Hi, everybody. Thanks for joining us today. I'm Vilas Abraham, the BDC analyst here at UBS, and for this session, I am pleased to be joined by Kipp deVeer, the CEO of Ares Capital Corporation and head of Ares Credit Group, as well as Scott Lem, the newly appointed CFO at ARCC. As many of you know, ARCC is the largest publicly traded BDC with $23 billion in assets, as well as one of the longest-running public BDCs, with a nearly 20-year track record in direct lending. With that brief introduction, why don't we jump in? Thank you for joining us, Kipp and Scott. Thanks for having us. Thanks. Maybe we can start, Kipp, with your perspective on the U.S. economy. Through the lens of your middle-market direct lending business, how would you characterize the health, or lack thereof, of the economy as we move through 2024? Yeah, sure. I mean, I think. You know, by way of background, our company has investments in over 400 middle-market companies, a pretty broad set of industries. But I guess the lens I might overlay is, you know, we're not investing to a benchmark, so actually, kind of a key to our strategy has actually been to position the portfolio in what we think are more defensive areas of the economy, different industries that we think will be more resilient. So when we look specifically at our portfolio, we actually feel pretty good about the economy, maybe better than I might have expected 18 months ago in the face of a pretty dramatic rate tightening cycle. We use a couple of metrics just to describe the overall health. You know, we grade our portfolio, which I think you're aware of, one through four. You come on as a three, which as a new underwriting means you're at plan. So our average portfolio weight today is just above three. And then we look at twos, which are the underperformers, and ones, which are really the troubled companies. So it's kind of the need to monitor more closely. If we added those two buckets up today, it's well below 10% and really in line with the historical average. So quick summary, we feel pretty good about the economy and about the portfolio today. Okay. And how about, inflation dynamics specifically? Are you seeing anything that would, suggest that the direction of travel may not be lower in the way that, most folks seem to be thinking about it this way? No, I'm actually probably in the camp of, inflation is, I think, largely been controlled by this, by this tightening cycle. We started just as evidence in the portfolio to see real signs of inflation pretty much after everybody got unlocked from their houses, you know, again, and call it the summer of 2021. So it was pretty apparent to us, looking at the portfolio, that a combination of very vibrant demand to go buy things and do things and not be stuck in your house with a pandemic, coupled with, some of the supply chain disruptions that we've all read a lot about. You know, price increases really started rolling through in a lot of our companies, fall of 2021, and they've really, Most of our companies tend to be, again, defensive, service-oriented. They tend to have a lot of pricing power, but in certain places, you know, we've seen companies raise prices 6, 7, 8 times in two years. That really started to stop by last summer, I'd say. It's really, not, not evident in a way that it was for us two years ago. Got it. Okay, that's helpful color. Sure. Let's talk about competition a little bit. So after a year and a half of private credit seeming to be the only game in town, broadly syndicated loan market is bouncing back. Spreads on large deals seem to have narrowed considerably. The recent reports of the $3 billion Ares-led deal for Arena closing with a spread of four- Mm-hmm ... 175 basis points. You know, it feels like just a few months ago, we were closer to, you know, to 600-ish. So is this a new C level for pricing, in your opinion, and in terms of deal structure as well, is anything changing? Yeah, I mean, look, I mean, I think if you look broadly at credit spreads, they're pretty tight, right? And I think that reflects an environment where the default rate remains pretty low, and I think folks are more constructive on the economy than they might have been, at least than I was, 12-18 months ago. You know, so I don't know if it's a soft landing or whatever we wanna call it, but I think that confidence has narrowed credit spreads. The other thing that has contributed to that is actually, just frankly, a lack of deal activity. The good news, though, was last year, with a lot of the banks having issues and not being very aggressive in the leveraged finance markets, particularly the single B and below leveraged finance markets, direct lending kind of was the only game in town. We think the group of us and others did probably 75% of the new LBO financings in the market, and the press is, all over your question these days. Mm-hmm. You know, the banks are back, and they're gonna kill you guys. And, you know, we remind them that you guys and a lot of the other banks are very significant partners to us in a lot of different ways. So we're happy that we're in just what I think of as a much more balanced environment, where there are public leverage finance alternatives, and then there are private credit alternatives. But I think those market share gains that we do build up over time and the fairway that expands for direct lending over time leaves some lasting gains for us, so. But I, but I think it's a very balanced and healthy environment for new deals. Hopefully, it picks up. It's pretty slow. Okay. Yeah, that kind of relates to my next question, right? So despite this more recent kind of uptick competition from the BSL market, on the earnings call, you were constructive on on origination volumes for 2024, guided to an uptick in in deal activity this year for ARCC from the $6 billion in commitments in 2023. Can you just give us a little bit more color on, you know, how you get there? Is it really simply just, you know, a smaller share, potentially, but a bigger pie? How do you think about that? Yeah, I mean, I think we had... Last year was a little funny because we had a very significant fourth quarter, right? Which made us feel very enthusiastic about things healing and transaction volume picking up into this year. While it's been okay, I would frankly have expected it to be a little busier. Was just at another one of the conferences going on down here that you're probably aware of around the corner with people that are pretty active in the leveraged finance space, too. And whether it was banks or non-banks, everybody was saying, "It's a little slower than I might have expected." And I personally thought that a lot of the deal activity that we saw in Q4 would carry over into Q1 and Q2, in particular with, I think an election that's gonna be a little bumpy come November, that people would try to pull some activity forward. You know, it's, it's okay, but it's, it's not rebounded as quickly as I think a lot of us might have hoped. I do think, and I've said this, publicly before, the real pressure, that should compel transaction activity is the fact that the LPs in private markets generally today, particularly in private equity, really are looking for capital to get returned, right? They're desperate for capital to get returned. And the thing that maybe is gumming it up a little bit is everyone's dealing with a different valuation environment because rates are so much higher. So I think there's just a little bit of that mismatch of expectations continuing between buyers and sellers. Do you still feel good about higher commitments in 2024 versus 2023? That, that's our base case, yeah. Yeah. That's still what I think our base case is, so I'm not gonna say we've made any changes, but we're scratching our heads a little bit that it's February, and we thought it might be a little busier by now. Okay. Okay. So prepayments, you know, obviously very difficult to predict, but how... Do you, you know, do you have a feel for how, how net growth could trend through the year? And, you know, how much of a risk is a meaningful spike in prepayments, particularly as it relates to, BSL market potentially refinancing away 2022, 2023 vintages? Yeah, I mean, our, you know, our base case, again, is for a better gross originations year. We also think that'll drive a growth in net originations. Mm-hmm. You know, BSL takeouts of our portfolio is not as significant as probably a repricing trend in some of the larger names, where companies are looking to just simply reduce their interest costs, but stay with their existing borrowers. But it's equally hard to predict, perhaps, as you know, how you see originations in February. But if you know, environment feels very ordinary course, maybe a little on the slower than I might have expected side, but I think healthy. And again, I think this need for LPs to turn things over is gonna compel transaction activity for the year. Okay, fair enough. Then, just on the fundraising side of things for direct lending, more broadly, how have things been trending lately? And, you know, where do you see it going from here? Yeah, I mean, you know, I can't comment, but we've had a couple direct lending funds in the market that are all either closed or marching towards closing. And not a lot has changed, frankly, in the institutional environment. I think that we and others have demonstrated that there's great risk-reward in this asset class, and it's lived through now a financial crisis and a pandemic, and all of this other stuff with pretty good results, particularly if you're smart about selecting which managers that you wanna be with. So, you know, 2023 was the largest fundraising year we had at Ares. Direct lending was a significant contributor to that. But, you know, it's not just the BDC, right? So, I mean, we have a BDC, we have a perpetual BDC in the wealth management channel. We've got a series of commingled funds that do private credit. We have a business in Europe, we're in Asia, so it's pretty broad-based, but not a lot of change on the fundraising side. Okay. Taking a step back a little bit, I wanted to touch on strategy. So, you know, over time, ARCC's portfolio has been 60%-70% senior secured, 30% ish junior, 10% equity. Why do you think that's the right mix, and do you see any change to that in the foreseeable future? I don't see any change because it's the same group of people that have been doing it together with pretty much the same strategy for 20 years. So, look, there are folks... Well, let me back up for a second. There are folks who say, "Oh, I only do senior," right? "I focus on senior because that's the lowest risk asset class." It's like: Well, yeah, of course it is. It also generates the lowest return, right? So I think we have an approach where we wanna bring the most flexible set of capital and tools to our borrowers. It helps us increase originations, right? So if you say we're capable of being senior lenders, we can be mezzanine and junior capital investors, and I'll get back to the equity as well, but most of the folks we do deals with like that we're minority equity partners in their companies, too, for alignment and all sorts of other things. But first and foremost, it gives us what we think is the broadest origination tool. And when you drive a ton of originations with a really scaled platform, it actually allows you to say no more. And we would say the hardest thing about our job is we close 5% of the deals that we look at, right? We tell people no 95% of the time. So really being able to maximize that origination goes hand in hand with the flexible toolkit. But I'll go back to the equity piece. I... The lending business is a very asymmetric business, right? You make a commitment, you get paid upfront fees, you collect a coupon, and you hopefully get paid back. Guess what? It's impossible to be in the lending business without generating losses. Hopefully, you can mitigate them and keep them as low as possible, but the way that we've always believed that you offset that is by being capable and willing to go in and invest in some of the higher risk reward areas, which of course, is junior debt and equity. And our track record would tell you that we're pretty good at that, and it's an important part of the strategy. I don't want an asymmetric lending portfolio that can only generate losses and not generate gains. So I think we'll keep doing what we're doing. We've been successful doing it for 20 years, so I think we'll stick to what we do. You offered some stats on the earnings call about still being active in the traditional middle market, call it sub-$50 million in EBITDA-type companies. It sounds like there's still interest there, but at the platform level, as Ares continues to grow, you know, do these smaller deals still make sense? I think Core addressed this a little bit last week in some public comments. Mm-hmm. just from your perspective What did he say? You know, yeah, does it, you know, does it move the needle? It does. I mean, look, so the reality of the business is it's changed a lot, right? Our team's been doing it for a long time. When this asset class was all getting developed, it was core middle market, was $10 -50 million of EBITDA, right? Then it became $10 -100 million, and I was pulling up a text from our IR team. But, you know, we still look at deals that have $10 million of EBITDA, and we look at companies that have $400 million of EBITDA because we've got a better market opportunity and a broader product set. But if you look through some of the stats that we publish, the median LTM EBITDA on our portfolio today is $70 million, right? So that, to me, is core middle market. Of course, when you're doing bigger deals, the math weights you, that your weighted average number gets pulled up. So we get a lot of questions 'cause our weighted average number is $275 million. But that's not really our target borrower. I mean, we're capable there, but the target borrower really remains $25 million-$150 million of EBITDA, right? Any billion-dollar or less financing, the banks have absolutely no interest in. It offers no aftermarket liquidity to more traditional loan and high yield buyers, of which we're one, and, you know, Ares, on its public side, is skewed away from that. So, we'll absolutely do small deals. The only thing I'd, I'd add is I do think smaller deals are riskier, right? You inherently have less sophisticated management teams. You probably have more of a reliance on one, two, or three products instead of 10, 20, or 30 products. You're probably not global. You may have more of a regional bent. So our inclination has always been, add more pricing to compensate for the risk. And I would tell you that at the bottom end of the direct lending competition, where you have some newer and smaller people, they can all compete in those smaller deals, and the premium has sort of gotten sucked out of that market by the, by the capital there. The pricing that we see in a $2 billion unit tranche is frankly not all that different than the pricing in a $200 million club direct loan that a bunch of folks can kind of, you know, kill each other competing on. Mm-hmm. It's interesting. Surprising. It's surprising to me, too. Yeah. I think it's just fragmented competition at the lower end of that market. Okay. Let's talk about balance sheet management a little bit. So ARCC as well as the whole industry, frankly, brought down leverage, you know, meaningfully in 2022, 2023. You know, now leverage at ARCC is around 1.05-ish. What's the normalized level there, and just how do you think about the path for leverage in different potential rate scenarios? Yeah, I mean, Scott obviously spends a lot of his day doing this, so I'll let him chime in. But the just big snapshot is the company has roughly $11 billion of NAV, and about $10-something billion of debt, and about half of it's secured bank financing, and about half of it is unsecured notes that we've been able to issue in the market. So we've consistently said we like to operate in that 1-1.25x range. We don't think it introduces significant risk to the earnings or to the balance sheet. It can amplify our earnings a little bit, but unlike a bank or a mortgage REIT or whatever that uses a lot more leverage than we do or other BDCs do, we really just view it as a way to enhance returns conservatively. It tends to modulate in that range based on originations versus repayments. So if we're in a net originations quarter, we'll draw a little bit more on the facility, and if we're in a net repayments quarter, we'll pay down debt, which is a little bit of what's happened lately. And Scott, I'll turn it over to you a little bit just to talk about how we've thought about financing markets. Yeah. But the one real constraint is that 1.25-ish on the top end, when we spend time with the rating agencies as an investment grade-rated company, which is something we intend on remaining, they really don't buy off, and I'm not sure I agree with them, but they really don't buy off on leverage in BDCs north of 1.3 or 1.4 times. Yeah. I mean, I think on the leverage front, the fact that we're earning such... You know, even with spreads tightening on new deals, you know, the overall return is still 11%-12%. We're generating nice earnings for the company without necessarily having to stretch for more leverage. So I think we're operating at a comfortable level right now. I think the only other thing that's probably worth noting, because it may- maybe it's underappreciated, maybe it's not, but just having been involved with the company since its inception 20 years ago, the liability structure in the industry is so, so much better now than it used to be. Mm-hmm. Right? So when we were a smaller company, we had no choice, but we had a asset liability mismatch that obviously exists in other financial services companies that we were cognizant of and not very happy about, i.e., we made loans and investments that tended to have a duration of 3 to 4 to 5 years, and we're funded almost entirely through, you know, 1-year credit facilities from folks like you guys. We sorted through all that during the financial crisis, but one of the things that we did to be sure that we could keep developing and scale was really get larger, get that investment grade rating, be able to tap the unsecured market, and that allowed us to extend the duration of our liabilities, such that today we probably have an almost perfect match of assets and liabilities, both with duration of about 4 years. So then, yeah, just in terms of the liability stack in the, you know, in the near term, you guys have been active in the unsecured market, back half of last year in January. Are you thinking about anything else, major in the near term to, to optimize it further, or are you comfortable there? No, I think we're always very opportunistic about how we raise our capital, and, you know, clearly we want to make sure we have enough capital to support our clients. Look, I think we've—we feel like we're pretty much resolved all the maturities for this year. We do have a little under $2 billion maturing next year. So, you know, we may look at it opportunistically. I think we're pretty happy we got the deal done when we did, given where rates have gapped out a little bit. Okay. So why don't we move on to everyone's favorite topic: credit quality? So my old colleague liked to use the phrase "Waiting for Godot" a lot—and I feel like that's what this credit cycle has felt like. So the sector credit quality has been fine, ARCC even, even better. But you know, how do you see the cadence of defaults over the next 12-18 months? And if it's a slow bleed, how do we know when we're past the peak, and which, you know, maybe pockets of direct lending would you think may show issues first if, you know, if there are, you know, meaningful to me first? Yeah, look, I mean, I think the leaders in the direct lending industry have continued to grow their importance, advantage, relative strength. So to your question about underperformance, I think that you're going to see more dispersion of results depending on managers. Because inevitably, you know, we think we have better origination, more origination, more diverse origination, better product set than others, so we think there are a lot of other people getting adversely selected on new deals. We think our ability to see the best credits is key. So I don't think there's a particular pocket, but I think some of the scale experienced managers who have great origination and know how to manage risk are going to do better than the other folks, right? My prospect for the year is, I... Yeah, I don't know if it's waiting for Godot or a slow bleed or whatever. I think it's a pretty traditional credit cycle where, you know, people, you think defaults are going to go up this year. I'm like, "Of course, they're going to go up this year." Like, by how much? You know, our non-accrual rate's about 1.4% today. The historical average is 3%. The peak during the GFC, when we also happened to buy a pretty troubled portfolio, and Allied Capital, I think, went to 5.5%. So my expectation is that defaults will go up to the historical average. I don't expect them to materially exceed the historical average, because I think the economy is pretty good. And, defaults are fine. It's part of the business, right? Defaults are not losses. So if you get into a situation that's underperforming, and you have a good asset management team that can go out and figure out how to minimize losses where you have defaults, that's the key. So, that's my, that's my guess for what happens over the remainder of the year. The reality is you've a lot of companies that have higher borrowing costs. They have good liquidity today, but they've been exhausting it, right? So depleting cash, drawing revolving credit facilities, and that'll take some time to roll through, and I think that'll continue to roll through this year and maybe even to next year. But nothing of, you know, epic concern, I think, for us. It's, it's natural. Yeah, it's to what some of your colleagues were saying, that you should expect that's what will happen for the next twelve months. Okay. And so, yeah, in terms of, you know, underperformers, about 10% of ARCC's investments are, you know, one or two rated, so below average performance. So that's not an excessive number, but curious, are there any common themes around those companies? And regarding the nature of the conversations happening now between ARCC, those companies, and their sponsors, since, you know, historically, ARCC is very good at getting ahead- Yeah ... of situations. Yeah, I mean, look, I mean, being proactive and understanding where you think the issues are is key. Good communication, getting good information from those companies is key. You know, the two areas where maybe if there are some common themes, and I think you've heard this from some others, has been certain parts of the healthcare business, particularly that are heavy on staffing and saw real wage inflation, whether it's a dental practice or a group of nurses. You know, there was a lot of wage inflation in that population. Remember, however long it was, a year ago or 18 months ago, when nobody wanted to go to work? Mm-hmm. You know, I mean, that was a contributor in those businesses. And again, because they're billing on a capitated basis, either Medicaid or Aetna or whoever else, they have less pricing pressure than other parts of the healthcare business. So I think you've seen that in public companies. And the other one was simply, it sounds dumb, but it's companies that make things, right? So we have companies that make socks. You know, we have a company that makes food ingredients for food service. They were all able to increase prices because they were seeing cost side pressure coming out of COVID with supply chains, but you can only increase prices on things that are a little bit more commodity-oriented so much. And obviously, when you're talking about going direct to consumer in some of these businesses, that world's changing a lot with Amazon and the way that people shop and buy things and the shrinking of retail. So probably those two areas of the portfolio, more common or more, similar stress than anything else. But, away from that, you know, and then what are we doing? I mean, it's all about early prevention. A lot of this, maybe increase in defaults, I think, will be a result of less cash flow at companies. So for the first time, I don't know if it's in my career, but in a while, you're actually seeing companies that are growing. Maybe they're not hitting plan, but they're growing. But they just have a lot less cash flow around because the cost of servicing debt went up by so much. You know, most of them, you know, we calculate an interest coverage ratio on the portfolio. It's still 1.7 times, right? So most of the companies, 90%+ of the companies in our portfolio, while they're tighter, they're still current, and they're growing, and I don't have any expectation that they're gonna turn into non-accruals anytime soon. So it really is our focus, looking at the 10%-ish that we've identified as ones and twos, and how do we get ahead of that? You know, the typical solution is you look to the owner of the company, very often being private equity firms, and say, "Cash flow looks like it's getting tight or the company's not performing. You know, what-- You're sort of the first line of defense here. What's the plan? “Are we gonna deleverage or are you gonna bring in new capital?” But you know, that's ongoing, so that's kinda what we're doing today with those names. Okay, makes sense. Let me ask one more question here and then, open it up to the room for- Yeah, sure. questions. This is, you know, maybe a bit of a loaded one, but, just given it's also been in the media a bit, just the regulatory future of private credit as a, as an asset class, how do you think about that? And is there anything that you can do to prepare for any changes? Yeah, you know, we spend a lot of time obviously. You know, Ares is a public company. You know, the BDC is a public company. They're obviously both regulated by the SEC, and, you know, we get looked at in a whole host of different ways. Again, it's not a bank, right? So when the bank regulators come to talk to us because they're curious about the asset class, I've found, for the most part, they don't really understand our business very well. We try to be incredibly transparent to explain it to them. And for the most part, they get through their questioning, trying to understand, you know, I think, good questions. "How do your leverage facilities work? You know, how levered are you? Do you match the duration of your liabilities to your assets?" And we give them the answers, some of which I've spoken about, and they're like, "Oh, great. So what happens if the asset level performance isn't what you expected?" And we said, "Well, you know, instead of delivering a 12% return for investors, we deliver a 6%," right? And then the LPs either hire us again to manage fund four, or they don't, right? So the performance is what regulates, you know, who gets to operate in this space. Away from the bank regulators, obviously, or insurance regulators, neither of which are, frankly, all that relevant, but come to us and ask questions. I don't really understand what the increased regulation direction of travel is, right? I mean, the BDC, in particular, publishes a really, really, you know, thick Q and K that details every investment we make, every term of every financing facility that we have. So, you know, people are always like, "Oh, shadow banking." We're like, "We're not in the shadows. Like, we disclose lots and lots of information about what we do every quarter." So, I just don't see any change. Nothing's really shifted in the last bunch of years. The press likes to write about it, and they've been wrong for 15 years now. But I don't see any real regulatory changes coming. Okay. Do you have any questions in the room? Okay, thank you. Just, you were just talking briefly, right? You're seeing growing, performing companies getting their cash flow squeezed, so I guess the returns to equity have been compressed with the higher rate environment. Just curious how you perceive, like, credit quality if we do end up in a higher for longer environment. I guess because sponsors may be okay with those lower returns on equity, for 12-18 months, right? But maybe hoping for some rate relief. But if that rate relief doesn't come, could we see further stresses to credit? Yeah, somebody asked me this in one of the one-on-ones. I don't. So I think an increase in interest rates from here would create a lot of problems for a lot of people in a variety of different businesses. My belief is that's unlikely. I think that the current landscape for leverage finance and private equity broadly has adapted to this new, you know, higher rate environment and higher for longer. But it's still making its way through, and some of the regulatory questions and the press about private credit and all that, that I think has been hugely wrong, I think is missing the point that you're making, which is you're seeing slow growth and higher debt servicing costs, which means less cash flow, less deleveraging, and again, with a higher base rate, inevitably a lower valuation environment. And private equity, in particular, has paid very high prices for companies over the last 5-7 years. I think it would be very difficult for them to exit them anytime soon at remotely similar valuations, which, as we described, the current dynamic is much worse for the equity in a lot of these companies than it is for the debt, right? And I think that's why the system is stuck up a little bit, right? Folks are not compelled to go out and sell things that they think they're gonna generate a 6% return on, when the hurdle to generate carry in their fund is 8, and their LP's expectation is that they're gonna do at least net 15, right? And that's not available right now. So, but we keep reminding people who are like, "Oh, credit, it's gonna be a huge bloodbath," and we're like, "What about all this private equity that's gone to work in the last five-to-seven years that I think is really challenged to meet return expectations? ... just the example of some of those class one and two loans, where you go to the private equity buyer and ask them for more equity. What if they say no, what's the next step? Well, I mean, it's a little bit of a delicate negotiation, but luckily we've kind of been doing this a long time. The good news, frankly, even since, since COVID, which was a real liquidity disruption in a lot of these companies, the playbook has and continues to be... In our underperformers, we're happy to be part of the solution, right? We're happy to provide amendments and modifications, and maybe we can decrease the cash interest that we're taking in relative to, you know, probably getting a higher all-in interest rate, but a lot of it accruing in PIK for a certain period of time. When we make those modifications, we make them with pretty much a requirement that the owner supports the business with new liquidity if it needs it, and we've had very good success of driving that. You know, it's a little bit of a funny conversation. So if you, if you ask for equity and they say no, the next conversation is probably, we try to get equity to come into the company to deal with liquidity. You said, "No." I mean, we're, you know, looking six months ahead, and to me, it looks like company's gonna run out of money. And if it does, what would you expect us to do other than, you know, file Chapter 11 and go reorganize it in the courts? But this is a discussion, right? Because bankruptcy tends to be a very value-destructive process. It's incredibly expensive in terms of hiring advisors and lawyers. That's never our goal is never to get there, right? We wanna have a collaborative relationship with our partners. The good news is, particularly on the private equity side, there's a lot of repeat business there, right? So we have sponsors that we're in 8, 10 portfolio companies with. It tends to be a pretty productive dialogue, and they understand the balance of what their, you know, responsibilities is versus what they can reasonably ask for from us as a lender. Anybody else? Maybe I'll end with a dividend question. Kipp, so, you know, at the $0.48 level that the dividend's at, so that's, you know, well covered by core, core earnings, right? That was at $0.63 in Q4. So it almost seems like the dividend is set to absorb even more rate cuts than the forward curve has priced in. Just, you know, how are you thinking about setting that base and, you know, just generally, do you think about just kind of excess earnings on a, on a continual basis to, you know, to support NAV, which has done actually pretty well as well? Yeah, I mean, we sort of made our way in the space way back when, with even Allied Capital and American Capital for a long time, kind of overpaying dividends relative to their core. So, we definitely want the core to exceed the dividend over a pretty long projection period. But the team agonized when we raised the dividend to $0.48 because it was obvious to everybody that with higher base rates, the company had significantly more earning power. But of course, the question was, back then, in a world of BDCs where you can't cut your dividend, how do we raise it to justify, you know, obviously higher levels of core without without having to turn back around and pick your timeframe two or three years and say, "Oh, we overshot it, and now we need to cut it?" So typically what we've done is make sure we have a very safe core dividend, which we think is very attractive, and again, is built on, you know, income streams coming off 400+ companies. So the diversity of what actually contributes to that dividend is much higher than other BDCs, so I'd argue it's a much safer dividend. And then we build NAV over time, and to the extent we think we've materially outearned the dividend. As you guys know, we have a history of occasionally declaring special dividends, you know, some of which we'll pay at year-end. That's typically when we look to clean it up, is around year-end. And we've done everything in the past, from issue one special dividend to a special dividend payable over four quarters. But at the core of it is we want a really high quality, really stable dividend that everybody has a tremendous amount of confidence in. We can always supplement that through, through other distributions. Fantastic. All right, thank you. Thanks ... Kippp and Scott, for joining us. Thank everybody for coming as well. Thanks for having us. Yeah, thanks.