Morgan Stanley Direct Lending Fund Announces June 30, 2026 Financial Results and Declares Third Quarter 2026 Regular Dividend of $0.45 per Share
NEW YORK--( BUSINESS WIRE)--Morgan Stanley Direct Lending Fund (NYSE: MSDL) (“MSDL” or the “Company”), a business development company externally managed by MS Capital Partners Adviser Inc. (the “Adviser”), today announced its financial results for the second quarter ended June 30, 2026.
QUARTERLY HIGHLIGHTS
SELECTED FINANCIAL HIGHLIGHTS
For the Quarter Ended
($ in thousands, except per share information)
June 30, 2026
March 31, 2026
Net investment income per share
$0.45
$0.47
Net realized and unrealized gains (losses) per share 1
($0.36)
($0.52)
Earnings per share
$0.09
($0.05)
Regular dividend per share
$0.45
$0.45
1 Amount shown may not correspond for the period as it may include the effect of the timing of the distribution, shares repurchased and the issuance of common stock.
As of
($ in thousands, except per share information)
June 30, 2026
March 31, 2026
Investments, at fair value
$3,554,287
$3,668,950
Total debt outstanding, at principal
$2,000,678
$2,064,010
Net assets
$1,647,868
$1,690,467
Net asset value per share
$19.50
$19.81
Debt to equity
1.21x
1.22x
Net debt to equity
1.17x
1.16x
RESULTS OF OPERATIONS
Total investment income for the quarter ended June 30, 2026 was $88.8 million, compared to $89.1 million for the quarter ended March 31, 2026. The modest decrease was primarily driven by the impact of positions placed on non-accrual, and partially offset by the impact of the Capstone JV.
Total net expenses for the quarter ended June 30, 2026 were $49.8 million, up from $47.7 million for the quarter ended March 31, 2026. The increase was primarily driven by higher interest and other financing expenses as well as a net increase in incentive fees in the quarter.
Net investment income for the quarter ended June 30, 2026 was $38.2 million, or $0.45 per share, compared to $40.5 million, or $0.47 per share, for the quarter ended March 31, 2026.
For the quarter ended June 30, 2026, net change in unrealized depreciation was $22.8 million and net realized losses were $7.4 million.
PORTFOLIO AND INVESTMENT ACTIVITY
As of June 30, 2026, the Company’s investment portfolio had a fair value of approximately $3.6 billion, comprised of 229 portfolio companies across 36 industries, with an average investment size of $15.5 million, or 0.4% of our total portfolio on a fair value basis. The composition of the Company’s investments was the following:
June 30, 2026
March 31, 2026
($ in thousands)
Cost
Fair Value
% of Total Investments at Fair Value
Cost
Fair Value
% of Total Investments at Fair Value
First Lien Debt
$3,414,546
$3,308,689
93.1%
$3,520,313
$3,439,360
93.8%
Second Lien Debt
77,453
72,603
2.0
82,095
72,397
2.0
Other Debt Investments
8,830
7,149
0.2
8,546
7,593
0.2
Equity
71,278
63,302
1.8
62,937
56,528
1.5
Investment in Joint Venture
104,532
102,544
2.9
94,532
93,072
2.5
Total
$3,676,639
$3,554,287
100.0%
$3,768,423
$3,668,950
100.0%
Investment activity was as follows:
Investment Activity:
Three Months Ended June 30, 2026
Three Months Ended March 31, 2026
New investment commitments, at par (net of syndications)
$94,988
$144,889
Investment fundings
$146,236
$173,964
Number of new investment commitments in portfolio companies
3
7
Number of portfolio companies exited or fully repaid
1
7
Total weighted average yield of investments in debt securities at amortized cost and fair value was 9.1% and 9.4%, respectively, as of June 30, 2026, down from 9.3% and 9.5%, respectively, as of March 31, 2026. Floating rate debt investments as a percentage of total portfolio on a fair value basis was 99.6% as of June 30, 2026, unchanged compared to March 31, 2026. As of June 30, 2026, certain investments in seven portfolio companies were on non-accrual status, representing approximately 2.9% of total investments at amortized cost.
CAPITAL AND LIQUIDITY
As of June 30, 2026, the Company had total principal debt outstanding of $2,000.7 million, including $351.0 million outstanding in the Company’s BNP Funding Facility, $215.7 million outstanding in the Truist Credit Facility, $425.0 million outstanding in the Company’s senior unsecured notes due February 2027, $350.0 million outstanding in the Company’s senior unsecured notes due May 2029, $350.0 million outstanding in the Company’s senior unsecured notes due May 2030 and $309.0 million outstanding in the Company’s inaugural CLO that closed in September 2025.
The combined weighted average interest rate on debt outstanding was 5.40% for the quarter ended June 30, 2026. As of June 30, 2026, the Company had $1,471.5 million of availability under its credit facilities and $71.6 million in unrestricted cash and short-term, liquid investments. Debt to equity was 1.21x and 1.22x as of June 30, 2026 and March 31, 2026, respectively.
SHARE REPURCHASES
For the three months ended June 30, 2026, the Company repurchased 831,486 shares at an average price of $15.06 per share.
JOINT VENTURE
The Company launched Capstone JV, a joint venture with an institutional investor with a substantially similar investment strategy as the Company. The Company and its joint venture partner agreed to contribute up to $200.0 million and $50.0 million, respectively, to Capstone JV. As of June 30, 2026, approximately 52.3% of the total capital commitments were called.
OTHER DEVELOPMENTS
CONFERENCE CALL INFORMATION
Morgan Stanley Direct Lending Fund will host a conference call on Friday, August 7, 2026 at 10:00 am ET to review its financial results and conduct a question-and-answer session. All interested parties are invited to participate in the live earnings conference call by using the following dial-in numbers or audio webcast link available on the MSDL Investor Relations website:
To avoid potential delays, please join at least 10 minutes prior to the start of the earnings call. An archived replay will also be available on the MSDL Investor Relations website.
About Morgan Stanley Direct Lending Fund
Morgan Stanley Direct Lending Fund (NYSE: MSDL) is a non-diversified, externally managed specialty finance company focused on lending to middle-market companies. MSDL has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. MSDL is externally managed by MS Capital Partners Adviser Inc., an indirect, wholly owned subsidiary of Morgan Stanley. MSDL is not a subsidiary of or consolidated with Morgan Stanley. For more information about Morgan Stanley Direct Lending Fund, please visit www.msdl.com.
Forward-Looking Statements
Statements included herein or on the webcast/conference call may constitute “forward-looking statements,” which relate to future events or MSDL’s future performance or financial condition. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results and conditions may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in MSDL’s filings with the U.S. Securities and Exchange Commission. MSDL undertakes no duty to update any forward-looking statements made herein or on the webcast/conference call.
Consolidated Statements of Assets and Liabilities
(In thousands, except share and per share amounts)
As of
June 30, 2026
December 31, 2025
(Unaudited)
(Audited)
Assets
Non-controlled/non-affiliated investments, at fair value (amortized cost of $3,537,851 and $3,833,800)
$
3,418,959
$
3,766,757
Non-controlled/affiliated investments, at fair value (amortized cost of $34,256 and $5,239)
32,784
4,789
Controlled/affiliated investments, at fair value (amortized cost of $104,532 and $0)
102,544
—
Total investments, at fair value (cost of $3,676,639 and $3,839,039)
3,554,287
3,771,546
Cash and cash equivalents (restricted cash of $8,600 and $3,820)
65,816
81,434
Investments in unaffiliated money market fund (cost of $14,357 and $12,976)
14,357
12,976
Deferred financing costs
18,914
16,874
Interest and dividend receivable from non-controlled/non-affiliated investments
23,670
26,332
Interest receivable from non-controlled/affiliated investments
146
89
Dividend receivable from controlled/affiliated investments
3,016
—
Receivable for investments sold/repaid
30,142
455
Other assets
391
10,390
Total assets
$
3,710,739
$
3,920,096
Liabilities
Debt (net of unamortized debt issuance costs of $9,288 and $10,545)
$
1,981,897
$
2,086,672
Distributions payable
38,103
43,222
Management fees payable
9,182
9,596
Income based incentive fees payable
6,518
7,281
Interest payable
18,776
20,945
Payable for investment purchased
11
—
Payable to affiliates (Note 3)
51
91
Accrued expenses and other liabilities
8,333
4,200
Total liabilities
2,062,871
2,172,007
Commitments and contingencies (Note 7)
Net assets
Preferred stock, $0.001 par value (1,000,000 shares authorized; no shares issued and outstanding)
—
—
Common stock, par value $0.001 (500,000,000 shares authorized; 84,504,322 and 86,276,305 shares issued and outstanding)
85
86
Paid-in capital in excess of par value
1,740,413
1,767,623
Distributable earnings (loss)
(92,630
)
(19,620
)
Total net assets
$
1,647,868
$
1,748,089
Total liabilities and net assets
$
3,710,739
$
3,920,096
Net asset value per share
$
19.50
$
20.26
Consolidated Statements of Operations (Unaudited)
(In thousands, except share amounts)
For the Three Months Ended
For the Six Months Ended
June 30, 2026
June 30, 2025
June 30, 2026
June 30, 2025
Investment income:
From non-controlled/non-affiliated investments:
Interest income
$
77,516
$
93,752
$
159,156
$
188,693
Payment-in-kind income
4,842
3,815
8,893
8,003
Dividend income
1,742
650
2,674
1,244
Other income
1,353
1,175
2,476
2,870
From non-controlled/affiliated investments:
Interest income
179
44
279
70
Payment-in-kind income
88
72
141
86
Dividend income
27
—
27
—
Other income
11
—
11
—
From controlled/affiliated investments:
Dividend income
3,016
—
4,181
—
Total investment income
88,774
99,508
177,838
200,966
Expenses:
Interest and other financing expenses
32,018
34,707
62,683
68,886
Management fees
9,182
9,624
18,612
19,242
Income based incentive fees
6,518
9,279
12,318
19,122
Professional fees
1,716
1,698
3,190
3,306
Directors’ fees
130
130
259
259
Administrative service fees
61
85
122
145
General and other expenses
189
128
350
310
Total expenses
49,814
55,651
97,534
111,270
Management fees waiver (Note 3)
—
—
—
(641
)
Incentive fees waiver (Note 3)
—
—
—
(375
)
Net expenses
49,814
55,651
97,534
110,254
Net investment income (loss) before taxes
38,960
43,857
80,304
90,712
Excise tax expense
800
200
1,634
827
Net investment income (loss) after taxes
38,160
43,657
78,670
89,885
Net realized and unrealized gain (loss):
Net realized gain (loss) on non-controlled/non-affiliated investments
(7,407
)
25
(20,580
)
587
Foreign currency and other transactions
(24
)
66
(22
)
53
Net realized gain (loss)
(7,431
)
91
(20,602
)
640
Net change in unrealized appreciation (depreciation) on non-controlled/non-affiliated investments
(21,915
)
(7,751
)
(51,621
)
(24,899
)
Net change in unrealized appreciation (depreciation) on non-controlled/affiliated investments
(351
)
(2
)
(1,023
)
40
Net change in unrealized appreciation (depreciation) on controlled/affiliated investments
(527
)
—
(1,987
)
—
Translation of assets and liabilities in foreign currencies
(8
)
101
(19
)
100
Net unrealized appreciation (depreciation)
(22,801
)
(7,652
)
(54,650
)
(24,759
)
Net realized and unrealized gain (loss)
(30,232
)
(7,561
)
(75,252
)
(24,119
)
Net increase (decrease) in net assets resulting from operations
7,928
36,096
3,418
65,766
Earnings per share (basic and diluted)
0.09
0.41
0.04
0.75
Weighted average shares outstanding (basic and diluted)
84,754,809
87,189,801
85,262,160
87,798,346