Morgan Stanley Direct Lending Fund (MSDL) Q4 2025 earnings summary

Executive summary

• Net investment income per share was $0.49 in Q4 2025, slightly down from $0.50 in Q3 2025, with earnings per share rising to $0.33 from $0.32 sequentially.

• NAV per share declined to $20.26 from $20.41 in the prior quarter.

• Board declared a Q1 2026 dividend of $0.45 per share, a $0.05 reduction, payable April 24, 2026.

• Launched Capstone Lending LLC joint venture post-quarter, with $200 million and $50 million commitments from the company and partner, respectively, and 47% of commitments called.

• Portfolio fair value was $3.8 billion, diversified across 227 companies in 35 industries, with 96% in first lien senior secured loans.

Financial highlights

• Total investment income for Q4 2025 was $96.6 million, down from $99.7 million in Q3 2025.

• Net investment income was $42.4 million or $0.49 per share.

• Total expenses decreased to $54.2 million from $56 million, mainly due to lower incentive fees.

• Net realized and unrealized losses per share were $(0.16) in Q4 2025, compared to $(0.18) in Q3 2025.

• Debt outstanding at quarter end was $2.09 billion, with a debt-to-equity ratio of 1.20x.

Outlook and guidance

• Board authorized a new $100 million share repurchase plan for 24 months, replacing the prior plan.

• Capstone Lending LLC joint venture expected to scale to $700 million in assets over 4–6 quarters, providing incremental ROE and NII.

• Dividend level considered sustainable over the medium term, with board to reassess as needed based on rate environment.

• Expectation that pressures on asset yields may ease as spread stability continues and Fed easing cycle nears its end.

• M&A activity rebounding, anticipated to be a multi-year tailwind for direct lenders.