Blue Owl Technology Finance Expands Portfolio as Earnings Ease
GAAP net investment income fell to $138.6 million, or $0.30 a share.
Blue Owl Technology Finance (OTF), the technology-focused business development company, returned to positive operating gains as its investment portfolio expanded and valuation losses receded.
Net assets generated by operations increased $154.2 million, or $0.33 a share, reversing a $219.9 million decrease in the prior quarter. Realized and unrealized results improved to a gain of $0.03 a share from a loss of $0.84, though both measures remained below year-earlier levels.
Total investment income rose 5.8% from a year earlier to $338.0 million and increased 3.7% sequentially, driven primarily by portfolio growth and higher dividend income tied to a repayment. GAAP net investment income declined from $160.4 million, or $0.34 a share, a year earlier and from $171.3 million, or $0.37, in the prior quarter.
Adjusted net investment income increased sequentially to $139 million, or $0.30 a share, from $133 million, or $0.29, while remaining below the year-earlier $167 million, or $0.36. Operating expenses climbed 30% from the prior quarter to $199.0 million as a capital-gains incentive-fee reversal did not recur and interest expense rose with higher average borrowings.
The portfolio grew 4.4% during the quarter to $14.68 billion at fair value and was 15.3% larger than a year earlier. Its weighted-average yield at fair value edged up sequentially to 9.6% but remained below 10.4% a year earlier, while new investment commitments fell roughly by half from the prior quarter to $852 million.
That growth came with higher leverage. Net debt-to-equity rose to 0.93 times from 0.85 times in the prior quarter and 0.58 times a year earlier as net debt increased to $7.16 billion. Non-accrual investments doubled sequentially to 0.6% of the portfolio at cost, while holding at 0.1% on a fair-value basis.
Net asset value was nearly unchanged from the prior quarter at $16.48 a share but declined 4.0% from a year earlier. Blue Owl repurchased $55 million of common stock, which added to second-quarter NAV, and raised $650 million through unsecured debt and secured financing to support its larger portfolio.