Good afternoon, everyone. I'm Derek Hewett from Bank of America. I cover the specialty finance sector here at BofA, including business development companies. With us today is Kipp deVeer, CEO of Ares Capital Corporation. Kipp, thank you for joining us. Thanks for having me. Kipp, could you start off by providing a brief history of Ares Capital, plus discuss, maybe the investment strategy and competitive advantages of being a part of the Ares platform? I can do that. Our BDC, where I'm still the CEO here, I guess 10 years later, we started back in 2004. We're now about $22 billion of assets under management. The business has evolved a lot as it's grown. You know, it started years ago, focusing on really only private equity-oriented transactions, and we've grown the origination footprint to be about 170 people today in the U.S. In doing that, we've expanded the geographic reach as well as the type of investing that we're doing. We're playing off, obviously long-standing relationships in the private equity space. Increasingly we've been building with some of the strengths of the platform, so dedicated industry verticals in a whole host of areas where we think we can source better, and we can really create that origination engine that's differentiated. Today we've got a team focused on software and services. We have a team focused on healthcare and life sciences, oil and gas, power and project finance, which includes renewables and the energy transition piece, financial services, et cetera. That's just dedicated to the BDC and the other U.S. direct lending investment vehicles. To maybe pull it back to the platform a little bit, Ares manages about $225 billion of credit, which includes the BDC at $22 or so billion. We're very active in leverage loan space, manage a large CLO business, manage high yield bonds both in the US and Europe, along with US-European direct lending in a business that we call alternative credit, which is sort of our non-corporate asset-oriented finance business. All in all, our credit business has 375 or so investment professionals. Look, I mean, I think that depth and geographic reach between the US, Europe, and Asia, and all of the competencies that we have developed, I think makes the BDC, you know, very, very advantaged from a competitive positioning perspective. Okay. Just from an origination perspective, following a record year, driven by M&A, and low rates in 2021, last year was a little bit more challenging given the wall of worry, anywhere from inflation to rising rates to geopolitical risk, et cetera. Could you comment on your outlook in terms of direct lending originations for the year? What would be some of the catalysts or risks to your base case in terms of volumes either being a little bit more positive or being a little bit more? Yeah. We just had this discussion out in Denver around our budget meetings with one of my partners who's the CEO of Ares Management. We, 21 was the busiest year in our history from a deployment standpoint in private credit, both in the U.S. and Europe. I think that was a bit of the post-COVID hangover, you know, a lot of capital waiting on the sidelines. 22 was also busy, but to your point, down a little bit because largely of the, I think, unexpected and quicker and more substantial rise in rates, right? If you think back to the summer of 2022, folks were not predicting that level of interest rate increases or how quickly they came along. The banks obviously found themselves in some not so great positions around leverage lending particularly, and that slowed things down. My forecast for this year is it should probably be in line with last year. There's a chance that it's lighter, I think just because the risk that everyone's thinking about and dealing with is the markets have been impacted negatively by rising rates. We haven't seen company performance be impacted yet by the rising rates. When rates go up, things are worth less, assets reprice. There's a whole rediscovery of markets. What multiples do you lend at? What's the pricing? What does private equity pay for companies specific to the direct lending business? That's happening right now. As a result, as well as some of the hangover, the Q4 effects, I think everybody's just really trying to ascertain where rates go from here. You know, have we hit peak rates? Mm-hmm. There are the folks out there who are scared about a 7% base rate, which I don't see in the forecast. As that feeling out period is occurring, it's just slowed the M&A market down. I would expect once folks have a better consensus around that things will pick back up. Okay. Given recessionary concerns, although it seems like the recession continues to get pushed back further and further. If at all. If at all. Defaults, and more importantly, severity, are to a certain extent, still top-somewhat topical. Whether you look at defaults in the liquid credit markets or among the BDCs, they're still trending near historic lows. Although I suspect some of that just had to do with kind of the refi wave that we had in 2021. Mm-hmm. That being said, what is your outlook for defaults, for the sector in 2023? I think they'll go up. Yeah. In terms of Ares performance or ARCC's performance, what do you expect on a kind of an absolute and then maybe on an industry relative basis? You know, I mean, the good news for us is I think we know how to manage risk, and we also underwrite our portfolios pretty conservatively going into what we think are, you know, periods of credit weakness. I would say even going into COVID, we weren't expecting that, but we were feeling like, the credit cycle was getting a bit long. It's even as far back as late 2019 and early 2020, we positioned our new underwriting pretty conservatively in terms of types of companies focusing on larger businesses, certain industries that we wanted to play in or not play in. That, I think, served us well during that strange period of 2020, which we needed a whole new playbook for, but obviously, I think, managed quite well through. Today, we have the resources and the time to go in and do early monitoring and start thinking about portfolio companies that maybe aren't performing to plan. To be honest, we're seeing pretty good company performance at the BDC. You know, we really describe the portfolio in two ways in terms of quality for investors, right? We publish a non-accrual rate that usually averages around 3.5%, 4% through a credit cycle. Today, we're at 1.7%, I think, 1.8% maybe. That's great news. We actually grade the BDC portfolio 1 through 4. When you're underwritten, you start as a 3. If you're on plan, you remain a 3. If you're outperforming plan, you become a 4. If you're a 2, that means you're probably underperforming plan. If you're a one, we think you're probably a credit problem where we have the potential for an impairment on the loan. We got the question during COVID a lot about how bad will the portfolio get, right? The way that I described it to people was we took really active monitoring to rescore the portfolio. Ones and twos together at the peak of COVID added up to about 20% of the portfolio. I was getting the question all the time, is that number gonna go to 50%? Our answer was no. We think we have it pretty well under control. We know who the problem children are. Our goal was to identify the sick patients and get them less sick, you know, over the course of the next 12-24 months. We did that. From Q2 of 2020 on, we showed a really significant positive credit migration story that's continued. Those ones and twos today, I think it depends if you look at cost or at fair value, it's around 8% of the portfolio, and it hasn't changed much in the last few quarters. Right now, at this point in time, the credit quality in the BDC portfolio is excellent. We did comment on the earnings call. We're seeing an increase in amendment activity. Doesn't give us huge concern that we can't handle it, but I think things will get a little bumpier. Companies still have the same operating pressure that they've been dealing with. With a period of slowing growth and maybe, you know, diminished margins because of all the things we read about in the newspaper, along with a higher base rate that's introducing higher interest servicing costs, you have to expect that you're gonna see more amendment activity and more defaults. Okay. That doesn't mean you're gonna see more losses. Okay. That's helpful. Then, just looking at Ares' portfolio companies that they are unrated, is there an analog to maybe some of the agency ratings in the liquid credit markets? Should the portfolio perform like equivalent to like a single B credit? That's probably a pretty good estimation. Yeah. Yeah. I mean, the only thing I'd say is part of the advantage that we have is, well, there are a couple, but. Our liquid credit business has a couple of constraints. Number one, it's a benchmark investor, so it's forced to invest in industries where it may not view them as particularly attractive. If you're managing a high yield portfolio, you're forced to have a pretty significant oil and gas portfolio, which is wildly cyclical, because it's part of the benchmark, and you need to. You know, you can be slightly underweight or slightly overweight, but you can't be at zero. That's actually a disadvantage. A disadvantage for liquid credit also is that you get very limited information. You tend to see a lot of surprises. You don't have good lines into management. You didn't have nearly as much information making a new investment. Supposedly, what you have to mitigate all that is daily liquidity. If you manage that well, you have the ability to get in and out of positions. Our business works a little bit differently because we're coming in knowing that we're underwriting for the long haul, that we're taking illiquidity with companies. What we get in exchange is all of the stuff you don't get in the liquid market. We get great access to information, we get great access to management, we get importance of relationship with the company on an ongoing basis. We don't get surprised a lot in our portfolio management process. It's all for us about early mitigation, working with management teams and owners of companies to identify problems early and to fix things, to create solutions before you get defaults and certainly before you get losses. Just the whole process of what we do from beginning to end, inherently, I think at least for us, has led to materially better credit outcomes, i.e., fewer losses on these portfolios than we've seen from competitors, but also in liquid credit portfolios. We've been able to achieve premium returns with fewer losses. Yeah. Okay. I guess, speaking of losses, kind of historically, you've had kind of a net cumulative negative realized credit loss. I think it's like a 1% gain in the actual portfolio. How has that been achieved? More importantly, kind of what would be a more normalized loss rate on the ARCC portfolio going forward? I mean, we have 1 year of net charge-offs, right? Which was not surprisingly, 2009, I think it was 1.2% or something on a net realized basis. There are not very many BDCs that actually understand how to pay reliable dividends and also can build NAV, right? The way that you do that is you actually consistently manage your dividends so that you're out-earning your dividend, which we've done for a very long period of time. That allows you to build modest amounts of retained earnings because we only need to pay out 90% of our income to preserve RIC status. You can make equity investments. Some BDCs don't like to do that or aren't good at it. We like to do that, and we think we're pretty good at it. You can buy companies' portfolios or assets at discounts to par and then obviously realize them at par loans. As you know, and others too, we bought two companies at pretty significant discounts to book value. Allied Capital in 2010 and American Capital in 2017. We have gains from those. We have gains from portfolios we bought. We have gains from single assets that we bought as well. Then obviously minimize losses. The way you minimize losses, in our opinion, is not to run away from bad situations, but it's to actually put really active portfolio management against troubled situations and fix them if we have to. We don't like to own companies, but we will. If we need to own them for five years and replace management and reposition a business so that we can achieve a good recovery, we'll do that. It takes a lot of people to do that. Okay. circling back to the portfolio companies, base rates are up over, what, say 450 basis points. A lot. in the last Mm-hmm. 12, 15 months. Are you seeing any signs of stress in your portfolio companies? I mean, on the Q4 earnings conference call, I mean, it looked like EBITDA was continued to see growth. Debt service coverage was still strong relative. Yeah. To the increase in rates. Yeah, I mean, the interest coverage ratio across the portfolio we said is 1.8 times. Yeah. I'd say the phenomenon that you're seeing is actually good underlying fundamental company performance, burdened by substantial, you know, substantial amounts of debt that have been put on these companies with much higher base rates to deal with. It's the first time in a while where we've actually seen companies that are doing well, that aren't having problems as a company, but probably have the wrong capital structure with a 5% base rate. Mm-hmm. I've described this in other settings. I think 2023 will be a little bit of a muddle through sort of year with lenders, equity owners, and management teams all just sort of figuring out how to solve for that. That's rare, right? You usually have that interaction between lenders, equity, and management when a company's not doing well. Mm-hmm. I think we're having more of those interactions with companies while they're actually doing fine. They just have too much debt with materially higher base rates. For me, that's a, that's kind of an equity problem, right? Okay. As the lender, we're supposed to go to management, I think, and to the owners of those companies and say, "Probably not a sustainable capital structure for you for the next three years. What should we do about that?" We can make some modifications. We can try to be part of the solution along the way, that's not a solution solely for us. Okay. Then just in general, are any of the, your portfolio companies kind of benefiting from, rate caps? Is that just not a part of. Not really. business. Okay. No. probably not enough hedging versus, you know, historical-. Okay. advantage or maybe what they could have accomplished, and now it's gotten to be prohibitively expensive. Yeah. Yeah. Okay. What about in terms of new entrants? You're seeing a lot of fundraising, both on the private and public BDCs have entered the space. You're seeing a lot of capital raising from, on the private, on the private side. Given the new. There was. Uh. We'll see. Yeah. What is the, kind of the competitive environment given just? To be honest, it's actually we haven't really seen any new entrants. I think what we've seen. You know, I said the only new entrant in our market over the last 10 years has been, well, maybe three. KKR taking on all the assets from Blackstone and focusing on direct lending. Blackstone rebuilding their business with a different source of capital. The only true new entrant is Owl Rock, right? I mean, that's a truly new platform, Blue Owl. I think right now what we're seeing is increased reliance on private credit and direct lending to get anything done because the banks are not active, and the syndicated loan markets are still not working. That's great for us. We're seeing more and more capital wanting to come to us, and we always say we consolidate market share during downturns and during periods of bank weakness. The other thing I would say is the folks at the top of the heap are probably benefiting the most because they bring the most valuable solutions to the market, i.e., they're the most flexible with their capital. They can write the largest checks. They're the most experienced in terms of structuring. I think we're benefiting as are, you know, a handful of our other large alternative credit players, whether they're public like Apollo and KKR, or not public like an HPS or a Sixth Street. I think that tide is lifting all boats, you know, Ares included right now. Okay. Then just given higher rates, can you talk about the kind of spreads on new investments that you're seeing since competition is not as fierce? Yeah, I mean. you would expect. To be honest, I mean, the market's reset to be what we kind of look at historically as wildly attractive. I mean, you know, a new LBO is a 5x levered unitranche at LIBOR plus 700. So I mean, you're talking about 12-ish% with fees to make senior loans in what we think are great companies with very low LTV. So I'm excited about that. That being said, I don't think that that generates a ton of activity unless purchase prices come down, because that's a fair amount of interest expense to have to pay, and deals stop working. Somebody said to me, you know, "It's great, except you can't finance the American economy at 9%. Right. Something's gonna have to shift a little bit. Okay. Just given the attractive spreads that you're seeing in unitranche, the portfolio, the ARCC portfolio is 18% second lien. Should we see a migration from second lien to unitranche? We get asked that question a lot. I mean, we kinda like the mix of the portfolio. It typically is, you know, SDLP, Ivy Hill. We, we have some components that are different than others. I think about the portfolio usually as being 60% or 70% senior, 30% junior, and 10% equity. You know, it's just kind of what it's always been for 20 years. We'll move that around a little bit. I think that the unitranche... the large unitranche business, because the lack of syndicated financing out there, is a very attractive place to play right now. Mm-hmm. Okay. Okay. Okay. Presumably we would see more growth in the SDLP just given the effect of the unitranche. We can see more growth just in stretched senior lending anyway. Okay. SDLP, for instance, and just on balance sheet unitranches for sure. I mean, that's where we're most active today. Again, it's not super busy, but. Okay. Just what about the growth in Ivy Hill the last year or so? It's doubled in size. Yeah. Do you think it's at the ideal size right now or? you know, it's about as large as we want it to be right now. We're taking advantage of good financing there, good investing. It's been an unbelievably successful investment for us. You know, we made the initial formation of Ivy Hill 15 years ago, and we've generated a literally 15% return on our capital with increasing dollar amounts for 15 years. Sometimes you wanna just keep backing your winners. I'm a little bit tired of answering questions around isn't 10% of the portfolio high? you know, the answer to that is, yeah, it kinda is a little bit high. You know, it's probably... it's about as large as we wanna get for the time being. Okay. What about fees? Fees have, over the last decade or so, migrated lower, either due to new entrants, new BDCs coming into the sector. Deal fees or management fees? Management fees. Management fees. One competitor basically cut the base management fee in half. Although I would suspect part of that had to do with just that was more performance related more than anything else. What is your- Who is that? I didn't even... Apollo. Yeah. Okay. Yeah. Yeah. Um, what, what- Probably just from historic not so great performance. Yeah. Yeah. what do you think in terms of kind of the longer term trajectory for just BDC fees in general? Do you think they're gonna. To be honest, I don't have a strong view. We don't talk about our fees a whole lot with our investors. We talk about our fees every year as part of our 15(c) process with our board, because we obviously have an external management agreement with Ares Management Corporation. Look, my two cents on fees are because we negotiate fees in everything that we do as an asset manager. Mm-hmm. Investors pay for good performance. You know, I mean, if your performance stinks, people look for lower management fees or they fire you. If your performance is good, they tend not to complain that much about fees. Okay. It's pretty consistent, BDC or not BDC. Okay. Then could you talk a little bit about underwriting? Just given that, it's, new originations are extremely attractive right now. Are you seeing any sort of pushback from portfolio companies in terms of covenants, EBITDA add backs? Today it's about as lender friendly. Okay ... as it can be. you know, for particularly for, you know, the non-sponsored piece of it is always friendlier than the sponsored piece. Mm-hmm. I think sponsors that really wanna get something done are understanding of the fact that it's just not a borrower's market today, right? It's a much harder market for capital. We've driven, you know, leverage ratios down. We have a laundry list of things that we've, you know, pulled out of loan documents. Frankly, when they make their way in, we've actually passed on a couple of things that got done in the third and Q4 because of documents alone. It's one of the benefits just of having such a big origination team and seeing so much deal flow is we can actually say no to more things than most people can because we know there's a lot of deal flow coming behind it. It's, it's quite lender friendly today in terms of our ability to drive the outcomes that we want on the non-economic side, on the doc side. Okay. Could you talk a little bit about the significant growth in average EBITDA that we've seen in the portfolio, from like pre-COVID to today? I think today it's nearly $100 million or $280 million versus pre-COVID it was $139 million. Someone asked me this earlier today, and actually Carl reminded me. That's just a Q4 number. Yeah. Okay. There are two numbers to look at because one is math driven. Yeah. There's no doubt we've been focusing on larger and larger companies. I'll come back to that. The two numbers that we like are what's your weighted average. That obviously gets skewed up by math, right? If you're involved with a bigger company, you tend to write a bigger check. The number goes up. We also remind people of the median EBITDA number, which I think is still below $100 million of EBITDA. I've lost track of exactly where we are. We wanna make sure that we have people understand that we're not de-emphasizing doing smaller deals, right? It's simply that the fairway for what we can do is broader for two reasons. Number one, we have more capital. Number two, our competition at the upper end of the middle market is severely disabled today, which is the syndicated loan and high yield markets. Does that reverse? I'm not sure. I think the dynamic of syndicated lending and of high yield is the banks wanna keep doing bigger deals, focus on larger borrowers, focus on larger sponsors, and the buyers of those syndicated deals want them as big as possible because back to my point about liquid credit markets, they value the aftermarket liquidity. Larger a deal is, the more liquidity you have, the smaller a deal is, the less liquidity you have. I was saying in a meeting earlier, there used to be a lot of $100 million-$200 million high yield deals. Those don't exist anymore, right. Like the benchmark for a high yield deal these days is $500 million. No institutional AM, PIMCO, BlackRock, et cetera, like, don't wanna play in a $200 million high yield deal. No way. Just that market continues to grow for private credit and continues to move away from the syndicated markets, whether it's loans or high yield. Okay. What do you think is some of the biggest risks for BDCs in the market today? I don't really like describing BDCs as an industry, but I guess we have to here since we're at the Bank of America Financial Services conference. The problem is it's sort of like saying every REITs the same as well, which they're not, right? People engage in really different business strategies, and I can't, I can't compare a $22 billion BDC on top of a $100 billion of direct lending capital with a BDC that has 12 origination people and 35 investments, right? My quick answer is I don't see any massive risk in BDCs as a whole, right? BDCs actually benefited from regulatory relief 5 years ago, where that one-to-one cap was raised to two to one. That gave us a lot more flexibility. It gave us what I always thought of as regulatory relief. The one worst thing that could always happen in the BDC industry was you ran at 0.9 to 1, and all of a sudden you saw fair value changes, and you blew your RIC test, and you can't pay a dividend anymore. Like that's bad. That's the parade of horribles. That's been taken off the table. Having lived through running this company with Mike through the financial crisis, the other really bad thing was financing 3-4-year illiquid assets with 1-year secured facilities. Luckily, none of us have to do that anymore because all of these debt markets have opened, and we've diversified our financing sources and extended the duration of the liabilities. The financing risk piece of it is sort of off the table. And I don't see any changes in the regulatory environment that would be negative. Mm-hmm. What I think you will see, again, saying that not every BDC is the same, is I think you're gonna see significant dispersion in credit performance based on quality of team, quality of platform, experience with underwriting and risk management, and all of that. We think we're on the right side of all of those trades being large, being diversified, having a significant team, and having experience, having lived through some of, you know, the more challenging markets running this company. Okay. Kind of speaking of liquidity risk, what is your, what are your thoughts kind of longer term in terms of your funding mix? Although you don't have any near-term debt maturities, or material near-term debt maturities. What is your... What is the policy in terms of unsecured versus secured funding for ARCC? Depends on what it costs, right? Today our secured borrowing is based on just where the yield, you know, we borrow at, you know, 200 over, so call it 6-something%. The unsecured bonds that we've issued, you know, I think we've been a pretty thoughtful and quality issuer. You know, we've done some bonds at, as you know, 2.5%, 2.875% back when the markets allowed for that. Our bonds probably trade to a 6.5%-7% yield today. Would I rather borrow unsecured at 7% or secured at 7%? I'd rather borrow unsecured at 7%. That's gonna keep moving around. Mm-hmm. When those markets open and close. Historically, to keep the answer simple, we've been a roughly 50% mix of secured and unsecured. Just as a reminder, you know, our secured financing tends to go up and down with investment activity, right? If we make a new investment, we typically don't have cash. We'll just draw on our secured facility, make that investment. If we get a repayment, we'll pay the secured facilities down. Those are sort of coming up and down. The unsecured issuance allows us to typically get more term at a favorable price. There's a good mix of both. Okay. A good guideline for us is a 50/50 mix. Okay. Just given the rise in rates, do you think you'll see just from an industry's perspective, more convert issuance or-? I don't know. You know, the biggest issue for us with that market is it's pretty limited in depth. Yeah. It's just not a deep market for BDCs. When you talk about our company, which has, you know, 10+ billion dollars of financing, if we can do a $300 million convert deal, is that useful? You know, maybe at the margin, but it's not gonna be a huge driver, I think, of what we do from a financing perspective. Okay. Then just given the scale of the platform, although there are a lot of kind of subscale BDCs, Is that of interest to you? I mean, you did 2 big deals previously, but now what? You know what? It, it usually takes something substantial to create that, right? Like the Allied Capital actually tripped their one-to-one test, and I would say their bond holders fired them. That's how we got involved with that company, going in to work with bond holders to buy assets from them to deleverage so they could get back in RIC compliance. With ACAS, since it's a long time ago now, I'll say this, but, you know, it took substantial mismanagement for a long period of time to trigger a very significant activist campaign from some people who were not gonna have the company not getting sold. You know, look, if performance is really bad from certain smaller BDCs is where I would likely guess there might be opportunity, maybe. It takes a lot to get, you know, at the end of the day, an entrepreneur or an owner-operator who has a valuable external management contract to give it up. Yeah. You know, something really bad has to happen. Okay. We'll see. No, no whispers of that yet. Okay. As I always joke around, I really doubt Blackstone or KKR are gonna be selling me their BDC contracts anytime soon. Okay. That's all my questions. Maybe I'll open it up for Q&A. Craig. Craig. Great. Kip, a couple years ago, portfolio yields unlevered were around 8%. Yeah. Now they're about 4% higher, roughly? On a new deal, but if you looked at the BDC, it hasn't caught up that quickly. I think our stated yield on the portfolio is like 9.5% or 10%. Even though it's floating because there's floors, right? Yes. Okay. Right. Some of it doesn't catch up all to current market today. If you underwrote, yeah. You're moving in the right direction. Okay. Yeah. You said interest coverage now blend is 1.8. Right. Yeah. How much, and you might think about this a different way, is close to 1, like on the low end? Yeah. Like is there significant between 1 and 1.2? Significant enough to pay attention. Yeah. Okay. The other question I get is what goes into that? We get what% is below one. Yeah. Right? Everybody thinks that's an immediate default, which it's not, because there are lots of other ways to cure that. The other question is what happens if rates go up 100 basis points? How much more goes into that bucket? We haven't quite gone there completely with people on that explicitly. We've tried to be directional on the response. I would just say that the portfolio doesn't have substantial, from my perspective, weakness with another 50-100 basis points of rates. I think with 150-200 basis points of rates, the percentage of the portfolio that you start to create cash flow problems in gets large. Kipp, you have lots of options. Like you can take equity, you can extend duration, like in those situations. Yeah. You also have a, like a best in class private equity firm, so, that manages equity. How does that get involved with the BDC? Yeah. How often do you ever have to take keys, the keys to the company? When we do, when we do workouts at ARCC, we don't get our private equity team involved. Is the simple answer. We've got enough experience, frankly, you know, at the senior level and on our workout team that we can do it ourselves. The benefit of having the private equity business though, helps us do that, right? It helps us source management teams. It helps us build boards. It helps us obviously have, if we have to go take the keys on a consumer products company. Private equity business owns a handful of consumer businesses. We can take the expertise there, we don't, we don't use that team. You know, we don't parachute in the private equity team to manage BDC investments. Just to keep it simple. There's benefit to having all of this other stuff going on at Ares. How often do we take the keys? I mean, look, more often than we would like. I mean, when you're in the sponsored finance business, you have to get the dialogue with private equity clients right, which is we're a lender. You own the company, right? Our goal is that you always own the company and that things go perfectly from start to finish. We all know sometimes they don't. The way that you create your reputation for being reasonable in difficult situations, but also keep that origination going, is to realize that each portfolio interaction is not a one-time interaction, right? If we've done 15 deals with Blackstone or KKR's private equity business, which we probably have, they understand our approach, which is the last thing we wanna do from a time resource, what our business is own your company. If we have to, we will. Right? I don't have a good number, Craig, for how often. I mean, we have 400 portfolio companies at the BDC, rough numbers. Today we probably have 10-15 lender-owned portfolio companies, something like that. Hopefully, that's helpful. It'll, you know, it goes up and down over time, but yeah. Yeah. How does it work when the PE is Ares itself? When they're... I'm sorry? When the equity ownership is also with the Ares Group and the debt is at the BDC level, but the equity is also owned at the Ares Group somewhere, correct? No. Or you don't have that scenario? We tip the equity investments the BDC makes tend to be equity co-investments alongside loans that we make. No. Not at the BDC level, but outside the BDC within the Ares Group, somewhere else you have a PE business, correct? Our debt business doesn't finance our private equity business. Okay. The BDC does not have any portfolio company which is owned by Ares? None. We prohibit it. Got it. Okay, thank you. Any other questions? Okay, thank you. looks like we're out of town. Thanks. Thank you, Kip. Appreciate it. Yeah. Thank you, guys.