Nuveen Churchill Direct Lending NYSE: NCDL reported third-quarter net investment income of $0.38 per share and adjusted net investment income of $0.39 per share, fully covering its regular quarterly distribution of $0.36 per share. The company’s board declared a total fourth-quarter distribution of $0.38 per share, including the regular $0.36 distribution and a $0.02 supplemental payment.
Net asset value was $17.13 per share as of Sept. 30, compared with $17.19 at the end of the second quarter. Total GAAP net income was $0.32 per share, versus $0.07 in the prior quarter. CFO and Treasurer Shai Vichness said third-quarter results included $0.06 per share of net realized and unrealized losses, including realized losses associated with the amendment and restructuring of two underperforming debt positions. Those losses were partly offset by a $2 million realized gain on an equity investment.
Investment activity rebounds, supported by joint venture
Gross originations reached $213.3 million during the quarter, up from $12.1 million in the second quarter, while gross investment fundings increased to $134.8 million from $24.8 million. Chairman, President and CEO Ken Kencel said the increase reflected a modest recovery in transaction activity as well as the launch of a new joint venture.
In July, NCDL formed a joint venture with an institutional investor. NCDL committed 87.5% of the joint venture’s equity capital, while its partner committed the remaining 12.5%. At closing, NCDL and its partner contributed $40.7 million and $5.8 million, respectively, and NCDL sold roughly $150 million of first-lien loans to the venture.
At Sept. 30, the fair value of the joint venture investments was $147.5 million, with a weighted average yield of 9.2%. Vichness said NCDL’s annualized return on its investment in the venture was 13.6% during the quarter and characterized that level as “reasonably sustainable.” The company expects to expand the joint venture to a portfolio of approximately $300 million over the coming quarters and continues to target full deployment within roughly 12 months.
The company reported $192.4 million in sales and repayments during the quarter, including the approximately $150 million in loans transferred to the joint venture. NCDL also had full repayments on two positions totaling $27 million and partial prepayments totaling $16 million.
Private-credit market remains selective
Kencel said private-equity merger-and-acquisition activity rebounded modestly from a slower second quarter, though leveraged buyout activity remained selective amid elevated borrowing costs, geopolitical uncertainty and AI-related disruption. At the broader Churchill platform, the firm closed or committed to more than 90 transactions totaling approximately $5 billion during the quarter.
Vichness said more than 80% of that volume was in senior direct lending, with other activity coming from mezzanine and equity investments, private-equity secondaries, and the firm’s capital-solutions business. Management said existing portfolio companies remain a source of financing opportunities as sponsors pursue buy-and-build strategies.
The company said spreads on new first-lien loans averaged about 480 basis points over base rates during the quarter, within a range of roughly 475 to 500 basis points that management said has persisted throughout 2026. NCDL’s weighted average yield on debt and income-producing investments at cost increased to 9.7% from 9.3% in the prior quarter, reflecting higher base rates at quarter-end and the contribution from the joint venture.
Portfolio quality and diversification
NCDL’s investment portfolio had a fair value of $1.9 billion at quarter-end and consisted of 258 portfolio companies, compared with 244 companies at the end of the second quarter. First-lien loans accounted for 87.1% of the portfolio, while junior debt represented 7.6%, equity investments represented 3.1%, and the joint venture represented 2.2%.
The company’s top 10 portfolio companies represented 12.4% of portfolio fair value, excluding the joint venture. Its largest exposure was 1.6% of the portfolio, and its average position size was 0.4%.
Management reported weighted average net leverage of 5.2 times and interest coverage of 2.3 times across traditional middle-market first-lien loans. Kencel said these metrics reflect the company’s conservative structuring and low attachment points in underwriting.
NCDL’s internal watch list increased to 11.6% of fair value from 10.8% in the prior quarter, driven by two additions. The weighted average internal risk rating remained 4.4, unchanged from the preceding quarter. The company placed one investment on non-accrual status during the quarter, with a cost basis of $3.9 million and fair value of $3.1 million, while another investment was removed from non-accrual following a restructuring.
At quarter-end, nine portfolio companies were on non-accrual, representing 2.6% of the portfolio at cost and 1.5% at fair value. Those figures compared with 2.7% at cost and 1.5% at fair value at the end of the second quarter.
Leverage, financing and capital allocation
NCDL’s gross debt-to-equity ratio declined to 1.23 times at Sept. 30 from 1.29 times at June 30, while net debt-to-equity fell to 1.17 times from 1.23 times. Vichness said asset transfers to the joint venture enabled the company to repay debt and fund new investments. Management expects to maintain BDC-level leverage toward the upper end of its 1.0 to 1.25 times target range, while targeting joint-venture leverage of about 2.25 times debt to equity.
The company also completed a $100 million tap of its 2030 unsecured notes, bringing total unsecured notes outstanding to $400 million. TIAA purchased all of the newly issued notes. NCDL entered an interest-rate swap on the incremental notes, resulting in a floating rate of SOFR plus 2.55% through March 2030. Unsecured debt represented about 38% of total debt at quarter-end, and the weighted average cost of debt was SOFR plus 187 basis points.
After the quarter ended, NCDL repurchased approximately 278,000 shares through Oct. 30 at an average price of about $10.76 per share, totaling approximately $3 million. The company had $47 million remaining under its $50 million repurchase authorization.
About Nuveen Churchill Direct Lending (NYSE:NCDL)
Nuveen Churchill Direct Lending Corp. NYSE: NCDL is a closed-end investment company that has elected to be regulated as a business development company. The company provides financing to privately owned, primarily U.S.-based middle-market businesses.
NCDL invests mainly in senior secured loans and other debt investments, with a focus on companies that may have limited access to traditional bank financing. Its portfolio may also include unitranche loans, subordinated debt and, to a lesser extent, equity or equity-related investments.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Nuveen Churchill Direct Lending, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Nuveen Churchill Direct Lending wasn't on the list.
While Nuveen Churchill Direct Lending currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
The space race is growing fast, and you don’t have to have gotten in early on SpaceX to profit. This report shows seven space stocks you can buy today that may grow as rockets, satellites, defense, space internet, and new space technology become more important.
Get This Free Report
Continue following MarketBeat
Add MarketBeat as your preferred source on Google to see our latest stories in your feed.
