SLR Investment Corp.

Good

morning, ladies and gentlemen. Welcome to today's SLR Investment Corporation second quarter 2025 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star 1 on your telephone. Also, today's call is being recorded, and if you should need any operator assistance during the call today, please press star 0. Now, at this time, I'd like to turn things over to Mr. Michael Gross, Chairman and Co-CEO. Please go ahead, sir.

Thank you very much, and good morning. Welcome to SLR Investment Corp's earnings call for the quarter ended June 30th, 2025. I'm joined today by my long-term partner, Bruce Fuller, Co-Chief Executive Officer, as well as our Chief National Officer, Shiraz Kaji, and the SLR Investor Relations Team. Shiraz, before we begin, would you please start by covering the webcast and forward-looking statements?

Thank you, Michael. Good morning, everyone. I'd like to remind everyone that today's call and webcasts are being recorded. Please note that they are the property of SLR Investment Corp, and that any unauthorized broadcast in any form is strictly prohibited. This conference call is also being webcast from the events calendar in the Investor section on our website at .slrinvestmentcorp.com. Audio replays of this call will be made available later today, as disclosed in our August 5th earnings press release. I would also like to call your attention to the customary disclosures in our press release regarding forward-looking statements. Today's conference call and webcast may include forward-looking statements and projections. These statements are not guarantees of our feature performance or financial results and involve a number of risks and uncertainties. Past performance is not indicative of future results. Actual results may differ materially as a result of number of factors, including those described from time to time in our filings with the SEC. We do not undertake to update any forward-looking statements unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website or call us at -993-1670. At this time, I would like to turn the call back over to our chairman and co-CEO Michael Gross.

Thank you Shiraz, and thank you everyone for joining our earnings call this morning. We are pleased to report that SLRC's second quarter results continue to reflect broad stability and highlight the benefits of our multi-strategy investment approach to private credit. Summarizing results, SLRC reported net investment income of 40 cents per share and net income of 44 cents per share in the second quarter. NAV per share of $18.19 as of June 30th increased slightly -by-quarter. It was approximately flat -over-year. We believe this compares quite favorably to peer publicly traded BDCs. SLRC's annualized net income returned 10% equity in the quarter. While net investment income per share was a penny below SLRC's base dividend of 41 cents per share in the second quarter, we note that the investment portfolio began the quarter levered at 1.04 times and then ended the quarter levered at 1.17 times as the company was able to source a track of new investments that led to a quarterly record of new originations. Many of the new investments funded towards the end of the quarter and therefore had a limited impact on second quarter results. We originated $567 million of new investments across the comprehensive portfolio and received repayments of $387 million with second quarter, resulting in comprehensive portfolio growth of $180 million to 3.2 million. Originations for Q2 included the largest ABL commitments in SLRC's history. These are partially offset by slightly higher than usual volume of exits. Our portfolio has achieved an annualized growth rate of .5% over the past five years. While conditions in the sponsor-backed cash flow market remained fiercely competitive, we have experienced more attractive conditions across SLRC's broad ABL strategies. With the supply demand imbalance in the sponsor finance market, there's been a decline of private credit alpha. However, thanks to higher barriers to entry in traditional ABL, a strategy we have been in since 2012, we believe that alpha today resides in our ability to extract complexity premiums. SLRC originated a record quarter of new ABL originations in the quarter at $373 million. Today, ABL lenders serve a broad universe of borrowers, including healthy companies facing temporary dislocation, corporate car browse, or even traditional cash flow borrowers looking for incremental liquidity. ABL can be used as a proactive tool to unlock liquidity from borrowers, unpledged liquid assets, and it's used by companies across the spectrum, from transitional credits to private equity backed platforms, to family owned small businesses, and even companies in the Fortune 500. Over the last two years, we have expanded the origination funnel in agencies and broadening sourcing relationships and channels to investments made across the SLR platform. SLR has made over 100 new hires across the platform, spread across 20 regional offices during this period of time. We believe this broad coverage model and the investments in people and infrastructure have contributed to the expansion and deal flow and a greater recognition of our leadership with ownership of five commercial finance affiliates that provide in-house servicing and collateral monitoring capabilities, the company's infrastructure and capital to further grow the comprehensive investment portfolio, including through potential portfolio acquisitions. This infrastructure allows us to capitalize on the current trend of continued regional bank retrenchment. Our strong quarter of ABL originations furthered our portfolio mix shift to asset-based special finance strategies of the last couple of years, which we believe provide greater downside protection principle for underlying collateral. Approximately 96% of our Q2 originations were in special finance due to the more favorable conditions in those markets that we believe present us with greater risk adjusted returns. Alternatively, we passed on the refinancing of several cash flow loan investments within our incumbent portfolio, allowing our sponsored finance portfolio to further shrink. As a result, approximately 83% of our portfolio was derived from special finance investments as of June 30th, with the remainder of the portfolio comprised of cash flow, sponsor-backed loans to companies in defensive, non-cyclical sectors such as healthcare and insurance brokerage services. With cash flow loans representing .9% of the comprehensive portfolio, the allocation of cash flow is at the lowest bounds of the company's historical mix. We will, however, continue to approach new investments of cash flow lending opportunistically. Overall, we remain pleased with the composition, quality, and performance of our portfolio. The tactical allocation afforded by SLR's multi-strategy approach and decision to be more discerning cash flow loans has safe gutter of performance through the prolonged high interest rate and inflationary environment. At quarter end, .9% of our comprehensive investment portfolio was comprised of first lien senior secured loans. .5% of our debt investments are performing, and PIC income continues to make up a de minimis percentage of total income. We believe these key credit quality metrics, along with a minimis trailing 12-month loss rate, compare favorably to peer public BDCs. At June 30th, including available credit facility capacity at SFLP and especially advanced portfolio companies, SLRC had over $650 million available capital to deploy. This puts the company in a position to take advantage of either stable economic conditions or softening of the economy. I'll now turn over the call to Shiraz to take you through the Q2 financial highlights.

Thank you, Michael. SLR investment corpse net asset value at June 30th, 2025 was $992.3 million, or $18.19 per share, compared to $18.16 per share at March 31st. At quarter end, SLRC's on-balance sheet investment portfolio had a fair market value of approximately $2.1 billion and 115 portfolio companies across 32 industries, compared to a fair market value of $2 billion and 118 portfolio companies across 32 industries at March 31st. SLRC's investment portfolio is funded by a combination of our revolving credit facilities and the issuance of term debt in the unsecured debt markets. The company is investment-grade rated by Fitch, Moody's, and DBRS. As of June 30th, 2025, SLRC had $359 million of unsecured debt. Subsequently, at the quarter end, the company privately placed with institutional investors $50 million of three-year unsecured notes at a fixed interest rate of 5.96%. Inclusive of the $50 million unsecured notes issued on July 30th, the company has $409 million of unsecured notes outstanding. We believe our issuance of these notes reflects an attractive and flexible cost of debt capital for shareholders. We expect to continue to opportunistically issue unsecured debt in the future. The company does not have any near-term refinancing obligations with the next unsecured note maturing occurring in December 2026. At June 30th, the company had approximately $1.2 billion of debt outstanding with a net debt to equity ratio of 1.17 times. We believe we have ample liquidity of cash and borrowing capacity to support our unfunded commitments. Moving to the P&L, for the three months ended June 30th, gross investment income totaled $53.9 million versus $53.2 million for the three months ended March 31st. Net expenses totaled $32.3 million for the three months ended June 30th. This compares to $31.1 million for the prior quarter. Accordingly, the company's net investment income for the three months ended June 30th, 2025 totaled $21.6 million or 40 cents per average share compared to a $22.1 million or 41 cents per average share for the prior quarter. Below the line, the company had net realized and unrealized gains for the second quarter totaling $2.6 million versus a net realized and unrealized loss of $2.2 million for the first quarter of 2025. As a result, the company had a net increase in net assets resulting from operations of $24.2 million for the three months ended June 30th, 2025 compared to a net increase of $19.9 million for the three months ended March 31st. On August 5th, the board of SLC declared a Q3 2025 quarterly based distribution of 41 cents per share tabled on September 26th, 2025 to hold this record as of September 12th, 2025. With that, I'll turn the call over to our co-CEO Bruce Spola.

Thank you, Shiraz. As Michael indicated, we've continued to shift our portfolio towards specialty finance strategies because of their more attractive risk-adjusted returns on today's market. Our specialty finance strategies offer higher pricing than sponsored finance loans and greater downside protection through their underlying collateral, which includes accounts of the receivable, finished goods inventory, commercial loan portfolios, essential use equipment, as well as intellectual property. In most cases, the assets are governed by dynamic borrowing-based frameworks, which enable real-time monitoring of the underlying asset performance. Moreover, they provide levers for us to manage our exposure, including eligibility tightening, advance rate adjustments, and cash dominion. This downside protection is critical in periods of economic uncertainty like today. Importantly, we are fortunate to have the infrastructure across our investment strategies that enables us to capitalize on this attractive opportunity set in collateral-based lending strategies. Now let me turn to the portfolio. At quarter end and on a fair value basis, comprehensive investment portfolio consisted of approximately $3.2 billion with an average exposure of $3.5 million. Measured at fair value, .3% of the comprehensive portfolio consisted of senior secured loans, with approximately 96% invested in first lien loans, including our investment in the SSLP. And only .2% was invested in second lien cash flow loans, with the remaining .2% invested in second lien asset-based loans. At quarter end, our weighted average yield on the comprehensive portfolio was 12.2%, consistent with the first quarter. We attribute this consistency to the heavy weighting towards specialty finance in our first half of 2025 originations. Based on our quantitative risk assessment scale, the portfolio currently has one of the strongest credit profiles in SLRC's history. At quarter end, the weighted average investment risk rating was under 2, based on our 1 to 4 risk rating scale, with 1 representing the least amount of risk. Just under 98% of the portfolio is rated 2 or higher. Moreover, .5% of the portfolio on a cost basis and .7% on a fair value basis was performing, with only one investment a non-accrual. Now let me touch on each of our four investment verticals. I'll start with asset-based lending. At quarter end, the ABL portfolio totaled over $1.3 billion across 259 borrowers, representing approximately 42% of our comprehensive portfolio. Regional domestic banks have continued to adjust their business models and are retreating from the ABL market, creating an attractive opportunity for SLR's ABL team. Under tighter credit regulations, regional banks' asset-based loans to non-rated companies are bumping into higher-risk capital charges, which makes these business lines economically less attractive to the banks. SLR is positioned to collaborate with these banks who are shifting their ABL strategies in reaction to these capital challenges. For the second quarter, we originated $373 million of new ABL investments and had repayments of just under $150 million. To give you a flavor of a couple transactions in the quarter, we closed on a $125 million first-lean ABL -based-driven credit facility to a manufacturer and supplier of products for the North American agricultural and food system. Proceeds from the loan will be used to refinance the newly structured ABL facility, providing an advance against liquidation value of both the company's receivables and inventory. In another ABL investment, we arranged a working capital solution via a $35 million commitment to a senior-secured ABL credit facility for a leading regional jewelry retailer. Our investment repaid an existing credit facility and is structured with a first priority security interest in all assets, including the jewelry. In the second quarter, the weighted average asset level yield of our ABL portfolio was .4% compared to .8% in the first quarter. We continue to see opportunities to provide ABL facilities to traditional cash flow borrowers who are experiencing liquidity pressures. This capability allows us to continue to be a value added partner to our sponsor clients during times when the cash flow opportunity set carries a less favorable risk-reward profile. These are highly structured ABL facilities which can achieve higher advance rates while maintaining traditional ABL risk parameters and fundamentally expanding the liquidity options for their middle market borrowers. A good example of this is the recent 75 million investment by our platform in an ABL facility to a sponsor-owned premium pet food manufacturer against the liquidation value of their receivables and finished goods inventory. The facility was used to repay their existing loan and provide liquidity for ongoing working capital needs. With the increased demand for our ABL solutions, we've continued to add personnel and evaluate further ways to expand and support our ABL franchise. It's important to note that this increased demand for ABL solutions is very different than the ever-present headlines of an increasing supply of asset-based finance strategies among some of our peer alternative investment managers. The recent headlines reflect more of an expansion of the opportunity set in asset-based finance or asset-based securitizations which includes the financing of pools of consumer assets such as credit card receivables, student loans, and residential mortgages, just to name a few. While these pools of financial assets are large and present scaled opportunities for diversified asset managers to distribute in size, it remains an area very different than SLR's focus on direct lending to individual companies backed by their working capital assets including receivables and inventory. We continue to focus on the commercial borrower and believe that our specialized focus in ABL has meaningful barriers to entry. Now let me touch on equipment finance. At quarter end, this portfolio totaled just over a billion dollars representing just under 33 percent of our comprehensive portfolio and was diversified across 630 borrowers. The credit profile was unchanged and stable quarter over quarter. During the second quarter, we originated just over 140 million of new assets with the majority of this coming from our business that provides leases to investment-grade corporate borrowers. We had repayments of approximately 170 million. The weighted average asset level yield for this asset class was 11.6 percent consistent with the quarter. Our investment pipeline has expanded and we're seeing demand from our borrowers to extend their existing leases on equipment rather than buy new equipment at higher tariff adjusted prices. Now let me turn to life sciences. Our life science portfolio totaled approximately 215 million across nine borrowers. Seventy-five percent of the portfolio is invested in companies have over 12 months of cash runway. Additionally, eight out of nine of these companies have revenues with at least one product in commercialization stage which significantly derisks our life science investments. Life science debt investments represented just under seven percent of the comprehensive portfolio and contributed 12 percent of our gross investment income for the quarter. During the second quarter, the team funded approximately 30 million of new investments, including two incremental investments to existing borrowers and had just one million of contractual amortization repayments. Leading the originations for life sciences in the second quarter was a partial funding associated with a new $400 million debt facility for Kojic, a publicly traded biotech company that includes tranches subject to clinical and operating milestones for future draws under our facility. We believe our life science teams' long-standing relationships and expertise in the sector ultimately led to SLR winning this business for a groundbreaking company at one of the largest commitments for life sciences in SLR's history. At quarter end, the weighted average yield on the first lane portfolio was 13.1 percent, inclusive of potential success fees but excluding warrants. We are seeing signs of recovery in the life science sector. However, the recent cuts at the FDA and NIH, evolving public policy and continuing valuation challenges remain headwinds for the sector. Now more than ever, extensive industry expertise is required to successfully navigate the investment opportunity set. We are fortunate to have one of the most seasoned teams in life science lending, and while they continue to remain extremely cautious, the pipeline of opportunities is increasing. Finally, let me touch on sponsor finance. In our sponsor finance business, we originate first-lean, senior-secured loans to middle-market companies and non-cyclical industries such as healthcare, business services, and financial services. This has helped us mitigate the impact on our portfolio from cyclical factors as well as tariffs. At quarter end, the sponsor cash portfolio was just under 550 million across 33 borrowers, including loans in our SSLP. With approximately 99 percent of the cash flow portfolio invested in first-lane loans, we believe we are well positioned to withstand either tariff or economic headwinds. Our borrowers have a weighted average EBITDA of approximately 90 million and carry low LTVs of under 44 percent. In sponsor finance, the average EBITDA and revenue growth continues to be in the mid-single digits year over year for our portfolio companies. Overall, they have successfully managed transition to an environment with higher cost of capital as well as input prices. Weighted average interest coverage on our sponsor finance book is 1.8 times. Additionally, approximately 500,000 of our second quarter gross investment income is in the form of capitalized PIC cash flow borrowers resulting from MMS. During the quarter, we made investments of $24 million in first-lane cash flow loans and experienced repayments of just under 70 million. As Michael mentioned, sponsor finance deal flow continues to be muted due to the lower M&A volume and we are selectively letting investments go in connection with refinancings if their new risk return profiles do not meet our investment criteria. Our specialty finance strategies enable us to be more selective in cash flow lending during periods of increased competition. At quarter end, the weighted average yield on our cash flow portfolio was 10.3 percent down from 10.4 percent in the first quarter. Lastly, let me touch on our SSLP. During the second quarter, we earned total income of $1.1 million from the SSLP representing a 9.3 percent annualized yield. During the quarter, we made $32 million of new investments and had repayments of $14 million. The investment portfolio began the quarter at just under one times levered and ended at 1.15 times levered. We expect to continue to rebuild this portfolio opportunistically. At quarter end, the SSLP had capacity of approximately $70 million. Now let me turn back to Michael. Thank you, Bruce.

While the path ahead is fraught with looming economic uncertainties from the ultimate impact of tariffs, the level of interest rates and an overhang in supply demand imbalance and sponsor funds conditions, we believe that our diversified and predominantly asset backed portfolio sits in a position of relative strength to deliver attractive results for shareholders across economic cycles. We are pleased with the growth of SSLRC over the last couple of years, creating a diversified commercial finance company with broad investment capabilities and deep experience to a 320 person team across the SLR platform. These investments across the platform can be evaluated through the lens of record quarter originations which was led by SLR's asset based strategies and strong credit performance. SLR's multi-strategy approach to private credit investing, our emphasis on preservation of capital and our portfolio construction with a SLR's emphasis differentiates us from the majority of our BDC peers and provides an investment portfolio that contains very limited investment overlap with other private credit managers. The combination of a diversified portfolio with strong credit metrics, momentum across our investment strategies and a growing investment pipeline tilted heavily towards SLR's investments positions the company favorably to navigate the current climate. Heading to the second half of the year we will remain opportunistic and prudent as we deploy capital with discipline and conviction. In closing, SLRC trades at an approximate .3% dividend yield as of yesterday's market close which we believe presents an attractive investment for both income seeking and value investors and also offers a more diversified investment portfolio compared to cash flow only private credit strategies. Our investment advisors alignment of interest with our shareholders continues to be our significant hallmark principles. The SLR team owns over 8% of the company's stock and has a significant percentage of their annual incentive compensation reinvested in SLRC stock every year. The team's investment alongside fellow institutional and private wealth investors demonstrates our confidence in the company's portfolio, stable funding and earnings outlook. We thank you all again for your time today as we recognize that it's a busy day for those that are not here. We appreciate all the listed BDCs marketplace closely. Operator, will you please open up the line for questions?

Certainly Mr. Gross, thank you. Ladies and gentlemen at this time if you do have any questions moments please press star one and you can remove yourself from the queue if your questions have been answered by pressing star two. Once again star one please for questions we'll go first this morning to Eric Zwick of Lucid Capital Markets.

Thanks, good morning guys. You know first congratulations on such a strong quarter of originations that's an impressive feat by the originations team. You know curiously you noted that the new originations didn't have much of an impact on QQ results due to the timing of when they hit the balance sheet. In order just to kind of think about that impact going forward are you able to provide any you know what was the average yield on the new originations and I'm curious how that compared to you know either the exits during the quarter or just relative to the average yield on the existing portfolio?

Yeah so the investments and the repayments did sort of on a weighted average dollar basis happen more towards the end of May so you really saw that net growth of 180 million impact the portfolio in June predominantly. The exits were just over 10% on average and the new investments were at about .8% on average.

Okay thanks that's a nice pick up in on that swap and then just given the strong originations in the quarter I'm curious you know that the level of the pipeline entering the third quarter relative to say you know maybe three months ago how does that stand and what does it look like in terms of you know new versus add-on opportunities?

So it is is definitely geared towards new opportunities. I would say it's fair to assume that it's not going to be as robust as Q2 was but still should be in line with our traditional activity levels. As you know the summer can be a little bit seasonally slow just in terms of getting things closed but you know we feel like we have a steady cadence.

Okay in just a minute's been you know several years now you've talked about the the opportunity in ABL with the bank rates and you've been you know in a great position to take advantage of that that continues to you know be an opportunity for you. I'm curious is that bringing any new entrants any other specialty lenders or any non-banks into that arena and are you seeing any increased competition there at this point?

Not really look I think we've talked a lot about you know we've been doing this in 2012. We've added 100 people. These are not businesses that you can wake up one day and say I'm going to go be in them. You have to build out the infrastructure because of how complex they are and so you know we have not seen new entrants because it takes a significant investment to do in a long time. There's been a lot of talk about people in private credit investing in you know asset-based lending. The predominance of it and the vast vast majority is in more of ABS you know buying portfolios of consumer loans whether it's credit card receivables, car loans, etc. So we you know we don't see new entrants into the space that we compete in today.

No it's a great position for you to be in and one last one for me and I'll step aside you know your portfolio from a credit perspective continues to be very clean and you pointed out the low risk weighting today and just one credit on non-accrual. As you kind of look out at you know just into the economy and potentially into your pipeline and deals that you turned down are you seeing any concerning developments in any sectors or any parts of the economy at this point?

No you know first of all as you know we're burdened by and benefit from the fact that we are generally focused on non-cyclical sectors. When we do look at cyclical opportunities it will be on an asset-based basis where we're really just looking to the liquidity and liquidation value of the working capital assets so that that protects us but across the cash flow book as you know it's centered on recession resilient sectors such as health care so we really don't have a great window into it but I will say that as we look across our abl portfolio which does lend to some cyclical sectors we are seeing you know some stress but I would not call it significant.

I appreciate the color thanks for taking my questions.

Thank you.

Thank you we go next now to Melissa Weddle of JP Morgan.

Good morning thanks for taking my questions. Appreciate all the color that you offered on the ADL strategies. Quick follow-up on that you mentioned that some of the changing capital rules have led regional banks to sort of pull away from that market creating some opportunity for you. I'm just wondering with you know those capital rules or some capital rules being revisited is there any chance that some relief might be brought to those regional banks that might bring them back into the market?

So I guess that's always a possibility but we're not seeing signs of that you know similar to Michael's commentary around the barriers to entry for private credit managers the banks face those same barriers once they pull out it's not something that you can dip your toe in and out of you need the investment in infrastructure and you can't create that quickly and this is not the first place they're going to be looking to redeploy capital so you should think back to the acquisition we made in the second half of last year at Webster Bank we bought the infrastructure we bought the portfolio we brought the team it's very difficult to then turn that back on quickly.

Okay understood I think there was a reference to the timing of the strong net origination sort of benefiting maybe one month out of the quarter how I mean if you were to analyze or estimate the NII impact if you would have the benefit of a full quarter of that deployment would there have been sold dividend coverage?

Yes. Okay

and then I guess last question for me right now would just be around the leverage levels within the portfolio there's not a ton of dry powder just given again a strong deployment is there given you know sort of the forward curve implying future rate cuts can you talk about how you're thinking about the sustainability of you know the earnings power of the portfolio going forward if we were to get those rate cuts that are currently embedded in forward expectations? Thanks.

Sure so we do have some dry powder as you mentioned over 600 million to deploy we are going to be very focused on continuing this rotation from low yielding to higher yielding assets as I think you know we've talked about in the past the added benefit of the specialty finance assets is not just that they carry borrowing bases and collateral and we think better risk management tools for the lender but they also carry higher returns as you can see across the portfolio and are less geared towards and correlated with changes in base rates so we think that gives us a little bit of push in there in terms of potential spread compression because what we find is it's an all-in return asset so as you know base rates or spreads come down we can compensate and with fees and other levers still keep those returns rather healthy obviously if we went back to a zero rate environment that would have some impact but we generally find that there is much less correlation with rates across the specialty finance assets.

Thank

you. Thank you. Just a quick reminder ladies and gentlemen star one please for questions today we go next now to Haley Scheff of Raymond James.

Morning thanks for the question. So you mentioned you earned a total of 1.1 million from the SSLP this quarter and that's lower than what we've seen in 2024 and also last quarter in 1Q. Can you provide any additional color there was this quarter a one-off or was there an over distribution the previous quarters and this is the new normalized dividend distribution run right?

Sure so just to step back for a moment if you you look back the SSLP had been in ramp mode and got to full deployment which is where you saw that more elevated distribution level closer to the the 1.8 million level there's a lag effect so we had let some of those assets repay consistent with what we did on balance sheet as we were getting repriced to rates that we thought were not acceptable and so that's trickled through in Q2 even though you saw the portfolio come down in Q1 we had some built-up income over the last year that we distributed so as we mentioned the portfolio did rebuild a little bit in Q2 and we hope to continue to do that so it will ebb and flow but I don't see the 1.1 as a constant we expect to continue to rebuild that and already did in Q2 and the dividend distribution will grow accordingly.

All right thanks for the call I appreciate it.

Thank you. Thank you and just a quick reminder ladies and gentlemen any further questions today star one at this time and we'll take a follow-up question now from Melissa JP Morgan.

Thanks just one more question from me when we look at the schedule of investments within equipment finance it looks like the business that you have there on balance sheet which is the majority of that portfolio there the multi-sector holding SLR equipment finance it looks like the steadily over the last year or so can you talk about what's driving that mark and what's happening within that portfolio? Thanks.

Sure so we have been shrinking that portfolio which has been what's driving that valuation we are starting to rebuild the portfolio but we had pulled back on that risk over the last year and a half and pivoted more towards our investment grade leasing portfolio. So the Kingsbridge sister set grow over the next couple of quarters here.

Thank you and Mr. Gross it appears we have no further questions today sir I'd like to turn the conference back to you for any closing comments.

Once again we thank you all for your attention today recognize it is quite a busy time of week in the BDC space and as always if you have any follow-up questions please feel free to call any of us at any time have a great day.

Thank you Mr. Gross ladies and gentlemen again that will conclude the SLR investment corp second quarter earnings call again thanks so much for joining us everyone and we wish you all a great day goodbye.