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How Ares Capital Corporation Performed in 3Q17

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How Ares Capital Corporation Performed in 3Q17 PART 1 OF 6

Ares Capital Reported an Increase in Total Investment Income

Income

The components of Ares Capital Corporation’s (ARCC) investment income include management and other fees, interest income from investments, dividend income, capital structuring service fees, and other income. ARCC generates the majority of its investment income from interest income related to investments.

In 3Q17, Ares Capital reported interest income from investments of $238.0 million compared to $200.0 million in 3Q16. This trend reflects an increase in the average size of its portfolio.

Ares Capital Reported an Increase in Total Investment Income

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However, unfavorable momentum related to weighted average yield in the portfolio has negatively impacted the YoY rise in the interest income from investments.

Ares Capital has a market capitalization of $6.9 billion. Among the company’s peers (XLF), Apollo Investment (AINV), Hercules Capital (HTGC), and TPG Specialty Lending (TSLX) have market capitalization levels of $1.3 billion, $1.1 billion, and $1.2 billion, respectively.

Service and management fees

Ares Capital (ARCC) reported a decline in its capital structuring service fees from $35.0 million in 3Q16 to $32.0 million in 3Q17. This decline reflects unfavorable momentum in relation to weighted average capital structuring fees that the company garnered from new investment commitments. 

The company reported dividend income of $18.0 million in 3Q17 compared to $16.0 million in 3Q16. Included in this income are the dividends garnered from Ivy Hill Asset Management.

Ares Capital reported a decline in its management and other fees from $4.0 million in 3Q16 to $1.0 million in 3Q17, reflecting fall in the sourcing fees related to the Senior Secured Loan Fund (or SSLP). The company posted a rise in other income from $3.0 million in 3Q16 to $5.0 million in 3Q17, reflecting the rise in administrative agent fees.

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