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INVESTMENTS | 9 Months Ended
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Sep. 30, 2024
Investments, Debt and Equity Securities [Abstract] |
INVESTMENTS | 4. INVESTMENTS As of September 30, 2024 and December 31, 2023, investments consisted of the following:
| As of
| September 30, 2024 |  | December 31, 2023
| Amortized Cost(1) |  | Fair Value |  | Amortized Cost(1) |  | Fair Value
First lien senior secured loans(2) | $ | 13,927 |  |  | $ | 13,684 |  |  | $ | 10,313 |  |  | $ | 10,081 |
Second lien senior secured loans | 2,859 |  |  | 2,755 |  |  | 3,980 |  |  | 3,753 |
Subordinated certificates of the SDLP(3) | 1,231 |  |  | 1,159 |  |  | 1,316 |  |  | 1,288 |
Senior subordinated loans | 1,443 |  |  | 1,414 |  |  | 1,150 |  |  | 1,096 |
Preferred equity | 2,666 |  |  | 2,685 |  |  | 2,457 |  |  | 2,460 |
Ivy Hill Asset Management, L.P.(4) | 1,729 |  |  | 1,954 |  |  | 1,763 |  |  | 1,987 |
Other equity | 1,718 |  |  | 2,267 |  |  | 1,689 |  |  | 2,209 |
Total | $ | 25,573 |  |  | $ | 25,918 |  |  | $ | 22,668 |  |  | $ | 22,874 |
________________________________________ (1)The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest or dividends. (2)First lien senior secured loans include certain loans that the Company classifies as “unitranche” loans. The total amortized cost and fair value of the loans that the Company classified as “unitranche” loans were $8,137 and $8,020 respectively, as of September 30, 2024, and $5,786 and $5,667, respectively, as of December 31, 2023. (3)The proceeds from these certificates were applied to co-investments with Varagon Capital Partners (“Varagon”) and its clients to fund first lien senior secured loans to 19 and 22 different borrowers as of September 30, 2024 and December 31, 2023, respectively. (4)Includes the Company’s subordinated loan and equity investments in IHAM (as defined below), as applicable. The Company uses GICS for classifying the industry groupings of its portfolio companies. The industrial and geographic compositions of the Company’s portfolio at fair value as of September 30, 2024 and December 31, 2023 were as follows:
| As of
| September 30, 2024 |  | December 31, 2023
Industry |  |  |
Software and Services | 25.4 | % |  | 23.2 | %
Health Care Services | 12.8 |  |  | 12.1 |
Commercial and Professional Services | 10.7 |  |  | 9.8 |
Financial Services(1) | 10.0 |  |  | 11.5 |
Insurance Services | 5.8 |  |  | 5.1 |
Consumer Services | 4.8 |  |  | 4.3 |
Investment Funds and Vehicles(2) | 4.7 |  |  | 5.8 |
Power Generation | 3.5 |  |  | 4.2 |
Retailing and Distribution | 3.3 |  |  | 2.5 |
Media and Entertainment | 3.2 |  |  | 2.8 |
Capital Goods | 2.8 |  |  | 2.4 |
Consumer Durables and Apparel | 2.2 |  |  | 3.1 |
Consumer Staples Distribution and Retail | 2.0 |  |  | 1.8 |
Energy | 1.5 |  |  | 2.2 |
Pharmaceuticals, Biotechnology and Life Sciences | 1.4 |  |  | 1.5 |
Other | 5.9 |  |  | 7.7 |
Total | 100.0 | % |  | 100.0 | %
________________________________________ (1)Includes the Company’s investment in IHAM. (2)Includes the Company’s investment in the SDLP (as defined below), which had made first lien senior secured loans to 19 and 22 different borrowers as of September 30, 2024 and December 31, 2023, respectively. The portfolio companies in the SDLP are in industries similar to the companies in the Company’s portfolio.
| As of
| September 30, 2024 |  | December 31, 2023
Geographic Region |  |  |
West(1) | 24.2 | % |  | 24.3 | %
Midwest | 24.1 |  |  | 24.7 |
Southeast | 18.4 |  |  | 18.5 |
Mid-Atlantic | 14.7 |  |  | 13.3 |
Northeast(2) | 12.3 |  |  | 13.2 |
International | 6.3 |  |  | 6.0 |
Total | 100.0 | % |  | 100.0 | %
________________________________________ (1)Includes the Company’s investment in the SDLP, which represented 4.5% and 5.6% of the total investment portfolio at fair value as of September 30, 2024 and December 31, 2023, respectively. (2)Includes the Company’s investment in IHAM, which represented 7.5% and 8.7% of the total investment portfolio at fair value as of September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024 and December 31, 2023, loans on non-accrual status represented 1.3% of the total investments at amortized cost (or 0.6% at fair value) and 1.3% at amortized cost (or 0.6% at fair value), respectively. Ivy Hill Asset Management, L.P. Ivy Hill Asset Management, L.P. (“IHAM”), a wholly owned portfolio company of the Company, is an asset manager and an SEC-registered investment adviser. As of September 30, 2024, IHAM had assets under management of approximately $13.2 billion. As of September 30, 2024, IHAM managed 21 vehicles (the “IHAM Vehicles”). IHAM earns fee income from managing the IHAM Vehicles and has also invested in certain of these vehicles as part of its business strategy. The amortized cost of IHAM’s total investments as of September 30, 2024 and December 31, 2023 was $2,304 and $2,288, respectively. For the three and nine months ended September 30, 2024, IHAM had management and incentive fee income of $13 and $41, respectively, and investment-related income of $75 and $266, respectively, which included net realized gains or losses on investments and other transactions. For the three and nine months ended September 30, 2023, IHAM had management and incentive fee income of $15 and $42, respectively, and investment-related income of $80 and $236, respectively, which included net realized gains or losses on investments and other transactions. The amortized cost and fair value of the Company’s investment in IHAM as of September 30, 2024 and December 31, 2023 were as follows:
| As of
| September 30, 2024 |  | December 31, 2023 |  |
| Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value |  |
Subordinated loan(1) | $ | 28 |  |  | $ | 28 |  |  | $ | 62 |  |  | $ | 62 |  |  |
Equity | 1,701 |  |  | 1,926 |  |  | 1,701 |  |  | 1,925 |  |  |
Total investment in IHAM | $ | 1,729 |  |  | $ | 1,954 |  |  | $ | 1,763 |  |  | $ | 1,987 |  |  |
_______________________________________________________________________________ (1)The Company has provided a commitment to fund up to $500 to IHAM, of which the availability is solely at the Company’s discretion. The interest income and dividend income that the Company earned from IHAM for the three and nine months ended September 30, 2024 and 2023 were as follows:
| For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Interest income | $ | 1 |  |  | $ | 5 |  |  | $ | 2 |  |  | $ | 28 |
Dividend income | $ | 69 |  |  | $ | 62 |  |  | $ | 204 |  |  | $ | 179 |
From time to time, IHAM or certain IHAM Vehicles may purchase investments from, or sell investments to, the Company. For any such sales or purchases by the IHAM Vehicles to or from the Company, the IHAM Vehicle must obtain approval from third parties unaffiliated with the Company or IHAM, as applicable. During the nine months ended September 30, 2024 and 2023, IHAM or certain of the IHAM Vehicles purchased $301 and $842, respectively, of loans from the Company. For the nine months ended September 30, 2024 and 2023, the Company recognized $1 and $12, respectively, of net realized losses from these sales. During the nine months ended September 30, 2024 and 2023, IHAM or certain IHAM Vehicles sold $32 and $26, respectively, of investments to the Company. The yields at amortized cost and fair value of the Company’s investments in IHAM as of September 30, 2024 and December 31, 2023 were as follows:
|  | As of
|  | September 30, 2024 |  | December 31, 2023
|  | Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
Subordinated loan |  | 11.3 | % |  | 11.3 | % |  | 12.0 | % |  | 12.0 | %
Equity(1) |  | 16.2 | % |  | 14.3 | % |  | 15.1 | % |  | 13.3 | %
_______________________________________________________________________________ (1)Represents the yield on the Company’s equity investment in IHAM, which is computed as (a) the annualized amount of the dividend received by the Company related to the Company’s equity investment in IHAM during the most recent quarter end, divided by (b) the amortized cost or fair value of the Company’s equity investment in IHAM, as applicable. IHAM is party to an administration agreement, referred to herein as the “IHAM administration agreement,” with Ares Operations. Pursuant to the IHAM administration agreement, Ares Operations provides IHAM with, among other things, office facilities, equipment, clerical, bookkeeping and record keeping services, services relating to the marketing and sale of interests in vehicles managed by IHAM, services of, and oversight of, custodians, depositories, accountants, attorneys, underwriters and such other persons in any other capacity deemed to be necessary. Under the IHAM administration agreement, IHAM reimburses Ares Operations for all of the actual costs associated with such services, including Ares Operations’ allocable portion of the compensation, rent and other expenses of its officers, employees and respective staff in performing its obligations under the IHAM administration agreement. Selected Financial Information Pursuant to Rule 4-08(g) of Regulation S-X, selected financial information of IHAM, in conformity with GAAP, as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 are presented below. In conformity with GAAP, IHAM is required to consolidate entities in which IHAM has a direct or indirect controlling financial interest based on either a variable interest model or voting interest model, which include certain of the IHAM Vehicles (the “Consolidated IHAM Vehicles”). As such, for GAAP purposes only, IHAM consolidates (a) entities in which it holds a majority voting interest or has majority ownership and control over the operational, financial and investing decisions of that entity and (b) entities that it concludes are variable interest entities in which IHAM has more than insignificant economic interest and power to direct the activities that most significantly impact the entities, and for which IHAM is deemed to be the primary beneficiary. When IHAM consolidates an IHAM Vehicle for GAAP purposes only, IHAM reflects the assets, liabilities, revenues and expenses of the Consolidated IHAM Vehicles on a gross basis, including the economic interests held by third-party investors in the Consolidated IHAM Vehicles as debt obligations, subordinated notes or non-controlling interests, in the consolidated IHAM financials below. All of the revenues earned by IHAM as the investment manager of the Consolidated IHAM Vehicles are eliminated in GAAP consolidation. However, because the eliminated amounts are earned from and funded by third-party investors, the GAAP consolidation of an IHAM Vehicle does not impact the net income or loss attributable to IHAM. As a result, the Company believes an assessment of IHAM's business and the impact to the Company’s investment in IHAM is best viewed on a stand-alone basis as reflected in the first column in the tables below.
| As of September 30, 2024
| IHAM |  | Consolidated IHAM Vehicles(1) |  | Eliminations |  | Consolidated
Selected Balance Sheet Information: |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Investments at fair value(2) | $ | 2,249 |  |  | $ | 8,421 |  |  | $ | (2,212) |  |  | $ | 8,458 |
Cash and cash equivalents | 4 |  |  | 831 |  |  | — |  |  | 835 |
Other assets | 72 |  |  | 126 |  |  | (57) |  |  | 141 |
Total assets | $ | 2,325 |  |  | $ | 9,378 |  |  | $ | (2,269) |  |  | $ | 9,434 |
Liabilities |  |  |  |  |  |  |
Debt | $ | 453 |  |  | $ | 6,696 |  |  | $ | — |  |  | $ | 7,149 |
Subordinated note from ARCC | 28 |  |  | — |  |  | — |  |  | 28 |
Subordinated notes(3) | — |  |  | 1,242 |  |  | (927) |  |  | 315 |
Other liabilities | 11 |  |  | 151 |  |  | (14) |  |  | 148 |
Total liabilities | 492 |  |  | 8,089 |  |  | (941) |  |  | 7,640 |
Equity |  |  |  |  |  |  |
Contributed capital | 1,701 |  |  | — |  |  | — |  |  | 1,701 |
Accumulated earnings | 188 |  |  | — |  |  | — |  |  | 188 |
Net unrealized losses on investments and foreign currency transactions(4) | (56) |  |  | — |  |  | — |  |  | (56) |
Non-controlling interests in Consolidated IHAM Vehicles(5) | — |  |  | 1,289 |  |  | (1,328) |  |  | (39) |
Total equity | 1,833 |  |  | 1,289 |  |  | (1,328) |  |  | 1,794 |
Total liabilities and equity | $ | 2,325 |  |  | $ | 9,378 |  |  | $ | (2,269) |  |  | $ | 9,434 |
| As of December 31, 2023
| IHAM |  | Consolidated IHAM Vehicles(1) |  | Eliminations |  | Consolidated
Selected Balance Sheet Information: |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Investments at fair value(2) | $ | 2,274 |  |  | $ | 9,392 |  |  | $ | (2,265) |  |  | $ | 9,401 |
Cash and cash equivalents | 9 |  |  | 707 |  |  | — |  |  | 716 |
Other assets | 70 |  |  | 100 |  |  | (68) |  |  | 102 |
Total assets | $ | 2,353 |  |  | $ | 10,199 |  |  | $ | (2,333) |  |  | $ | 10,219 |
Liabilities |  |  |  |  |  |  |
Debt | $ | 462 |  |  | $ | 7,459 |  |  | $ | — |  |  | $ | 7,921 |
Subordinated note from ARCC | 62 |  |  | — |  |  | — |  |  | 62 |
Subordinated notes(3) | — |  |  | 1,280 |  |  | (992) |  |  | 288 |
Other liabilities | 17 |  |  | 189 |  |  | (16) |  |  | 190 |
Total liabilities | 541 |  |  | 8,928 |  |  | (1,008) |  |  | 8,461 |
Equity |  |  |  |  |  |  |
Contributed capital | 1,701 |  |  | — |  |  | — |  |  | 1,701 |
Accumulated earnings | 126 |  |  | — |  |  | — |  |  | 126 |
Net unrealized losses on investments and foreign currency transactions(4) | (15) |  |  | — |  |  | — |  |  | (15) |
Non-controlling interests in Consolidated IHAM Vehicles(5) | — |  |  | 1,271 |  |  | (1,325) |  |  | (54) |
Total equity | 1,812 |  |  | 1,271 |  |  | (1,325) |  |  | 1,758 |
Total liabilities and equity | $ | 2,353 |  |  | $ | 10,199 |  |  | $ | (2,333) |  |  | $ | 10,219 |
________________________________________ (1)Consolidated for GAAP purposes only. (2)The determination of such fair value is determined in accordance with IHAM’s valuation process (separate and apart from the Company’s valuation process described elsewhere herein). The amortized cost of IHAM’s total investments as of September 30, 2024 and December 31, 2023 was $2,304 and $2,288, respectively. The amortized cost of the total investments of IHAM on a consolidated basis as of September 30, 2024 and December 31, 2023 was $8,597 and $9,619, respectively. (3)Subordinated notes generally represent the most junior capital in certain of the Consolidated IHAM Vehicles and effectively represent equity in such vehicles. (4)As of September 30, 2024 and December 31, 2023, net unrealized losses of $53 and $13, respectively, have been eliminated upon consolidation and the elimination is included in “non-controlling interests in Consolidated IHAM Vehicles” in the selected balance sheet information. (5)Non-controlling interests in Consolidated IHAM Vehicles includes net unrealized depreciation in the Consolidated IHAM Vehicles of $139 and $221 as of September 30, 2024 and December 31, 2023, respectively.
| For the Three Months Ended September 30, 2024
| IHAM |  | Consolidated IHAM Vehicles(1) |  | Eliminations |  | Consolidated
Selected Statement of Operations Information: |  |  |  |  |  |  |
Revenues |  |  |  |  |  |  |
Investment income | $ | 77 |  |  | $ | 251 |  |  | $ | (75) |  |  | $ | 253 |
Management fees and other income | 13 |  |  | 2 |  |  | (12) |  |  | 3 |
Total revenues | 90 |  |  | 253 |  |  | (87) |  |  | 256 |
Expenses |  |  |  |  |  |  |
Interest expense | 10 |  |  | 139 |  |  | — |  |  | 149 |
Distributions to subordinated notes | — |  |  | 49 |  |  | (37) |  |  | 12 |
Management fees and other expenses | 4 |  |  | 14 |  |  | (12) |  |  | 6 |
Total expenses | 14 |  |  | 202 |  |  | (49) |  |  | 167 |
Net operating income | 76 |  |  | 51 |  |  | (38) |  |  | 89 |
Net realized losses on investments and foreign currency | (2) |  |  | (39) |  |  | 2 |  |  | (39) |
Net unrealized (losses) gains on investments, foreign currency and other transactions | (8) |  |  | 41 |  |  | 10 |  |  | 43 |
Total net realized and unrealized (losses) gains on investments, foreign currency and other transactions | (10) |  |  | 2 |  |  | 12 |  |  | 4 |
Net income | 66 |  |  | 53 |  |  | (26) |  |  | 93 |
Less: Net income attributable to non-controlling interests in Consolidated IHAM Vehicles | — |  |  | 53 |  |  | (26) |  |  | 27 |
Net income attributable to Ivy Hill Asset Management, L.P. | $ | 66 |  |  | $ | — |  |  | $ | — |  |  | $ | 66 |
| For the Nine Months Ended September 30, 2024
| IHAM |  | Consolidated IHAM Vehicles(1) |  | Eliminations |  | Consolidated
Selected Statement of Operations Information: |  |  |  |  |  |  |
Revenues |  |  |  |  |  |  |
Investment income | $ | 263 |  |  | $ | 784 |  |  | $ | (257) |  |  | $ | 790 |
Management fees and other income | 41 |  |  | 8 |  |  | (38) |  |  | 11 |
Total revenues | 304 |  |  | 792 |  |  | (295) |  |  | 801 |
Expenses |  |  |  |  |  |  |
Interest expense | 30 |  |  | 432 |  |  | — |  |  | 462 |
Distributions to subordinated notes | — |  |  | 154 |  |  | (114) |  |  | 40 |
Management fees and other expenses | 11 |  |  | 47 |  |  | (38) |  |  | 20 |
Total expenses | 41 |  |  | 633 |  |  | (152) |  |  | 522 |
Net operating income | 263 |  |  | 159 |  |  | (143) |  |  | 279 |
Net realized gains (losses) on investments and foreign currency | 3 |  |  | (113) |  |  | (7) |  |  | (117) |
Net realized loss on extinguishment of debt | — |  |  | (1) |  |  | — |  |  | (1) |
Net unrealized (losses) gains on investments, foreign currency and other transactions | (41) |  |  | 88 |  |  | 40 |  |  | 87 |
Total net realized and unrealized losses on investments, foreign currency and other transactions | (38) |  |  | (26) |  |  | 33 |  |  | (31) |
Net income | 225 |  |  | 133 |  |  | (110) |  |  | 248 |
Less: Net income attributable to non-controlling interests in Consolidated IHAM Vehicles | — |  |  | 133 |  |  | (110) |  |  | 23 |
Net income attributable to Ivy Hill Asset Management, L.P. | $ | 225 |  |  | $ | — |  |  | $ | — |  |  | $ | 225 |
| For the Three Months Ended September 30, 2023
| IHAM |  | Consolidated IHAM Vehicles(1) |  | Eliminations |  | Consolidated
Selected Statement of Operations Information: |  |  |  |  |  |  |
Revenues |  |  |  |  |  |  |
Investment income | $ | 87 |  |  | $ | 285 |  |  | $ | (87) |  |  | $ | 285 |
Management fees and other income | 15 |  |  | 3 |  |  | (14) |  |  | 4 |
Total revenues | 102 |  |  | 288 |  |  | (101) |  |  | 289 |
Expenses |  |  |  |  |  |  |
Interest expense | 15 |  |  | 152 |  |  | — |  |  | 167 |
Distributions to subordinated notes | — |  |  | 52 |  |  | (40) |  |  | 12 |
Management fees and other expenses | 3 |  |  | 19 |  |  | (14) |  |  | 8 |
Total expenses | 18 |  |  | 223 |  |  | (54) |  |  | 187 |
Net operating income | 84 |  |  | 65 |  |  | (47) |  |  | 102 |
Net realized losses on investments and other transactions | (7) |  |  | (16) |  |  | 8 |  |  | (15) |
Net unrealized gains on investments and other transactions | 2 |  |  | 46 |  |  | (4) |  |  | 44 |
Total net realized and unrealized (losses) gains on investments and other transactions | (5) |  |  | 30 |  |  | 4 |  |  | 29 |
Net income | 79 |  |  | 95 |  |  | (43) |  |  | 131 |
Less: Net income attributable to non-controlling interests in Consolidated IHAM Vehicles | — |  |  | 95 |  |  | (43) |  |  | 52 |
Net income attributable to Ivy Hill Asset Management, L.P. | $ | 79 |  |  | $ | — |  |  | $ | — |  |  | $ | 79 |
| For the Nine Months Ended September 30, 2023
| IHAM |  | Consolidated IHAM Vehicles(1) |  | Eliminations |  | Consolidated
Selected Statement of Operations Information: |  |  |  |  |  |  |
Revenues |  |  |  |  |  |  |
Investment income | $ | 253 |  |  | $ | 813 |  |  | $ | (251) |  |  | $ | 815 |
Management fees and other income | 42 |  |  | 6 |  |  | (40) |  |  | 8 |
Total revenues | 295 |  |  | 819 |  |  | (291) |  |  | 823 |
Expenses |  |  |  |  |  |  |
Interest expense | 50 |  |  | 424 |  |  | — |  |  | 474 |
Distributions to subordinated notes | — |  |  | 141 |  |  | (110) |  |  | 31 |
Management fees and other expenses | 11 |  |  | 55 |  |  | (40) |  |  | 26 |
Total expenses | 61 |  |  | 620 |  |  | (150) |  |  | 531 |
Net operating income | 234 |  |  | 199 |  |  | (141) |  |  | 292 |
Net realized losses on investments and other transactions | (17) |  |  | (26) |  |  | 8 |  |  | (35) |
Net unrealized gains on investments and other transactions | 19 |  |  | 76 |  |  | (23) |  |  | 72 |
Total net realized and unrealized gains on investments and other transactions | 2 |  |  | 50 |  |  | (15) |  |  | 37 |
Net income | 236 |  |  | 249 |  |  | (156) |  |  | 329 |
Less: Net income attributable to non-controlling interests in Consolidated IHAM Vehicles | — |  |  | 249 |  |  | (156) |  |  | 93 |
Net income attributable to Ivy Hill Asset Management, L.P. | $ | 236 |  |  | $ | — |  |  | $ | — |  |  | $ | 236 |
____________________________________ (1)Consolidated for GAAP purposes only. Senior Direct Lending Program The Company has established a joint venture with Varagon to make certain first lien senior secured loans, including certain stretch senior and unitranche loans, primarily to U.S. middle-market companies. The joint venture is called the Senior Direct Lending Program, LLC (the “Senior Direct Lending Program” or the “SDLP”). In July 2016, the Company and Varagon and its clients completed the initial funding of the SDLP. The SDLP may generally commit and hold individual loans of up to $450. The Company may directly co-invest with the SDLP to accommodate larger transactions. The SDLP is capitalized as transactions are completed and all portfolio decisions and generally all other decisions in respect of the SDLP must be approved by an investment committee of the SDLP consisting of representatives of the Company and Varagon (with approval from a representative of each required). The Company provides capital to the SDLP in the form of subordinated certificates (the “SDLP Certificates”), and Varagon and its clients provide capital to the SDLP in the form of senior notes, intermediate funding notes and the SDLP Certificates. As of September 30, 2024 and December 31, 2023, the Company and a client of Varagon owned 87.5% and 12.5%, respectively, of the outstanding SDLP Certificates. As of September 30, 2024 and December 31, 2023, the Company and Varagon and its clients had agreed to make capital available to the SDLP of $6,150 and $6,150, respectively, in the aggregate, of which $1,444 and $1,444, respectively, is to be made available from the Company. The Company will continue to provide capital to the SDLP in the form of the SDLP Certificates, and Varagon and its clients will provide capital to the SDLP in the form of senior notes, intermediate funding notes and the SDLP Certificates. This capital will only be committed to the SDLP upon approval of transactions by the investment committee of the SDLP as discussed above. Below is a summary of the funded capital and unfunded capital commitments of the SDLP.
| As of
| September 30, 2024 |  | December 31, 2023
Total capital funded to the SDLP(1) | $ | 4,900 |  |  | $ | 5,361 |
Total capital funded to the SDLP by the Company(1) | $ | 1,274 |  |  | $ | 1,328 |
Total unfunded capital commitments to the SDLP(2) | $ | 291 |  |  | $ | 260 |
Total unfunded capital commitments to the SDLP by the Company(2) | $ | 68 |  |  | $ | 60 |
___________________________________________________________________________ (1)At principal amount. (2)These commitments to fund delayed draw loans have been approved by the investment committee of the SDLP and will be funded if and when conditions to funding such delayed draw loans are met. The SDLP Certificates pay a coupon equal to Secured Overnight Financing Rate (“SOFR”) plus 8.0% and also entitle the holders thereof to receive a portion of the excess cash flow from the loan portfolio, after expenses, which may result in a return to the holders of the SDLP Certificates that is greater than the stated coupon. The SDLP Certificates are junior in right of payment to the senior notes and intermediate funding notes. The amortized cost and fair value of the SDLP Certificates held by the Company and the Company’s yield on its investment in the SDLP Certificates at amortized cost and fair value as of September 30, 2024 and December 31, 2023 were as follows:
| As of
| September 30, 2024 |  | December 31, 2023 |  |
| Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value |  |
Investment in the SDLP Certificates | $ | 1,231 |  |  | $ | 1,159 |  |  | $ | 1,316 |  |  | $ | 1,288 |  |  |
Yield on the investment in the SDLP Certificates | 12.9 | % |  | 13.7 | % |  | 13.6 | % |  | 13.9 | % |  |
The interest income from the Company’s investment in the SDLP Certificates and capital structuring service fees and other income earned for the three and nine months ended September 30, 2024 and 2023 were as follows:
| For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Interest income | $ | 43 |  |  | $ | 43 |  |  | $ | 131 |  |  | $ | 129 |
Capital structuring service fees and other income | $ | 4 |  |  | $ | 1 |  |  | $ | 9 |  |  | $ | 8 |
As of September 30, 2024 and December 31, 2023, the SDLP’s portfolio was comprised entirely of first lien senior secured loans to U.S. middle-market companies and were in industries similar to the companies in the Company’s portfolio. As of September 30, 2024 and December 31, 2023, one of the loans was on non-accrual status. Below is a summary of the SDLP’s portfolio.
| As of
| September 30, 2024 |  | December 31, 2023
Total first lien senior secured loans(1)(2) | $ | 4,889 |  |  | $ | 5,431 |
Largest loan to a single borrower(1) | $ | 367 |  |  | $ | 370 |
Total of five largest loans to borrowers(1) | $ | 1,686 |  |  | $ | 1,650 |
Number of borrowers in the SDLP | 19 |  |  | 22 |
Commitments to fund delayed draw loans(3) | $ | 291 |  |  | $ | 260 |
___________________________________________________________________________ (1)At principal amount. (2)First lien senior secured loans include certain loans that the SDLP classifies as “unitranche” loans. As of September 30, 2024 and December 31, 2023, the total principal amount of loans in the SDLP portfolio that the SDLP classified as “unitranche” loans was $4,181 and $4,558, respectively. (3)As discussed above, these commitments have been approved by the investment committee of the SDLP. Pursuant to Rule 4-08(g) of Regulation S-X, selected financial information of the SDLP, in conformity with GAAP, as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 are presented below:
| As of |
| September 30, 2024 |  | December 31, 2023 |
Selected Balance Sheet Information: |  |  |  |
Investments at fair value (amortized cost of $4,724 and $5,267, respectively) | $ | 4,581 |  |  | $ | 5,129 |  |
Other assets | 169 |  |  | 192 |  |
Total assets | $ | 4,750 |  |  | $ | 5,321 |  |
Senior notes | $ | 3,319 |  |  | $ | 3,705 |  |
Intermediate funding notes | 125 |  |  | 139 |  |
Other liabilities | 130 |  |  | 136 |  |
Total liabilities | 3,574 |  |  | 3,980 |  |
Subordinated certificates and members’ capital | 1,176 |  |  | 1,341 |  |
Total liabilities and members’ capital | $ | 4,750 |  |  | $ | 5,321 |  |
| For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Selected Statement of Operations Information: |  |  |  |  |  |  |
Total investment income | $ | 137 |  |  | $ | 145 |  |  | $ | 420 |  |  | $ | 421 |
Interest expense | 74 |  |  | 76 |  |  | 228 |  |  | 217 |
Other expenses | 5 |  |  | 7 |  |  | 13 |  |  | 19 |
Total expenses | 79 |  |  | 83 |  |  | 241 |  |  | 236 |
Net investment income | 58 |  |  | 62 |  |  | 179 |  |  | 185 |
Net realized and unrealized (losses) gains on investments | (25) |  |  | 6 |  |  | (97) |  |  | (79) |
Net increase in members’ capital resulting from operations | $ | 33 |  |  | $ | 68 |  |  | $ | 82 |  |  | $ | 106 |

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