $ 3,721 — N/A
December 31, 2021 $ 125,000 $ 3,870 — N/A
4.95% Notes due 2028
December 31, 2023 $ 55,000 $ 7,864 — $ 21.82
December 31, 2022 $ 55,000 $ 8,457 — $ 23.27
December 31, 2021 $ 55,000 $ 8,795 — $ 25.51
6.25% Notes due 2023
December 31, 2020 $ 25,000 $ 14,754 — $ 24.82
6.375% Notes due 2025
December 31, 2020 $ 50,000 $ 7,377 — $ 22.66
December 31, 2019 $ 50,000 $ 7,519 — $ 25.30
December 31, 2018 $ 50,000 $ 5,645 — $ 24.84
6.50% Notes due 2025
December 31, 2020 $ 48,525 $ 7,601 — $ 22.80
December 31, 2019 $ 48,525 $ 7,747 — $ 25.29
December 31, 2018 $ 48,525 $ 5,817 — $ 24.43
5.95% Notes due 2026
December 31, 2020 $ 54,325 $ 6,790 — $ 21.89
December 31, 2019 $ 54,325 $ 6,920 — $ 24.75
BNP Facility
December 31, 2023 $ 90,500 $ 4,779 — N/A
December 31, 2022 $ 104,700 $ 4,442 — N/A
December 31, 2021 $ 100,000 $ 4,837 — N/A
December 31, 2020 $ 31,450 $ 11,728 — N/A
December 31, 2019 $ 56,450 $ 6,659 — N/A
Banc of California Credit Facility
December 31, 2023 $ — $ — — N/A
December 31, 2022 $ — $ — — N/A
December 31, 2021 $ — $ — — N/A
December 31, 2020 $ 600 $ 614,760 — N/A
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(dollar amounts in thousands, except per unit data)
Class and Year
Total Amount Outstanding (1)
Asset Coverage Per Unit (2)
Involuntary Liquidating Preference Per Unit (3)
Average Market Value Per Unit (4)
December 31, 2019 $ — $ — — N/A
December 31, 2018 $ 12,000 $ 23,521 — N/A
December 31, 2017 $ 17,600 $ 11,540 — N/A
December 31, 2016 $ 9,500 $ 15,821 — N/A
December 31, 2015 $ — $ — — N/A
WM Credit Facility
December 31, 2014 $ 72,612 $ 2,847 — N/A
SBA debentures (SBIC I LP) (5)(6)
December 31, 2023 $ 31,920 $ — — N/A
December 31, 2022 $ 50,920 $ — — N/A
December 31, 2021 $ 69,920 $ — — N/A
December 31, 2020 $ 105,270 $ — — N/A
December 31, 2019 $ 149,880 $ — — N/A
December 31, 2018 $ 149,880 $ — — N/A
December 31, 2017 $ 149,880 $ — — N/A
December 31, 2016 $ 149,880 $ — — N/A
December 31, 2015 $ 149,880 $ — — N/A
December 31, 2014 $ 127,295 $ — — N/A
Total Senior Securities (7)
December 31, 2023 $ 302,420 $ 1,599 — N/A
December 31, 2022 $ 335,620 $ 1,634 — N/A
December 31, 2021 $ 349,920 $ 1,728 — N/A
December 31, 2020 $ 315,170 $ 1,757 — N/A
December 31, 2019 $ 359,180 $ 1,796 — N/A
December 31, 2018 $ 260,405 $ 2,554 — N/A
December 31, 2017 $ 167,480 $ 11,540 — N/A
December 31, 2016 $ 159,380 $ 15,821 — N/A
December 31, 2015 $ 149,880 $ — — N/A
December 31, 2014 $ 199,907 $ 2,847 — N/A
(1) Total amount of each class of senior securities outstanding at the end of the period presented.
(2) The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by the class of senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the “asset coverage Per Unit.”
(3) The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it.
(4) Average market value per unit for our unsecured notes represents the average of the daily closing prices as reported on the Nasdaq Market during the period presented. Not applicable to our 4.75% Notes due 2026, the Banc of California Credit Facility, BNP Facility, WM Credit Facility or SBA debentures because these senior securities are not registered for public trading.
(5) The SBA debentures are not subject to the asset coverage requirements of the 1940 Act as a result of exemptive relief granted to us by the SEC.
(6) On March 1, 2024, we fully repaid our outstanding SBA debentures totaling $31.9 million and requested the approval of the SBA to surrender our license to operate as a SBIC. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments.”
(7) The Asset Coverage Per Unit does not include the SBA debentures as described in footnote (5) above.
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FINANCIAL HIGHLIGHTS
The following is a schedule of financial highlights for each year in the ten-year period ended December 31, 2023. The financial highlights as of December 31, 2023, 2022, 2021, 2020 and 2019 were audited by KPMG LLP and the financial highlights for each year in the five-year period ended December 31, 2018 are derived from our consolidated financial statements that were audited by our former independent registered public accounting firms. The data should be read in conjunction with our consolidated financial statements and notes thereto and “Management's Discussion and Analysis of Financial Condition and Results of Operations,” which are included elsewhere in this Annual Report.
Year Ended December 31,
2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Per share operating performance:
Net asset value per share at beginning of year
$ 13.47 $ 15.18 $ 11.85 $ 12.46 $ 13.10 $ 14.12 $ 14.82 $ 14.76 $ 14.24 $ 14.58
Net investment income (4)
1.50 1.37 1.00 0.92 1.43 1.38 1.28 1.46 1.39 0.95
Net realized gain (loss), net of taxes (4)
(0.85) (0.13) (1.54) (0.75) (0.29) (0.36) 0.55 0.25 (0.17) (0.35)
Net unrealized appreciation (depreciation), net of deferred taxes (4)
(0.67) (1.79) 5.12 0.25 (0.42) (0.31) (1.19) (0.29) 0.66 0.42
Loss on extinguishment of debt (4)
(0.02) (0.01) (0.34) (0.06) — — — — — —
Loss on impairment of goodwill (4)
— — — (0.08) — — — — — —
Total from operations (0.04) (0.56) 4.24 0.28 0.72 0.71 0.64 1.42 1.88 1.02
Distributions
(1.34) (1.16) (0.91) (0.86) (1.36) (1.73) (1.36) (1.36) (1.36) (1.36)
Issuance/repurchase of common stock (5)
— 0.01 — (0.03) — — (0.03) — — —
Other (6)
— — — — — — 0.05 — — —
Net asset value per share at end of year $ 12.09 $ 13.47 $ 15.18 $ 11.85 $ 12.46 $ 13.10 $ 14.12 $ 14.82 $ 14.76 $ 14.24
Per share market value, end of period
$ 11.70 $ 10.15 $ 10.90 $ 7.15 $ 11.17 $ 10.60 $ 11.90 $ 13.76 $ 11.48 $ 11.78
Total return based on market value (1)
30.2 % 4.4 % 66.8 % (24.0) % 18.3 % 3.5 % (4.7) % 32.3 % 9.0 % 2.4 %
Total return based on net asset value (2)
1.4 % (0.6) % 40.2 % 13.6 % 6.7 % 7.8 % 5.0 % 10.9 % 16.0 % 7.5 %
Shares outstanding at end of period 13,398,078 13,398,078 13,422,413 13,409,559 13,376,836 13,357,337 13,340,217 9,700,297 9,691,170 9,650,834
Weighted-average shares outstanding 13,398,078 13,417,410 13,413,861 13,394,005 13,364,244 13,348,203 12,403,706 9,693,801 9,670,153 9,634,471
Ratio/Supplemental Data (in thousands except ratios)
Average net asset value (3)
$ 173,265 $ 194,068 $ 178,628 $ 148,175 $ 171,889 $ 182,468 $ 171,631 $ 142,818 $ 140,002 $ 138,131
Net asset value at end of year
$ 162,004 $ 180,423 $ 203,744 $ 158,956 $ 166,627 $ 175,023 $ 188,336 $ 143,778 $ 143,012 $ 137,471
Net investment income
$ 20,160 $ 18,352 $ 13,450 $ 12,295 $ 19,098 $ 18,385 $ 15,877 $ 14,145 $ 13,411 $ 9,135
Ratio of total expenses, net to average net assets (8)
21.2 % 15.7 % 19.2 % 22.4 % 19.4 % 13.4 % 10.2 % 11.9 % 13.5 % 9.9 %
Ratio of total expenses, net and losses on impairment of goodwill and extinguishment of debt to average net assets (9)
21.4 % 15.7 % 21.8 % 23.7 % — % — % — % — % — % — %
Ratio of net investment income to average net assets (10)
11.6 % 9.5 % 7.5 % 8.3 % 11.1 % 10.5 % 8.4 % 9.8 % 9.6 % 6.6 %
Ratio of goodwill impairment loss to average net assets — % — % — % 0.7 % — % — % — % — % — % — %
Ratio of loss on extinguishment of debt to average net assets 0.1 % 0.1 % 2.6 % 0.6 % — % — % — % — % — % — %
Portfolio turnover (7)
8.8 % 28.0 % 54.9 % 28.1 % 21.2 % 41.9 % 50.4 % 18.1 % 44.6 % 34.9 %
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(1) Calculated as ending market value less beginning market value, adjusted for distributions reinvested at prices based on the Company’s dividend reinvestment plan for the respective distributions.
(2) Calculated as ending net asset value less beginning net asset value, adjusted for distributions reinvested in the Company’s DRIP for the respective distributions.
(3) Based on the average of the net asset value at the beginning of the indicated period and the end of each calendar quarter within the period indicated.
(4) Calculated on the average share method.
(5) The issuance/repurchase of common stock on a per share basis reflects the net asset value change as a result of DRIP issuances, shares repurchased pursuant to the Stock Repurchase Program or the follow-on public offering of 3,625,000 shares during 2017.
(6) Represents the impact of different share amounts used in calculating per share data as a result of calculating certain per share data based on a weighted- average shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.
(7) Portfolio turnover rate is calculated using the lesser of year-to-date sales, Structured Finance Security distributions and principal payments or year-to-date purchases over the average of the invested assets at fair value at the beginning of the indicated period and the end of each calendar quarter within the period indicated.
(8) Ratio of total expenses before incentive fee waiver to average net assets was 22.7% and 13.4% for the years ended December 31, 2020 and December 31, 2018, respectively.
(9) Ratio of total expenses before incentive fee waiver and losses on impairment of goodwill and extinguishment of debt to average net assets was 24.0% for the year ended December 31, 2020.
(10) Ratio of net investment income before incentive fee waiver to average net assets was 8.0% and 10.5% for the years ended December 31, 2020 and December 31, 2018, respectively.
Item 6. Reserved.
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