Morgan Stanley Direct Lending Fund

Welcome to the Morgan Stanley Direct Lending Q4 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow to prepare remarks. As a reminder, this conference call is being recorded. At this time, I'd like to turn the conference over to Ms. Santa Johnson. Please go ahead, ma'am.

Good morning, and welcome to Morgan Stanley Direct Lending Fund's full year and fourth quarter 2024 earnings call. Joining me this morning are Jeff Levin, Chief Executive Officer, Michael Osi, President, David Pessa, Chief Financial Officer, and Rebecca Shaul, Head of Portfolio Management. Morgan Stanley Direct Lending Fund's fourth quarter and full year 2024 financial results were released yesterday after market close and can be accessed on the investor relations section of our website at www.msdl.com. We have arranged for a replay of today's events that will be accessible from the Morgan Stanley Direct Lending Fund website. During this call, I want to remind you that we may make forward-looking statements based on current expectations. The statements on this call that are not purely historical are forward-looking statements. These forward-looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements, including and without limitation market conditions, uncertainty surrounding interest rates, changing economic conditions, and other factors we have identified in our filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions can prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward-looking statements. The forward-looking statements contained on this call are made as of the date hereof, and we assume no obligation to update the forward-looking statements or subsequent events. To obtain copies of FCC-related filings, please visit our website. With that, I will now turn the call over to Jeff Levin.

Thank you, Sana. And thank you for joining us today for Morgan Stanley Direct Lending's fourth quarter and full year 2024 conference call. We are proud of the strong results that we generated. To close, it was a critical year for us. In 2024, we successfully executed our IPO in January and continued to deploy capital prudently in our efforts to generate attractive risk-adjusted returns for our growing base of shareholders. I will first begin with a summary of our performance in the fourth quarter before handing it to Michael to discuss our market outlook. Dave will then provide updates on our portfolio and comment on the financial results. Our team delivered solid operating results for the fourth quarter supported by strong underlying credit performance. At $20.81, net asset value per share was stable quarter over quarter. We generated net investment income of 57 cents per share representing 114% regular dividend coverage. During the quarter, we also had a 10 cent special dividend that had been declared by the Board of Directors around the time of the IPO and was paid to shareholders of record as of November 4th, 2024. For the fourth quarter, new investment commitments totaled approximately $188 million, resulting in net funded deployment for the quarter of $144 million, an increase from the $124 million in the third quarter. During the quarter, MSDL's debt to NAV increased from 0.99 times to 1.08 times. Importantly, we accomplished the objective that we had previously telegraphed of achieving our one to one and a quarter times target leverage range over the few quarters following the IPO without stretching on credit. Our underlying deployment activity in the quarter showcased once again our ability to leverage our unique origination engine to drive quality deal flow. Over the course of 2024, more than three-quarters of our non-refinancing gross deployment was to new borrowers. While we remain focused on supporting existing borrowers through incremental financing, we think the skew towards new platforms highlights the value of our unique sourcing platform, even amidst, in our view, a more subdued LBO environment. Additionally, over the course of 2024, we led or co-led over 90% of the new borrowers added to MSDL's portfolio. We continue to believe that sponsors are drawn to the quality of our team and our ability to be a value-add partner, given the broader Morgan Stanley platform we are a part of. On previous calls, we've highlighted the clear benefits of our ability to leverage the broader Morgan Stanley platform. Our breadth and depth of sponsor relationships allows us to see a vast range of deal flow, and that deal flow exceeds our capital base, which breeds selectivity. Flexibility is also key to our strategy. MSDL's median EBITDA has been steady in the mid-$80 million context. We like to credit attributes in this segment of the market, but we have the ability to move up and down market to optimize risk-adjusted returns. As we had flexed up market during the peak of the inflation-led dislocation a couple of years ago, We think that the deal flow to capital imbalance in our nimble approach to financing the middle market will continue to serve as a key competitive advantage for us. With that, I would like to hand the call over to Michael, who will provide some commentary on our broader market outlook. Michael was appointed to president of the BDC at the end of 2024, and we are excited to see his role expand as we continue to optimize our business for the benefit of our shareholders.