Executives at SLR Investment (NASDAQ:SLRC) said fourth-quarter results capped what they characterized as a “strong year” marked by portfolio stability, measured growth, and a continued shift toward asset-based and specialty finance lending as competition remains intense in sponsor finance.
Quarterly and full-year results
For the fourth quarter ended December 31, 2025, management reported net investment income (NII) of $0.40 per share and net income of $0.46 per share. NII per share was flat sequentially, while net asset value (NAV) rose to $18.26 per share at year-end from $18.21 at September 30, 2025 and $18.20 at December 31, 2024. The company said the quarterly net income equated to a 10.1% annualized return on average equity.
Chief Financial Officer Shiraz Kajee said gross investment income was $54.5 million in the quarter, down from $57.0 million in the prior quarter, while net expenses were $32.9 million, down from $35.4 million. The company posted net realized and unrealized gains of $3.5 million in the quarter, compared with $1.7 million in the third quarter, resulting in a net increase in net assets from operations of $25.1 million.
Originations, portfolio growth, and a continued mix shift
Chairman and Co-CEO Michael Gross said SLRC originated $462 million of new investments in the fourth quarter and received $445 million of repayments, producing net fundings of $70 million. The company ended the year with a comprehensive portfolio of approximately $3.3 billion, which management said reflected 7.2% annual growth. Gross added that 2025 originations totaled $1.84 billion.
Management emphasized that commercial finance strategies drove new production and accelerated a portfolio shift toward asset-based and specialty finance lending. As of December 31, the company said more than 83% of portfolio investments were in senior secured, specialty finance loans, the highest percentage in its 20-year history. Gross also highlighted low direct exposure to software of approximately 2% at year-end, framing the limited exposure as a differentiator given investor concerns around technology obsolescence risk and the impact of artificial intelligence.
Co-CEO Bruce Spohler said the comprehensive portfolio totaled about $3.3 billion at year-end with average exposure per borrower of $3.8 million. At fair value, about 98% of the portfolio was in senior secured loans, including 95% in first lien. The remaining 3% in second lien loans consisted entirely of asset-based loans with borrowing bases, with no second lien cash-flow loans, he said.
Credit quality and yields
Management reported what it described as strong credit quality metrics. Gross said 100% of investments at cost were performing at year-end, with zero non-accruals, and that paid-in-kind (PIK) income remained a de minimis portion of total income. Spohler added that, on SLRC’s internal one-to-four risk scale (with one least risky), the weighted average investment risk rating was under two, and just under 98% of the portfolio was rated two or higher.
Spohler said the weighted average yield on the portfolio was 11.6% at year-end, down from 12.2% in the third quarter and 12.1% at the end of 2024. He attributed the sequential decline primarily to lower base rates in the fourth quarter and a timing impact from funding new investments late in December while receiving repayments earlier in the quarter. Gross also noted the company is not immune to base rate declines, but argued SLRC’s earnings sensitivity to base rate changes is among the lowest in its peer group due to a lower allocation to cash-flow lending.
Business line highlights: ABL, equipment finance, life sciences, and sponsor finance
SLRC’s executives repeatedly emphasized the role of asset-based lending (ABL) and specialty finance as “downside protection” strategies. Gross said fourth-quarter ABL originations were $247 million, almost double the prior-year period, and full-year ABL originations were $1.1 billion, close to double 2024. He said the firm’s ABL strategies have continued to offer all-in returns of SOFR plus 600. Gross also noted that the company hired Mac Fowle—described as an industry veteran—as President of Asset-Based Lending at SLRC’s investment adviser during early fourth quarter, with a mandate to expand ABL capabilities beyond the existing franchise.
Spohler said the year-end ABL portfolio was just under $1.5 billion across 252 issuers, about 45% of the comprehensive portfolio. In the fourth quarter, SLRC originated about $250 million of new ABL investments and had $235 million of repayments, with a weighted average asset-level yield of 12.6%.
Equipment finance totaled just under $1.1 billion at quarter-end, approximately one-third of the comprehensive portfolio, and was diversified across 585 borrowers, Spohler said. Fourth-quarter originations were just over $150 million with repayments of just over $120 million, and the weighted average asset-level yield was just under 11%. He added that the company is seeing demand to extend existing equipment leases rather than purchase new equipment at higher tariff-adjusted prices.
On life sciences, Spohler said the firm has maintained a strict late-stage approach and intentionally avoided healthcare services/IT transactions that are predominantly software loans to healthcare borrowers. The year-end life science portfolio totaled approximately $180 million across seven borrowers; management said 100% were revenue-generating with at least one product in commercialization. During the fourth quarter, the team funded $26 million and had just under $60 million of repayments, with a weighted average yield on first lien life science loans (including success fees but excluding warrants) of 12.3%, consistent with the prior quarter. Spohler said the opportunity pipeline is larger than at the beginning of last year, pointing to higher-profile acquisitions that have bolstered bioscience valuations and the potential for AI to shorten development timelines over time, while emphasizing continued underwriting discipline.
In cash-flow sponsor finance, management described a highly competitive environment and said SLRC has allowed the portfolio to shrink by passing on certain refinancings where terms and structures were less attractive. Gross said cash-flow loans represented 14.5% of the comprehensive portfolio. Spohler reported the sponsor finance portfolio was just over $475 million across 27 borrowers, including loans held in the SSLP joint venture, or roughly 15% of the total portfolio. He said the portfolio was 100% first lien, with weighted average loan-to-value of about 40%, weighted average EBITDA of just over $100 million, and weighted average interest coverage of 2.3x, up from the prior quarter. Fourth-quarter cash-flow new investments were $37 million with about $30 million of repayments, and the weighted average yield was just under 10%.
Capital, leverage, funding, and the dividend
SLRC ended the year with approximately $1.2 billion of debt outstanding and a net debt-to-equity ratio of 1.14x, which management said was within its target range. Kajee said the company is investment grade rated by Fitch, Moody’s, and DBRS, and that more than 40% of debt capital was unsecured at year-end. He also said the company has no near-term refinancing obligations, with the next unsecured note maturity in December 2026.
Management highlighted activity in its credit facilities, including the closing of a new SSLP credit facility that improved borrowing flexibility and reduced the spread by 75 basis points. Spohler said SSLP’s revolving credit facility was refinanced during the quarter, and noted that adjusted for one-time charges, SSLP would have earned $1.5 million in the fourth quarter, representing an annualized yield of 12.6%. SSLP invested $13 million and had $19 million of repayments, ending the quarter with net leverage just under 0.9x and roughly $55 million of undrawn debt capacity.
Gross said that, including credit facility capacity at SSLP and specialty finance portfolio companies, SLRC had over $850 million of available capital to deploy at year-end. On the shareholder payout, Kajee said the board declared a first-quarter 2026 base distribution of $0.41 per share, payable March 27, 2026, to holders of record March 13, 2026. In the Q&A, management said it had no spillover income “to speak of.”
When asked about leverage and deployment, Gross said the company would be willing to move leverage toward the high end of its target range of 1.25x if opportunities warrant, while noting that repayments have been elevated and that SLRC has intentionally chosen repayment in cases where pricing and structure were less attractive. He also said the firm remains active evaluating potential acquisitions of ABL and equipment finance teams or portfolios, though nothing was described as imminent.
About SLR Investment (NASDAQ:SLRC)
SLR Investment Corp. (NASDAQ: SLRC) is a closed‐end, externally managed business development company that provides customized debt and equity financing solutions to middle‐market companies. The firm seeks to generate current income and capital appreciation by investing primarily in senior secured loans, second lien financings, mezzanine debt and equity co‐investments. Its flexible capital approach allows it to structure financing across the capital structure to address a range of sponsor‐backed transactions.
SLR Investment Corp.
