Morgan Stanley Direct Lending Fund (MSDL) Q1 2026 earnings summary

Executive summary

• Net investment income for Q1 2026 was $40.5 million ($0.47 per share), down from $0.49 in the prior quarter, mainly due to lower base rates and portfolio repricings.

• NAV per share declined to $19.81 from $20.26, with net assets at $1.69 billion and earnings per share at $(0.05).

• Regular dividend was $0.45 per share, with 104% coverage and a new Q2 2026 dividend declared.

• Share repurchase program authorized for up to $100 million; 940,492 shares repurchased at an average price of $15.64, resulting in $0.05 of NAV accretion.

• Capstone Lending LLC joint venture launched, with $94.5 million contributed and $200 million commitment, expanding investment capacity.

Financial highlights

• Total investment income was $89.1 million, down from $96.6 million in the prior quarter and $101.5 million year-over-year, primarily due to lower base rates.

• Net realized and unrealized losses per share were $(0.52), contributing to the NAV decline.

• Total expenses declined to $48.6 million from $54.2 million, reflecting lower financing costs.

• Debt outstanding at quarter-end was $2.06 billion, with a debt-to-equity ratio of 1.22x.

• Total liquidity stood at $1.51 billion, including $96.7 million in cash and $1.41 billion in undrawn debt capacity.

Outlook and guidance

• Board declared a regular $0.45 per share dividend for Q2 2026, payable July 24, 2026.

• Truist Credit Facility maturity extended to April 2031, enhancing long-term liquidity.

• Management expects sufficient liquidity for ongoing operations and unfunded commitments.

• Dividend policy expected to remain appropriate for the medium term, with strong coverage and spillover income.

• Anticipates continued origination and gradual JV deployment over the next four to six quarters.