Prospect Capital Corp (PSEC) 2025 Q4 法說會逐字稿

Good day, and welcome to the Prospect Capital fourth quarter and fiscal year-end earnings release and conference call. (Operator Instructions) Please note, this event is being recorded.

大家好，歡迎參加 Prospect Capital 第四季度和財年末收益發布和電話會議。（操作員指示）請注意，此事件正在被記錄。

I would now like to turn the conference over to Mr. John Barry, Chairman and CEO. Please go ahead.

現在我想將會議交給董事長兼執行長約翰·巴里先生。請繼續。

Thank you, Betsy. Joining me on the call today are Grier Eliasek, our President and Chief Operating Officer; and Kristin Lea Dask, our Chief Financial Officer.

謝謝你，貝琪。今天與我一起參加電話會議的還有我們的總裁兼營運長 Grier Eliasek 和我們的財務長 Kristin Lea Dask。

Kristin?

克里斯汀？

Thanks, John. This call contains forward-looking statements that are intended to be subject to Safe Harbor protection. Future results are highly likely to vary materially. We do not undertake to update our forward-looking statements. For additional disclosure, see our earnings press release and 10-K filed previously and available on our website, prospectstreet.com.

謝謝，約翰。本次電話會議包含前瞻性陳述，旨在受到安全港保護。未來的結果很可能會發生重大變化。我們不承諾更新我們的前瞻性陳述。如需更多揭露，請參閱我們先前提交的收益新聞稿和 10-K 表，可在我們的網站 prospectstreet.com 上查閱。

Now, I'll turn the call back over to John.

現在，我將把電話轉回給約翰。

Thank you, Kristin. In the June quarter, our net investment income or NII with $79 million, $0.17 per common share. Our NAV was $3 billion, $6.56 per common share. At June 30, our net debt to total assets ratio was 30.4%. Unsecured debt plus unsecured preferred is 77.1% of total debt plus preferred. We are announcing monthly common shareholder distributions of $0.045 per share for each of September and October. We plan on announcing our next set of shareholder distributions in November.

謝謝你，克里斯汀。6 月季度，我們的淨投資收益或 NII 為 7,900 萬美元，每股 0.17 美元。我們的資產淨值為 30 億美元，每股 6.56 美元。截至 6 月 30 日，我們的淨負債與總資產比率為 30.4%。無擔保債務加上無擔保優先債務佔總債務加上優先債務的 77.1%。我們宣布 9 月和 10 月每月向普通股股東分配每股 0.045 美元。我們計劃在十一月宣布下一批股東分配。

Since our IPO 20 years ago through our October 2025 declared distribution, we will have distributed approximately $4.6 billion or $21.66 per share. Our preferred shareholder count distributions continue at their contract rates. We continue to make progress repositioning our business, including rotation of assets into an increased focus on our core business of first lien senior secured middle market loans with our first lien mix increasing 642 basis points to 70.5% from last year.

自 20 年前首次公開發行以來，到 2025 年 10 月宣布分配為止，我們將分配約 46 億美元或每股 21.66 美元。我們的優先股股東數量分配繼續按照其合約利率進行。我們繼續在業務重新定位方面取得進展，包括將資產輪換為更注重我們的核心業務——第一留置權高級擔保中端市場貸款，我們的第一留置權組合比去年增加了 642 個基點，達到 70.5%。

This rotation includes selected equity-linked investments. For new investments, we are focusing on companies with less than $50 million of EBITDA, a market with more than 200,000 companies in the United States, including companies sponsored by smaller private equity sponsors, independent sponsors and direct loans to companies without financial sponsors.

此次輪換包括選定的股票掛鉤投資。對於新投資，我們專注於 EBITDA 低於 5000 萬美元的公司，這個市場在美國有超過 20 萬家公司，包括由小型私募股權發起人、獨立發起人發起的公司以及直接向沒有金融發起人的公司提供貸款。

Number two, reduction in our second lien senior secured middle market loans with our second lien mix decreasing 202 basis points to 14.4% from last year. And with two additional second lien loans having been repaid since June 30, 2025, further reducing our second lien mix 69 basis points to 13.7% based on the investment portfolio as of June 30, 2025.

第二，我們的第二留置權優先擔保中型市場貸款減少，我們的第二留置權組合較去年同期下降了 202 個基點，至 14.4%。自 2025 年 6 月 30 日以來，又有兩筆第二留置權貸款得到償還，根據截至 2025 年 6 月 30 日的投資組合，我們的第二留置權組合進一步減少了 69 個基點，至 13.7%。

Number three, selling our subordinated structured notes with our subordinated structured notes mix, decreasing 781 basis points to 0.6% from last year.

第三，出售我們的次級結構性票據和我們的次級結構性票據組合，較去年下降 781 個基點至 0.6%。

Number four, prudent exits of equity-linked assets, including real estate, with six properties sold in the last six quarters and corporate investments, including the sale of Echelon assets in July 2025, with extra exits targeted.

第四，謹慎退出包括房地產在內的股權相關資產，過去六個季度已出售六處房產，並進行了企業投資，包括 2025 年 7 月出售 Echelon 資產，併計劃額外退出。

Number five, enhancement of portfolio company operations.

第五，加強投資組合公司營運。

And number six, greater utilization of our cost-efficient floating-rate revolver, which largely matches our floating rate assets.

第六，更多地利用我們具有成本效益的浮動利率循環信貸額度，這與我們的浮動利率資產基本匹配。

Thank you. I will now turn the call over to Grier.

謝謝。現在我將把電話轉給格里爾。

Thank you, John. Over the past two decades, Prospect Capital Corporation has invested $12.6 billion in over 350 exited investments that have earned a 12% unlevered investment level gross cash IRR to Prospect Capital Corporation. This, over two-decade time period, includes the GFC and has been dominated in general by low prevailing market interest rates.

謝謝你，約翰。在過去的二十年裡，Prospect Capital Corporation 已在 350 多個退出投資中投資了 126 億美元，這些投資為 Prospect Capital Corporation 帶來了 12% 的無槓桿投資水平總現金 IRR。在過去的二十年中，包括全球金融危機在內，這段時期總體上一直受到低市場利率的主導。

As of June 2025, we held 97 portfolio companies across 33 different industries with an aggregate fair value of $6.7 billion. For the June quarter, our portfolio at cost comprised 70.5% first lien debt, up 642 basis points from the prior year, 14.4% second lien debt, almost entirely secured, down 202 basis points in the prior year, 0.6% subordinated structured notes with underlying secured first lien collateral, down 781 basis points in the prior year and nearly completely exited. And 14.5% unsecured debt and equity investments, resulting in 85% of our investments being senior and secured debt.

截至 2025 年 6 月，我們持有 33 個不同產業的 97 家投資組合公司，總公允價值為 67 億美元。就六月季度而言，我們的投資組合按成本計算包括 70.5% 的第一留置權債務，比上年增加 642 個基點，14.4% 的第二留置權債務，幾乎全部有擔保，比上年下降 202 個基點，0.6% 的次級結構性票據，其底層有擔保權的第一年。14.5% 為無擔保債務和股權投資，因此我們的投資 85% 為優先債務和擔保債務。

Our middle market lending strategy is the primary focus of our company. With such strategy as of June, representing 85% of our investments at cost, an increase of 878 basis points in the prior year. In our middle market core lending strategy, we continue our focus on first lien senior secured loans during the quarter, with such investments totaling $167 million of originations during the quarter.

我們的中端市場貸款策略是我們公司的主要關注點。截至 6 月份，採用此策略，我們的投資成本佔比為 85%，比前一年增加了 878 個基點。在我們的中端市場核心貸款策略中，我們本季持續關注第一留置權優先擔保貸款，本季此類投資總額達 1.67 億美元。

Investments during the quarter included a new investment in Verify Diagnostics, a provider of advanced molecular diagnostic testing, a new investment in QC Holdings, a provider of consumer credit. And other follow-on investments in existing portfolio companies to support acquisitions, working capital needs, organic growth initiatives and other objectives.

本季的投資包括對先進分子診斷測試提供商 Verify Diagnostics 的新投資，以及對消費信貸提供商 QC Holdings 的新投資。以及對現有投資組合公司的其他後續投資，以支持收購、營運資金需求、有機成長計畫和其他目標。

We've substantially completed the exit of our subordinated structured notes portfolio as of June 30, with such portfolio representing 0.6% of our investment portfolio at cost, representing a reduction of 781 basis points from 8.4% the prior year. In our real estate property portfolio at National Property REIT Corp or NPRC, which represented 14% of our investments at cost as of June and which is focused on developed and occupied cash flow multifamily investments.

截至 6 月 30 日，我們已基本完成次級結構性票據投資組合的退出，該投資組合占我們投資組合成本的 0.6%，較上年的 8.4% 減少了 781 個基點。在我們國家房地產投資信託公司（NPRC）的房地產投資組合中，截至 6 月份，該投資組合占我們投資成本的 14%，主要專注於已開發和已入住的現金流量多戶型投資。

Since the inception of this strategy in 2012 and through June 30, 2025, we've exited 52 property investments that have earned an unlevered investment level, gross cash IRR of 24% and cash-on-cash multiple of 2.4 times. The remaining real estate property portfolio included 58 properties that paid us an income yield of 4.5% for the June quarter. Prospect's aggregate investments in NPRC included a $378 million unrealized gain as of June. We expect to continue to redeploy future asset sale proceeds primarily into first lien senior secured middle market loans.

自 2012 年實施該策略以來，截至 2025 年 6 月 30 日，我們已退出 52 項房地產投資，這些投資獲得了無槓桿投資水準、24% 的總現金 IRR 和 2.4 倍的現金倍數。剩餘的房地產投資組合包括 58 處房產，6 月季度的收益率為 4.5%。截至 6 月份，Prospect 對 NPRC 的總投資包括 3.78 億美元的未實現收益。我們預計將繼續將未來資產出售所得主要用於第一留置權優先擔保中端市場貸款。

Prospect's approach is one that generates attractive risk-adjusted yields. In our performing interest-bearing investments, we're generating an annualized yield of 12.2% for the quarter ended June 2025. Our interest income in the June quarter was 95% of total investment income reflecting a strong recurring revenue profile for our business. Payment in kind income for the quarter ended June 2025 is reduced by over 50% from the quarter ended June 2024.

Prospect 的方法是產生有吸引力的風險調整效益。在我們的有息投資中，截至 2025 年 6 月的季度，我們的年化報酬率為 12.2%。我們六月季度的利息收入佔總投資收入的 95%，反映出我們業務強勁的經常性收入狀況。2025 年 6 月結束的季度實物支付收入與 2024 年 6 月結束的季度相比減少了 50% 以上。

Non-accruals as a percentage of total assets as of June 2025 stood at approximately 0.3% based on fair market value and 4% based on cost, representing a reduction from the prior quarter of 30 basis points and 65 basis points, respectively. Investment originations in the June quarter aggregated $271 million and were comprised of 91% middle market investment with a significant majority of first lien senior secured loans. We also experienced $445 million of repayments and exits as a validation of our capital preservation objective, resulting in net repayments of $174 million.

截至 2025 年 6 月，非應計項目佔總資產的百分比以公平市價計算約為 0.3%，以成本計算約為 4%，分別較上一季減少 30 個基點和 65 個基點。6 月季度的投資總額為 2.71 億美元，其中 91% 來自中端市場投資，且絕大多數為第一留置權優先擔保貸款。我們也經歷了 4.45 億美元的償還和退出，這驗證了我們的資本保全目標，最終淨償還額為 1.74 億美元。

Thank you. I'll now turn the call over to Kristin. Kristin?

謝謝。我現在將電話轉給克里斯汀。克里斯汀？

Thanks, Grier. We believe our prudent leverage, diversified access to matched book funding, substantial majority of unencumbered assets, weighting toward unsecured fixed rate debt and avoidance of unfunded asset commitments all demonstrate balance sheet strength as well as substantial liquidity to capitalize on attractive opportunities. Our company has locked in a ladder of liabilities extending 26 years into the future.

謝謝，格里爾。我們相信，我們審慎的槓桿率、多元化的匹配賬面融資渠道、絕大多數無抵押資產、對無擔保固定利率債務的重視以及對無資金資產承諾的避免，都表明我們的資產負債表實力雄厚，並且擁有充足的流動性，可以利用誘人的機會。我們公司已經鎖定了未來 26 年的負債階梯。

Our unfunded eligible commitments to portfolio companies totals approximately $41 million, of which, $16 million are considered at our sole discretion, representing approximately 0.6% and 0.2% of our total assets as of June 2025, respectively. Our combined balance sheet cash and undrawn revolving credit facility commitments stood at $1.3 billion as of June and we held $4.2 billion of our assets as unencumbered assets, representing approximately 62% of our portfolio.

我們對投資組合公司的未撥付合格承諾總額約為 4,100 萬美元，其中 1,600 萬美元由我們自行決定，分別占我們截至 2025 年 6 月總資產的約 0.6% 和 0.2%。截至 6 月份，我們的資產負債表現金和未提取循環信貸額度承諾總額為 13 億美元，其中 42 億美元為無抵押資產，約占我們投資組合的 62%。

The remaining assets are pledged to Prospect Capital funding, a non-recourse SPV. We currently have $2.12 billion of commitments from 48 banks, demonstrating strong support of our company from the lender community with the diversity unmatched by any other company in our industry. The facility does not mature until 2029 and revolves until 2028. Our drawn pricing continues to be SOFR plus 2.05%.

剩餘資產質押給無追索權的特殊目的機構 Prospect Capital 融資。我們目前已獲得來自 48 家銀行的 21.2 億美元貸款承諾，表明我們公司獲得了貸款機構群體的大力支持，其多元化程度是業內任何其他公司都無法比擬的。該設施要到 2029 年才會成熟，並且要到 2028 年才會結束。我們的定價繼續為 SOFR 加 2.05%。

Outside of our revolver, we have access to diversified funding sources across multiple investor types and have successfully issued securities in an array of markets. Prospect has issued multiple types of unsecured debt institutional non-convertible bonds, institutional convertible bonds, retail baby bonds and retail program notes. All of these types of unsecured debt have no financial covenants, no asset restrictions and no cross defaults with our revolver.

除了循環信貸之外，我們還可以從多種投資者類型獲得多元化的資金來源，並已在一系列市場成功發行證券。Prospect 已發行多種類型的無擔保債務機構不可轉換債券、機構可轉換債券、零售嬰兒債券和零售計畫票據。所有這些類型的無擔保債務都沒有財務契約、沒有資產限制，也沒有與我們的循環信貸交叉違約。

We've tapped the unsecured term debt market on multiple occasions to ladder our maturities and to extend our liability duration out 26 years with our debt maturities extending through 2052. With so many banks and debt investors across so many unsecured and non-recourse debt tranches, we have substantially reduced our counterparty risk. At June 30, 2025, our weighted average cost of unsecured debt financing was 4.52%.

我們多次利用無擔保定期債務市場來分階段提高我們的到期日，並將我們的負債期限延長 26 年，我們的債務到期日延長至 2052 年。由於有這麼多的銀行和債務投資者投資於如此多的無擔保和無追索權債務，我們大大降低了交易對手風險。截至 2025 年 6 月 30 日，我們的無擔保債務融資加權平均成本為 4.52%。

Now, I'll turn the call back over to John.

現在，我將把電話轉回給約翰。

Okay. We're ready to take questions.

好的。我們已準備好回答問題。

(Operator Instructions) Finian O'Shea, Wells Fargo.

（操作員指示） 富國銀行的 Finian O'Shea。

I wanted to ask about the REIT. You've seen industry challenges in multi-family both on inflation hitting OpEx, and it's also been hard to raise rents to our understanding. Where do you think we are in terms of getting through those headwinds? And seeing if you could give some outlook for the income trajectory if it should improve sooner or later or if today's income rate is sort of appropriate to model out.

我想問一下有關房地產投資信託基金 (REIT) 的問題。您已經看到多戶住宅產業面臨的挑戰，既有通貨膨脹對營運支出的衝擊，也有我們理解的難以提高租金的挑戰。您認為我們在克服這些困難方面進展如何？看看您是否可以對收入軌跡做出一些展望，看看它是否遲早會改善，或者今天的收入率是否適合建模。

I think you articulated many of the prior headwinds within multi-family, but we're seeing a substantial turning the corner occur in our portfolio, and I'll take each of those in turn. First, it's widely diversified from a geographic standpoint. Many of our assets are located in areas in the Midwest and Mid-Atlantic or more sort of tertiary areas of the Sun Belt which weren't as targeted for development and actually have some fairly healthy rent growth.

我認為您已經闡明了多戶型住宅領域之前面臨的許多不利因素，但我們看到我們的投資組合出現了重大轉折，我將逐一討論這些不利因素。首先，從地理角度來看，其分佈十分多樣化。我們的許多資產位於中西部和中大西洋地區，或是陽光地帶的第三產業地區，這些地區並不是開發的目標，但實際上租金成長相當健康。

For certain assets in larger cities in the Sun Belt where there were supply additions in the market in the last few years. That is now abating substantially. There's a lag effect for new development. So developments that were started prior to 2022 when rates shot up didn't get completed until 2023, 2024, even a little bit at the beginning of 2025. Now, much of that new supply has ground to a halt because of higher interest rates and higher development costs, which is very good for incumbent landlords like in our portfolio. That's on the revenue, rents and occupancy side.

對於陽光地帶較大城市的某些資產，過去幾年市場供應量增加。如今，這種情況正在大幅減弱。新的發展存在滯後效應。因此，在 2022 年利率飆升之前開始的開發案直到 2023 年、2024 年，甚至 2025 年初才完成一點。現在，由於利率上升和開發成本上升，大部分新供應已經陷入停滯，這對我們投資組合中的現有房東來說非常有利。這是關於收入、租金和入住率方面。

In terms of the cost equation, we've seen a significant slowdown in inflation, property taxes, insurance and payroll and all of that is quite favorable. Our book has had a like-for-like sort of same property net operating income increase of 7% in the last year. And we anticipate that accelerating to double-digit growth going forward.

就成本方程式而言，我們看到通貨膨脹、財產稅、保險和工資的大幅放緩，所有這些都相當有利。去年，我們同類物業的淨營業收入較去年同期成長了 7%。我們預計未來這一成長速度將加速至兩位數。

We are strategically focused as a middle market first lien senior secured lender. Real estate is substantially lower yielding than our middle market book. We are selectively exiting investments at a value maximizing price over time in a careful and prudent way. Of course, if we expect substantial NOI growth in certain properties, it may make sense to exit in a year or two as opposed to this second. It also makes sense to exit in a methodical bottoms-up singular asset or mini portfolio way to maximize buyer interest. There are a lot fewer buyers that can stroke a $1 billion check plus for the entire portfolio compared to ones that can buy individual assets or mini portfolio.

我們的策略重點是成為中端市場第一留置權優先擔保貸款人。房地產的收益率遠低於我們的中端市場收益率。我們會以謹慎、審慎的方式，選擇性地以價值最大化的價格退出投資。當然，如果我們預期某些資產的淨營業收入將大幅成長，那麼在一兩年內而不是現在退出可能是更明智的選擇。以有條不紊的自下而上的單一資產或迷你投資組合的方式退出也是有意義的，這樣可以最大限度地提高買家的興趣。與可以購買單一資產或迷你投資組合的買家相比，能夠為整個投資組合拿出 10 億美元以上支票的買家要少得多。

So we're very pleased with the direction of our real estate business. We view the rotation from that 4.5% yielding a part of our book into middle market senior secured loans as a huge value driver for our business. Our last 10 or so deals in the middle market, which have been focused, as John mentioned, on sub $50 million EBITDA companies have had an average spread of around 750 and an average floor of 300 basis points. So we're talking about double-digit yields in an all-weather fashion, even if rates get cut to 0 -- near 0, where they were only 3.5 years ago.

因此，我們對我們的房地產業務的發展方向非常滿意。我們認為，將我們帳面收益率為 4.5% 的部分轉向中端市場優先擔保貸款，將為我們的業務帶來巨大的價值驅動力。正如約翰所提到的，我們在中端市場最近進行的 10 筆交易主要集中在 EBITDA 低於 5000 萬美元的公司，平均利差約為 750，平均底線為 300 個基點。因此，我們談論的是全天候的兩位數收益率，即使利率降至 0 或接近 0，即 3.5 年前的水平。

So we've been resisting the upper middle market urge to jump into deals with tight spreads, with loose covenants with lender liability, liability management exercises, low to no floors, no maintenance covenants, significant problems. And we're staying away from those Wall Street ask or larger club deals where so much capital has been focused. There's maybe 230,000 middle-market companies between $5 million and $150 million of EBITDA. The upper middle market, where there are so many problems in the $50 million to $150 million range, has only about 10,000 of those companies and the other 220,000 are sub $50 million.

因此，我們一直在抵制中上層市場對利差較小、貸款人責任契約較寬鬆、負債管理措施較多、下限較低甚至沒有、沒有維護契約等重大問題的交易的衝動。我們正在遠離那些華爾街要求或大型俱樂部交易，因為這些交易已經集中了太多的資本。大約有 23 萬家中型市場公司的 EBITDA 在 500 萬美元至 1.5 億美元之間。中高端市場中，5,000 萬美元至 1.5 億美元範圍內的問題很多，但只有大約 10,000 家這樣的公司，其餘 220,000 家公司的資產都在 5,000 萬美元以下。

That's where we're focused. They're harder deals to originate to underwrite, to close, but we originate thousands of deals per annum and have a low 0.5% book-to-look ratio with our 150-person strong team. So we're well equipped to do that. We've already unlocked value and streamlined and simplified our business by exiting our CLO book. You are not seeing this company message itself as we have in the past as a multiline player, we are focused on middle market lending first lien, senior secured with a portion of our assets from time to time purchasing selected equity.

這就是我們關注的重點。這些交易的發起、承銷和成交都比較困難，但我們每年發起數千筆交易，憑藉我們 150 人的強大團隊，訂單與看盤比率僅為 0.5%。因此我們已做好充分準備來做到這一點。透過退出 CLO 帳簿，我們已經釋放了價值並簡化了我們的業務。您不會看到這則公司資訊本身，因為我們過去作為多元化公司，我們專注於中間市場貸款第一留置權，優先擔保，我們不時用部分資產購買選定的股權。

That, in many cases, is highly synergistic with our debt and helps to command better debt terms, plus, of course, give us upside in many cases, without trade-offs through warrants through convertible debt and other types of liquidation preference security attached to our position. So that's what we're doing strategically and as it relates to real estate, Finian.

在許多情況下，這與我們的債務具有高度的協同作用，有助於獲得更好的債務條款，當然，在許多情況下，這也給我們帶來了好處，而無需通過可轉換債務的認股權證和附加在我們頭寸上的其他類型的清算優先權擔保進行權衡。這就是我們在策略上正在做的事情，與房地產有關，Finian。

This concludes our question-and-answer session. I would like to turn the conference back over for any closing remarks.

我們的問答環節到此結束。我想將會議交回，以便發表結束語。

Okay. Well, there are my closing remarks right there. Thank you, everyone. Have a wonderful afternoon. Bye now.

好的。好吧，這就是我的結束語。謝謝大家。祝您下午愉快。再見了。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。