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Operator
Good afternoon and welcome to the earnings conference call for the period ended June 30th, 2023 for MidCap Financial Investment Corporation. At this time, all participants have been placed in a listen-only mode. The call will be open for a question and answer session following the speaker's prepared remarks. If you would like to ask a question at that time, simply press star 1 on your telephone keypad. If you would like to redraw your question, please press star 2. I'll now turn the call over to Elizabeth Besson, Investor Relations Manager for MidCap Financial Investment Corporations. Please go ahead, ma'am.
Elizabeth Besson
Thank you, Operator, and thank you, everyone, for joining us today. Speaking on today's call are Tanner Powell, Chief Executive Officer, Ted McDulty, President, and Greg Hunt, Chief Financial Officer. Howard Widger, Executive Chairman, as well as additional members of the management team are on the call and available for the Q&A portion of today's call. I'd like to advise everyone that today's call and webcast are being recorded. Please note that they are the property of MidTap Financial Investment Corporation and that any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available in our press release. I'd like to also call your attention to the customary safe harbor disclosure in our press release regarding forward-looking information. Today's conference call and webcast may include forward-looking statements. You should refer to our most recent filings with the SEC for risks that apply to our business. and then may adversely affect any forward-looking statements we make. We do not undertake to update our forward-looking statements or projections unless required by law. To obtain copies of our SEC filings, please visit our website at www.midcapfinancialic.com. I'd also like to remind everyone that we've posted a supplemental financial information package on our website, which contains information about the portfolio as well as the company's financial performance. Throughout today's call, we will refer to MidCap Financial Investment Corporation as either MFIC or the BDC, and we will use MidCap Financial to refer to the lender headquartered in Bethesda, Maryland. At this time, I'd like to turn the call over to our Chief Executive Officer, Tanner Powell.
Tanner Powell
Thank you, Elizabeth. Good afternoon, everyone, and thank you for joining us today. I will begin today's call by highlighting our results for the June quarter, and we'll then provide our thoughts on the current environment. Following my remarks, Ted will cover our investment activity and portfolio, and we'll also provide an update on credit quality. Lastly, Greg will review our financial results in detail. We'll then open the call to questions. Beginning with our results, we're very pleased with our performance for the June quarter, given our strong net investment income, a slight increase in net asset value per share, and stable credit quality. Net investment income per share for the June quarter was 44 cents, well above the current 38-cent dividend, as we continue to see the benefit of higher base rates on our floating rate assets. We are particularly pleased with these results when considering the relatively muted transaction environment, which resulted in below-normal prepayment income. At the end of June, NAV per share was $15.20, an increase of two cents from the end of March, which reflects earnings in excess of a dividend, stable credit quality, and includes approximately one cent per share accretion from stock buybacks. We are pleased to report that we continue to observe relatively stable credit quality in our portfolio. We're seeing that most of our portfolio companies are able to handle higher interest costs. We constructed our portfolio to withstand challenging periods. As a reminder, our corporate lending and other portfolio, which makes up 92% of our portfolio, primarily consists of first lien, top of the capital structure loans, is well diversified by borrower and industry, is largely sponsor-backed, and has what we consider to be robust documentation and financial covenants. At the end of June, 96% of our corporate lending debt portfolio on a cost basis or 97% on a fair value basis had one or more financial covenants. Let me give a brief update on Merck's. As discussed previously, we are focused on reducing our investment in Merck's. While we don't expect paydowns to occur evenly, we believe aircraft sales and servicing income should allow for the paydown of third-party trade-level debt and MFIC's equity and debt investment in Merck's. Although Merckx did not sell any aircraft in its portfolio during the June quarter, Merckx repaid $3.5 million to MFIC, which applied to the revolver, which was applied to the revolver. At the end of June, our investment in Merck's totaled $193 million, representing approximately 8% of our total portfolio at fair value. Turning now to the market environment, the heightened volatility that we saw in the first quarter stemming from the regional banking crisis subsided as the quarter progressed, despite ongoing concerns about inflation, higher interest rates, and fears about recession. Against this backdrop, new issue volumes were slow, driven primarily by slower M&A activity, partially offset by add-on activity as sponsors pursue bolt-on acquisitions. We still see financial sponsors, particularly those focused on the middle market, seeking financing solutions in the private credit market. We continue to observe more lender-friendly pricing and terms on new commitments compared to prior vintages, although we are seeing the pace of increases plateau. Moving to the dividend, our board of directors declared a dividend of $0.38 per share to shareholders of record as of September 12, 2023, payable on September 28, 2023. A $0.38 dividend represents an annualized dividend yield of 10% on NAV. At current base rates, we are well positioned to generate net investment income in excess of this dividend level. We believe our portfolio will continue to earn above the current dividend in a normalized rate environment. our board and management team continue to evaluate potential dividend increases versus retaining earnings. With that, I will turn the call over to Ted.
Elizabeth
Thank you, Tanner, and good afternoon, everyone. Beginning with investment activity, as a reminder, MFIC is focused on investing in loans sourced by MidCap Financial, an affiliate of Apollo Global, which provides MFIC with a large pipeline of investment opportunities. MidCap Financial is a leading middle market lender with one of the largest direct lending teams in the U.S., with close to 200 investment professionals. MidCap Financial was active during the June quarter, closing approximately $4.4 billion in new commitments. Specific to MFIC, new corporate lending investment commitments during the quarter totaled $79 million, all first lien, across 15 different borrowers for an average new commitment of $5.2 million, as we continue to emphasize diversification by borrower. 17% of new commitments were made to existing portfolio companies. We continue to observe favorable pricing at lower leverage levels for newly originated loans. The weighted average spread on new commitments was 681 basis points, with an average OID of approximately 266 basis points. This translates into a very attractive weighted average yield of approximately 12.5% based on current base rates. The weighted average net leverage of new commitments was 3.7 times. In terms of funded investment activity, gross fundings, excluding revolvers for the corporate lending portfolio, totaled $73 million. Higher interest rates and a lack of New Deal activity led to a slowdown in repayment activity. Sales and repayments totaled $58 million. Net revolver fundings totaled $11 million. And we also received a $3.5 million pay down from Merck, as Tanner mentioned. In aggregate, net fundings for the quarter totaled $22 million. Turning to our investment portfolio, At the end of June, our investment portfolio had a fair value of $2.41 billion and was invested in 150 companies across 25 different industries. Corporate lending and other represented 92% of the total portfolio, and Merck's accounted for 8% of the total portfolio on a fair value basis. 95% of our corporate lending portfolio was first lien. We continue to have conservative weighted average attachment and net leverage on our corporate loans of 0.1 times and 5.45 times respectively. Both of these metrics were flat compared to the prior quarter, which we consider to be another indication of our portfolio's stable credit quality. At the end of June, the average funded corporate lending position was $15.4 million, or approximately 0.7% of the total corporate and other lending portfolio. MFIC is focused on lending to the core middle market, where mid-cap financial has strong, long-standing relationships with sponsors and borrowers and a proven track record across cycles. As of the end of June, the median EBITDA of MFIC's corporate lending portfolio companies was approximately $55 million. We believe the core middle market offers attractive investment opportunities across cycles and does not compete directly with either the broadly syndicated loan market or the high-yield market. The weighted average yield at cost of our corporate lending portfolio was 11.7% on average for the June quarter, compared to 11.3% last quarter, driven by an increase in base rates. These yield figures are an average of the beginning and the end of the quarter. At the end of June, the yield of the corporate lending portfolio at cost was 11.9%, up from 11.5% at the end of March. The weighted average spread across the corporate lending portfolio was 614 basis points, up one basis point compared to last quarter. Turning to credit quality, our portfolio companies continue to have solid fundamental performance with positive revenue and EBITDA growth. We're not seeing any signs of overall credit weakness, although we have observed a deceleration in top-line growth and some margin pressure. We've not seen a meaningful increase in covenant breaches or a pickup in amendment activity. We believe our credit quality has benefited from mid-cap financials, strong sourcing and underwriting capabilities. Based on data since mid-2016, which is the approximate date upon which we began utilizing our co-investment order, MFIC's annualized net realized and unrealized loss rate on loans sourced by MidCap Financial is extremely low at approximately one basis point. The weighted average net leverage of the companies in our corporate lending portfolio was 5.45 times unchanged compared to the prior quarter. As mentioned, the net leverage on new commitments was 3.7 times, well below the portfolio average. Moving to interest coverage, the weighted average interest coverage ratio was 2.1, down from 2.3 times last quarter, with four companies below one times. If we utilized June 30 base rates, the interest coverage would be 1.6 times compared to 1.7 times last quarter in that stress test scenario. In the coming quarters, Excuse me. We are closely monitoring these situations, which we believe are manageable, as these companies either have strong current liquidity or the underlying businesses are performing well. We want to underscore that we have not increased PIC income to create interest coverage. Importantly, MFIC benefits from MidCap Financial's large, dedicated portfolio management team of nearly 60 investment professionals, which helps identify and address issues early. It is also important to note that MidCap Financial leads and serves as an administrative agent on the majority of our deals, which provides meaningful downside protection. As agent, we're in active dialogue with the borrowers and have enhanced information flow, which allows us to be proactive in resolving problem credits as issues arise. We're also monitoring near-term maturities to identify any potential risk of repayment so that we can address any issues early and proactively work with borrowers to help them meet their liquidity needs. As part of our investment process, we're mindful of the specific fund making and acquisition, as we believe sponsors are more likely to support businesses and funds with greater remaining duration. We continue to have very low levels of non-accruals. No investments were placed on non-accrual status during the quarter. At the end of June, investments on non-accrual status totaled $7.5 million, or 0.3% of the total portfolio, at fair value. With that, I will now turn the call over to Greg to discuss our financial results in detail.
spk07
Thank you, Ted, and good afternoon, everyone. Beginning with our financial results, net investment income per share for the June quarter was $0.44, as we continue to benefit from higher base rates on our floating rate assets and improved net interest margins. prepayment income declined quarter over quarter due to lower prepayment activity. Prepayment income was approximately $600,000 compared to $2.6 million last quarter. Fee income also declined compared to the prior quarter. Fee income was approximately $1 million in the June quarter compared to $2.2 million last quarter. Ticket income remained very low, representing approximately 1.2% of total investment income for the quarter. Gap net income per share for the quarter was $0.39. Net per share at the end of June was $15.20, an increase of $0.02 since the end of June. The $0.02 increase reflects net investment income of $0.44, which is $0.06 above the $0.38 dividend, $0.05 per share net loss on the portfolio, and approximately $0.01 accretion from stock buybacks. Additional details on unrealized net gain and losses are shown on page 16 in the earnings supplement. Total expenses for the quarter were $39.8 million, up $1.5 million compared to the last quarter, primarily due to higher interest expense. Gross management fees totaled $4.3 million, essentially flat quarter over quarter. As a reminder, MSIC's base management fee was reduced to $1.75 on equity, beginning January of 2023. Among listed BDCs, MFIC's management fee is the lowest, and we are the only BDC to charge management fees on equity, which we believe provides a greater alignment and focus on that asset value. Gross incentive fees totaled $6.1 million for the quarter. As a reminder, our incentive fee on income is 17.5%. It includes a total return hurdle with a rolling 12-quarter look-back. We believe our fee structure is best in class amongst listed BDCs and provides a strong alignment of interest with our shareholders. For the quarter, we generated an annual ROE based on net investment income of 11.6% and an annualized ROE based on net income of 10.2%. Moving on, from a balance sheet perspective, our net leverage stood at 1.4 times at the end of June. As highlighted last quarter, in April, we were pleased to extend the maturity of our senior secured revolving credit facility by over two years to April, 2028. We also are pleased that Kroll affirmed our investment grade ratings in June. During the quarter, we repurchased approximately $2.3 million of stock, which had a 1% accretive impact on NAV4Share. This concludes our prepared remarks. Operator, please open the call for questions.
Operator
Yes, sir. At this time, if you would like to ask a question, please press the star key followed by the 1 key on your touchstone phone. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star 1 to ask a question. We will pause for a moment to allow questions to queue. Our first question comes from Oren Zyganovich for Citi.
Oren Zyganovich
Thanks. Maybe you could just talk a little bit about how your conversations with equity sponsors are right now. Are you seeing anyhow loosening up in terms of, you know, increasing activity? I know it's August now, so I imagine a seasonal slowdown happening. But just in general relative, you know, since we have some better lender-friendly type of terms today.
Tanner Powell
sure um uh thanks for the question aaron so in terms of i'll try to handle it in two aspects as it relates to i think which is uh primarily what your question is getting at in terms of overall overall activity notwithstanding the you know the kind of summer doldrums which we know we encounter in in august we are seeing a modest kick up you know from earlier in in the year Off of a relatively low base, I think that there's a Bain report, a Bain Capital report that came out that said LBO volume was down 50% in the second quarter. We're seeing a modest uptick and a greater willingness to engage from LBO sponsors. The second aspect of our conversation of sponsors relates to those companies where either they're trying to do something strategic and or things are moving sideways. And we continue to see a very healthy level of support from the sponsors. And in particular, in this type of environment, one of the ways that sponsors are electing to try and counter, you know, the bid-ask spread, if you will, in terms of expectations of multiples is by completing add-on acquisitions. dialogue has been very, very healthy and shows continued equity support for the underlying borrowers. Thank you.
Operator
Our next question comes from Kyle Joseph with Jefferies.
Kyle Joseph
Hey, good afternoon. Thanks for taking my question. Just on the portfolio yield side, obviously it's been expanding. How much of that is base rates and how much of it is it It's spread movement. I know you mentioned it's still kind of a more lender-friendly environment out there.
Tanner Powell
Yeah, thanks, Kyle. In terms of the spread, let's just talk spread to help you disaggregate it there. In the quarter, we deployed at 681 and an OID of just over 2.5 points, which reflects what we've seen for a number of quarters, which is a very attractive environment for private credit lenders. Notwithstanding the downdraft in M&A, private credit is able to service a disproportionate share of M&A that's getting done. And more broadly against that backdrop, it continues to be lender friendly. To my response to Arne's question, we're seeing, you know, if I were to look at the deals that are being screened today, there might be a slight tightening in terms of spread as, you know, M&A picks up and people are feeling better. about prospects and or there is some level of stabilization, which is enabling sponsors to make better decisions and or risk appetite has improved as we get further from some of the stress that we saw earlier this year. Not to say that all has been mitigated, but generally speaking, banks and markets are feeling a little bit better relative to what was a relatively low base for much of the first half of the year.
Kyle Joseph
Very helpful. Thanks. And then one follow-up for me. You mentioned some of the banking volatility negatively impacting deal flow, but, you know, stepping back from a longer-term perspective with, you know, potentially higher capital requirements at banks, you know, do you see that as a longer-term opportunity for mid-cap but also the BDC sector as a whole?
Tanner Powell
Yeah, absolutely. I'm sorry. I should have drawn the distinction there. I think, Kyle, when we see periods of volatility, which in this case earlier this year happened to be related to banking stress, there was more broadly a greater reticence to transact. And it wasn't necessarily a function of whether banks were able to provide that financing or not, but you just saw reduced volumes, which were more connected to volatility and had less to do on whether or not the banks were providing it. As we and our peers have stressed and we are huge believers in, we continue to benefit very much from a secular trend that has private credit taking share from the banking system as we roll forward and expect that to continue.
Kyle Joseph
Got it. Thanks very much for answering my question.
Operator
Our next question comes from Sean Paul Adams, Raymond James.
Sean Paul Adams
Hey, guys. I think you guys shared some light on the amount of companies you guys have that are below a 1X interest coverage ratio. Do you guys have the exact numbers about the portion of the total portfolio that those companies represent? And maybe share some thoughts on your total outlook for, you know, your general portfolio as interest coverage might continue to decline later in the year?
Elizabeth
Yeah, sure. And thanks for your question. I'll start with the outlook, you know, which is, you know, if base rates, to state the obvious, if base rates continue to increase, you know, our borrowers as well as everyone else's borrowers are going to face increased pressures. You know, we've run a number of different stress tests and scenarios around, you know, what those numbers, you know, could look like in different types of situations. As to the existing portfolio, the ones that we have that are below one times now, in some cases, sponsors are putting in equity to cover that. In other cases, there's still sufficient liquidity, and we're in active dialogue with those.
Sean Paul Adams
Got it. Thank you. I appreciate your answer.
Operator
Our next question comes from Melissa Whittle, JP Morgan.
Melissa Whittle
Good afternoon. Thanks for taking my questions today. First wanted to start with some of the capital return activities and comments you made on the call. I know last quarter you talked about potential special dividends at some point. based on the comments you made today about the board continuing to evaluate sort of over-earning and whether to pay that out versus retain it, I guess the question would be, is the board still thinking about a potential payout in the form of a special, or has that conversation evolved a bit to something else?
spk08
This is Howard. I think, you know, Effectively, everything's on the table, meaning it is a cornerstone of the goal for us is to have stable NAV. We are helped by that by over-earning the dividend. We also have you know, both requirements, obviously, to pay out, you know, a certain amount of income, as well as sort of a desire, obviously, to return to the shareholders, you know, some excess return. And so, you know, the answer is, if you did this over, you know, a longer period of time, and we were out earning what is our core dividend, six, seven cents a share each quarter, as were the last two quarters, there's sort of room for both. But it's a year – it's effectively a decision – I would say as much as we – the thing that sort of has been decided is a decision that we will sort of make at the end of the year so that, like, we'll, you know, we'll retain it for now and then make a decision in a year about the size of what we may or may not do. So I know that's not that definitive. But we're just sort of trying to like, you know, balance all things. And obviously, if if if base rates continue to go up or even they went up in July, obviously just now. And, you know, there's some and our fee income builds off a, you know, a very low base. We could even out earn, you know, the dividend by even more. And so then there's even more more room for for, you know, both options.
Melissa Whittle
Okay, understood. I appreciate the delving into the framework that way. It's helpful. In terms of the share repurchase activity that you did, notice that, you know, obviously it picked up. I think the last repurchase activity was about a year ago. As we think about, you know, moving forward and the capital allocation choices that you have in front of you, you've got a really attractive investment environment. You've got net leverage, you know, kind of where it is, I think, towards the midpoint of your target range, if I'm looking at this right. And you know, how should we think about you guys evaluating those opportunities for, you know, appetite for additional share repurchase versus, you know, deploying capital into an attractive environment?
spk08
Yeah, I mean, it's – you know, the buying back of shares is a – it's definitely a function of the things you said. Obviously, you know, how levered we are and how much capital we have. But more importantly is comparing it against alternative investments. And, you know, we bought back those shares much earlier in the quarter at markedly lower prices than we're at today. You know, and so – which changes sort of the return on that buyback multiple hundreds of basis points. So it does change that metric. So we're always looking at it. And so obviously if yields on assets or opportunities went down, that could change the appetite at this price because we still think that it's a good value. But when there are these lending opportunities at this level based on where we've traded to now, you know, that balance is different. So I think the answer is, We will buy back shares when it is clearly accretive to the shareholders versus all other options, right? Paying dividends, making a different loan, delevering. And we felt that was the case at the level we were able to buy shares very early in this quarter.
Melissa Whittle
Thank you. That's really helpful.
Operator
Just a reminder, to ask a question, please press star 1. Our next question comes from Paul Johnson, KBW.
Paul Johnson
Yeah, good evening, guys. Thanks for taking my question. So I guess just with, you know, everything that's occurred, you know, I guess in the first half of this year, and based on kind of what you're seeing from sponsors, you know, behavior and appetite for deals today, you know, Do you think that we've reached or maybe we're approaching an inflection point, you know, in terms of just kind of risk appetite from sponsors? And, you know, if that is the case, I guess, you know, what do you guys kind of expect for the remainder of the year and maybe more so like 2024? Are you expecting a big year or just kind of a slower recovery to normalization?
Tanner Powell
Yeah, sure. Thanks, Paul. And let me make a quick comment before opining on your question. I think one of the parts of our story that we try to stress quite a bit is that we're $2.4 billion of a $30 billion business, and that affords us a nice... strategic advantage in that in any given quarter, there is plenty of volume. And as we called out in our prepared remarks, MidCap, the broader MidCap, the Bethesda MidCap did 4.4 billion of originations in the given quarter. And that gives us a dynamic where we're less sensitive to the ebbs and flows in deal volume. You know, in terms of, you know, the inflection point, what we hear from sponsors in our discussions, and not to give you a half answer by any stretch of the imagination, but what we have seen, while there is some volatility, the dispersion has been reduced, and there's some modicum of stabilization. And that's not to say that no one's discounting the potential for higher rates. And at least being able to say that I've got something that's unlikely to go up materially from here has enabled sponsors, when they digest the implications to the next buyer's ability to pay, particularly if it's a sponsor-to-sponsor buyout, that enables models to be able to be run with a greater degree of confidence and precision. And so I think that's the impetus currently, as well as also, you know, some distance from the, you know, the stresses that we saw earlier in the year, as well as some upside to, you know, economic prints. But it would be very premature to call, you know, the inflection point as data on the on the front lines is changing, but certainly, you know, some modicum of reprieve there, and that's what we've sort of seen in the kind of post-quarter end period with some modestly higher M&A volume and activity levels.
Paul Johnson
Got it. Thanks for that. I understand. um it's always difficult to predict um my other question is just a little more specific to mercs um i'm just i'm trying to kind of understand um you know as i do understand these are obviously fixed fixed rate you know fixed payment leases um on the underlying aircraft um you know this is obviously a portfolio company that's you know in runoff um with you guys but in terms of aircraft leasing, comparable lease rates, I guess is how I would term it, for any sort of borrower in the market, what are the current, I guess, set of comparable rates that are available to lessees? And what I'm sort of getting at is, are any of these borrowers, when they go to renew leases, or I don't know if it's possible to refinance leases, are these being done at higher fixed payments, you know, is that driving a longer average life of the assets, you know, pushing out that sort of termination data? I'm just curious how that works.
Tanner Powell
Yeah, absolutely. And what could be a very long answer, I'll try to be clear. And first and foremost is, you know, with respect to the assets that we have in the, you know, Yes, they are fixed leases, but we have fixed debt costs against those. And then so then as you play forward and we look at kind of a next buyer analysis or we look at transitioning those leases. Ultimately, a plane is an economic instrument utilized by airlines to make money. And in the same way, you see plane tickets going up to kind of recover the broader increase in interest rates. And ultimately, because of the long duration of a lot of leases, there's a lag there, maybe even more significant than what you'd otherwise see in maybe the leveraged loan market. But notwithstanding, that does adjust. And you will see that become reflected in how the lease rates. One quick comment also, one of the aspects that gives us some cautious optimism in terms of reducing our exposure in Merck's right now, is that it is, generally speaking, a good yield environment for leasing companies. The increase in demand is well documented. And at this juncture, actually, domestic revenue passenger miles are actually above COVID levels. International is lagging slightly. And overall, we're at 96%. But importantly, with Asia having recently come back online, we would expect You know, increases in demand there. And that's on the other side of the equation in terms of supply. We continue to see issues with Airbus and Boeing to deliver significant amounts of lift. And as a result, you put aside the question you asked about, you know, lease rates and interest rates. Notwithstanding, we're seeing a healthy environment for lease rates and leasing on account of those supply-demand dynamics, which we hope will support our disposition efforts at Merck to reduce that exposure.
Paul Johnson
Thanks for that. I appreciate that. It's an interesting dynamic, and obviously this conversation could go on a lot longer, but I appreciate the abbreviated answer, and that's all for me.
Operator
Our final question comes from Kenneth Lee, RBC Capital Markets.
Kenneth Lee
Hey, good afternoon, and thanks for taking my question. Wasn't sure whether this was discussed already, but wondering if you could talk about any amendment activity you've been seeing in the portfolio, whether they're just routine or whether they're out of the ordinary. Thanks.
Elizabeth
Yeah, sure. So the activity level on the amendment side of things has not picked up materially. We do have, you know, most of our borrowers and most of our transactions, you know, have a set of covenants in them. And so when borrowers come back and, you know, want to grow, as we've mentioned before, they're looking to do accretive acquisitions. or if there are things where covenants are getting tight and sponsors want to be proactive, that brings us to the table to have those discussions. Our stance when we've been doing that is looking to de-risk and or get enhanced economics around it. You know, if a sponsor is looking for additional cushion on a leverage covenant, for example, you know, we're going to put, we may grant that cushion, but then we're going to have step downs. And it also provides the opportunities for fees, and we can also, you know, look at the spreads as well. So, you know, the bigger picture is, you know, we have covenants, so we are in dialogue. You know, the tone and the pace of amendments, you know, has not increased, you know, materially, you know, as kind of at the same pace. as it has been over the last several quarters. You know, but when it does occur, you know, we view that, you know, as an opportunity as well to either de-risk or enhance the economics.
Kenneth Lee
Gotcha. Gotcha. Very helpful there. And then just one follow-up, if I may, and this is just a follow-up question from an earlier one about originations. Given that you see a lot of the potential deal flow from the broader mid-cap origination platform and perhaps a little bit less dependent upon deal flow there or M&A activity, would it be fair to say that the key constraints to originations over the near term would be more on the underwriting, finding the appropriate deals, the appropriate returns, leverage constraints,
Elizabeth
more so than than broader uh industry trends thanks yeah yeah i mean the as we've mentioned you know mid cap closed on on over four billion of um new commitments in the last quarter you know we get to look at those um look to see what fits you know into our portfolio from a diversification uh standpoint and you know obviously from from a yield and structure standpoint So in terms of constraints to new activity, you know, it's certainly not the top of the funnel because we get that via mid-cap. What we've, you know, continually, you know, expressed in terms of leverage, you know, is a range of 1.4 to 1.6 and a desire to stay at the lower end of that range. And so, you know, you've kind of seen us in between 1.4 and 1.45, you know, over the last several quarters and, you know, So as we think about deploying into new capital, we're balancing, you know, our desire to be in that leverage range, you know, with the attractive opportunities that are out there.
Kenneth Lee
Gotcha. Very helpful there. Thanks again.
Operator
We have no further questions in the queue at this time. I would now like to turn the call back over to today's speakers.
Tanner Powell
Thank you, Operator. Thank you, everyone, for listening to today's call. On behalf of the entire team, we thank you for your time today. Please feel free to reach out to us if you have any other questions, and please have a good evening.
Operator
This does conclude today's program.
Tanner Powell
Thank you for your participation.
Operator
You may disconnect at any time.
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