Morgan Stanley Direct Lending Fund (MSDL) Q1 2025 earnings summary

Executive summary

• Net investment income for Q1 2025 was $46.2 million ($0.52 per share), down from $50.7 million ($0.57 per share) in Q4 2024, with earnings per share at $0.34 versus $0.58 in the prior quarter.

• NAV per share decreased to $20.65 from $20.81 at the end of Q4 2024.

• Portfolio fair value was $3.8 billion, invested across 210 companies in 34 industries, with a focus on U.S. middle-market, first lien, floating rate loans.

• Regular dividend of $0.50 per share declared for Q2 2025; special dividend of $0.10 per share paid.

• Share repurchase program authorized up to $100 million, with 491,332 shares repurchased in Q1 2025.

Financial highlights

• Total investment income for Q1 2025 was $101.5 million, down from $103 million in Q4 2024, but up from $99.1 million in Q1 2024.

• Net realized and unrealized losses totaled $16.6 million, with net realized and unrealized losses per share at $(0.18) in Q1 2025.

• Net change in unrealized depreciation on investments was $17.1 million, partly due to credit spread widening.

• Net increase in net assets from operations was $29.7 million, down from $51.7 million in Q1 2024.

• Total net expenses increased to $55.2 million from $52.3 million sequentially, mainly due to higher management and incentive fees.

Outlook and guidance

• Board declared a regular Q2 2025 dividend of $0.50 per share.

• Management expects sufficient liquidity for near-term investing activities, with $65.6 million in cash and $1.08 billion in available credit as of March 31, 2025.

• M&A recovery is anticipated later in 2025 or possibly 2026, depending on market clarity and tariff developments.

• Equity distribution agreements allow for up to $300 million in new share issuance, though no shares were issued in Q1 2025.

• Expect continued strong risk-adjusted returns, leveraging a robust origination platform and selective investment approach.