Ares Capital Originations Slow as Core EPS Edges Lower

The Tip Desk · November 8, 2026 · 4 min read

Net investment income was $328 million, or $0.46 a share, as third-quarter commitments fell to $2.11 billion.

Ares Capital Corporation (ARCC), a specialty finance company that lends to U.S. middle-market borrowers, reported net investment income of $328 million, or $0.46 a share, for the three months ended September 30, 2026, down from $338 million, or $0.48 a share, a year earlier.

Core earnings per share, which excludes realized and unrealized gains and losses, fell to $0.46 from $0.47 in the second quarter after holding at $0.47 in the first quarter. GAAP net income was $319 million, or $0.44 a share, versus $404 million, or $0.57 a share, a year earlier.

The swing in GAAP results came from marks. Net realized gains turned to a $52 million loss, or $0.07 a share, from a $162 million gain a year earlier. Net unrealized results flipped to a $43 million gain, or $0.05 a share, from a $96 million loss. Unrealized losses had been $183 million in the second quarter and $412 million in the first.

Total investment income declined to $763 million from $782 million a year earlier. Interest income from investments was $558 million. Capital structuring service fees fell to $23 million from $48 million. Total expenses were $429 million, including $221 million of interest and credit facility fees.

Chief Executive Officer Kort Schnabel said the company reported solid third-quarter results supported by continued healthy portfolio performance, including stable credit quality and historically low levels of non-accruing loans and problem assets. He said a slower transaction environment led to a more measured pace of originations during the quarter, that the investment backlog is up meaningfully from last quarter, and that the company is seeing stronger transaction activity entering the fourth quarter.

Gross new investment commitments were $2.11 billion, of which about $1.6 billion were funded, compared with $3.92 billion a year earlier. Commitments went to 25 new portfolio companies and 28 existing ones. Exits of commitments were $2.47 billion. The company also funded about $711 million of previously existing unfunded revolving and delayed-draw commitments.

Portfolio investments at fair value were $29.21 billion at September 30, down from $29.35 billion at June 30. The number of portfolio company investments rose to 636 from 603 at December 31, 2025. Weighted average yields on debt and other income-producing securities were 10.6% at amortized cost and 10.8% at fair value, versus 10.3% on both measures at year-end 2025.

First lien senior secured loans were 58% of the portfolio at fair value. Loans on non-accrual status were 2.4% of total investments at amortized cost, or 1.4% at fair value, versus 1.8% at amortized cost, or 1.2% at fair value, at December 31, 2025. The weighted average grade of the portfolio at fair value was 3.1.

Chief Financial Officer Scott Lem said the company increased debt capacity through a $750 million issuance of seven-year unsecured notes and reduced funding costs through a reset of its debt securitization and modest commercial-paper utilization. In September it issued $750 million of notes at 6.250% maturing September 15, 2033, and entered a $750 million interest-rate swap. In July it refinanced ADL CLO 1’s about $702 million term debt securitization with an about $709 million securitization, cutting the blended spread on July 2038 CLO secured debt from SOFR plus 1.86% to SOFR plus 1.51% and extending maturity to July 25, 2038.

As of September 30, the company had $722 million in cash and cash equivalents, $15.5 billion of debt outstanding, and about $6.9 billion available for additional borrowings under existing credit facilities. The debt-to-equity ratio was 1.11 times, or 1.06 times net of available cash. Net asset value per share was $19.31.

The board declared a fourth-quarter 2026 dividend of $0.48 a share, unchanged from the third- and second-quarter dividends. Schnabel said the company’s market leadership, scale, diversified portfolio and strong financial position, along with the expected benefit from higher yields and the recently announced acquisition of MidCap Financial Investment Corporation, reinforce its confidence in the current level of the regular quarterly dividend.

From October 1 through October 22, the company made about $1.1 billion of new investment commitments, of which about $855 million were funded, and exited about $727 million of commitments. As of October 22, investment backlog was about $2.5 billion. On October 26 it entered a definitive agreement to acquire MidCap Financial Investment Corporation in a cash and stock transaction.