Stanger: Non-Listed BDCs Post Seventh Consecutive Quarter of Growth, Still Trail Traded BDCs
Non-listed business development companies had a combined aggregate net asset value of $67.9 billion as of March 31, 2024, a year-over-year increase of 55%. The heavily credit-focused Stanger NL BDC Total Return Index once again hit an all-time high, growing 2.9% in Q1 2024 and 12.7% over the trailing 12 months. This marks its seventh consecutive quarter of growth, and its best 12-month performance since Q3 2021.
“[Non-listed] BDCs have posted positive returns for 14 of the past 15 quarters and continue to benefit from the current interest rate environment, with combined aggregate NAV growing nearly 12% quarter-over-quarter. Both the performance of traded BDCs and improved price/book ratios have provided a one-year increase of 28.5% for the S&P 500 BDC Total Return Index, compared to 12.7% for the Stanger NL BDC Total Return Index,” said Kevin T. Gannon, chairman and chief executive officer of Stanger.
“Fundraising continues to be robust in the [non-listed] BDC space, raising just under $27 billion over the trailing 12 months – a nearly 59% increase year over year. For context, this is more than five times the capital raised by Non-Traded REITs over the same period,” Gannon added.
These results, as well as individual performance data on non-listed BDCs, are published in the Non-Listed BDCs Edition of The Stanger Report for Q1 2024.
HPS Corporate Lending Fund led non-listed BDCs in both the three-month and one-year total return in Q1 2024, with a total return of 3.8% and 16.3%, respectively. Looking at longer-term performance, MSC Income Fund Inc. and Blue Owl Capital Corporation II both maintained their number one positions in terms of three-year and five-year total return, respectively.
“Investors continue to benefit from strong yields of [non-listed] BDCs, with an average base distribution rate of 9.2% across prime share classes. Funds may also provide supplemental and special distributions to further enhance distributions to investors, with seven of the 20 funds regularly paying supplemental distributions.” stated Michael S. Covello, executive managing director at Stanger.
The Stanger NL BDC Total Return Index measures the performance of non-listed business development companies on a quarterly basis. Stanger began calculating the index on Dec. 31, 2015, with a base level of 100. Perpetually offered, non-listed BDCs that update their NAVs no less frequently than monthly and that have a minimum of one calendar quarter of performance are included in the index. All other non-listed BDCs are generally added to the index in the quarter that their first NAV is announced. Non-listed BDCs are removed from the index upon listing, merger, or in the case of a liquidation by disposition of investments, upon conversion to a liquidation basis of accounting or announcement of the effectiveness of a plan of liquidation. Non-listed BDCs may also be removed from the index for other special circumstances. As of Q1 2024, the index currently includes 20 BDCs with a total of 39 separate share classes.
Robert A. Stanger & Co., Inc., founded in 1978, is an investment banking firm specializing in providing investment banking, financial advisory, fairness opinion and asset and securities valuation services to partnerships, real estate investment trusts, and real estate advisory and management companies in support of strategic planning and execution, capital formation and financings, mergers, acquisitions, reorganizations, and consolidations.
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