ARCC 10-K & 10-Q changes, risk factors and insider trading

•We and our portfolio companies and third-party service providers may be subject to cybersecurity risks and our business could be adversely affected by changes to data protection laws and regulations.

From time to time, capital markets may experience periods of disruption and instability. Such disruptions may result in, amongst other things, write-offs, the re-pricing of credit risk, the failure of financial institutions or worsening general economic conditions, any of which could materially and adversely impact the broader financial and credit markets and reduce the availability of debt and equity capital for the market as a whole and financial services firms in particular. ThereGlobal financial markets have experienced heightened volatility in recent periods and there can be no assurance these market conditions will not occur or worsen in the future, including as a result of economic and political events in or affecting the world’s major economies, such as the ongoing war between Russia and UkraineUkraine, continued conflicts and conflictspolitical unrest in the Middle East.East and South America. Sanctions imposed by the U.S. and other countriescountries, including in connection with hostilities between Russia and Ukraine and the tensions between China and TaiwanTaiwan, have caused additional financial market volatility and affected the global economy. Concerns over future increasesinflation in inflation,volatility, economic recession, as well as interest rate volatility and fluctuations in oil and gas prices resulting from global production and demand levels, as well as geopolitical tension, have exacerbated market volatility. In addition, social unrest, changes regarding immigration and work permit policies and other political and security concerns may not abate, which may cause the debt and equity capital markets and our business to be adversely affected both within and outside of regions experiencing ongoing conflicts. Market uncertainty and volatility have also been magnified as a result of the 2024current U.S. presidential and congressional electionsadministration and resultingongoing uncertainties regarding actual and potential shifts in U.S. and foreign, trade, economic and other policies, including with respect to treaties and tariffs. In addition to impacting the capital markets, global economic, political and market conditions could have a significant adverse effect on our business, financial condition and results of operations. See “General Risk Factors— Difficult market and political conditions may adversely affect our businesses in many ways, including by reducing the value or hampering the performance of our investments or reducing our ability to raise or deploy capital, each of which could have a significant adverse effect on our business, financial condition and results of operations.”

Equity capital may be difficult to raise during such periods of adverse or volatile market conditions because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than net asset value without first obtaining approval for such issuance from our stockholders and our independent directors. We generally seek approval from our stockholders so that we have the flexibility to issue up to 25% of our then outstanding shares of our common stock at a price below net asset value. Pursuant to approval granted at a special meeting of stockholders held on August 8, 2024,2025, we are permitted to sell or otherwise issue shares of our common stock at a price below net asset value, subject to certain limitations and determinations that must be made by our board of directors. Such stockholder approval expires on August 8, 2025.2026.

The U.S. Federal Reserve (“Federal Reserve”) decreased the federal funds rate multiple times in 2024 after a sustained period of historically high rates.2025. Because we borrow money and may issue debt securities or preferred stock to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds or pay interest or dividends on such debt securities or preferred stock and the rate at which we invest these funds. In periods of declining interest rates, we may earn less interest income from investments and our cost of funds will also decrease, to a lesser extent, given certain of our currently outstanding indebtedness bears interest at fixed rates, resulting in lower net investment income. Conversely, in periods of rising interest rates, our interest income will increase as the majority of our portfolio bears interest at variable rates while our cost of funds will also increase, to a lesser extent, with the net impact being an increase to our net investment income, see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.” We have entered into certain hedging transactions, such as interest rate swaps, to mitigate our exposure to adverse fluctuations in interest rates, and we may do so again in the future. However, we cannot assure you that such transactions will be successful in mitigating our exposure to interest rate risk. There can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. See “Risks Relating to Our Investments—We may expose ourselves to risks if we engage in hedging transactions.”

Certain of our portfolio companies are in industries that have been or may be impacted by inflation. U.S. inflation rates have fluctuated in recent periods, and remain well above historical levels over the past several decades. InflationaryOngoing inflationary pressures have increased the costs of labor, energy and raw materials and have adversely affected consumer spending, economic growth and our portfolio companies’ operations. If these portfolio companies are unable to pass any increases in their costs of operations along to their customers, it could adversely affect their operating results and impact their ability to pay interest and principal on our loans, particularly if interest rates rise in response to inflation. In addition, any projected future decreases in our portfolio companies’ operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of our investments could result in future realized or unrealized losses and therefore reduce our net assets resulting from operations. See “—We are exposed to risks associated with changes in interest rates, including the current interest rate environment.”

Accomplishing this result on a cost-effective basis is largely a function of the structuring of our investment process and the ability of our investment adviser to provide competent, attentive and efficient services to us. Our executive officers and the members of our investment adviser’s U.S. direct lending investment committee have substantial responsibilities in connection with their roles at Ares and with other Ares funds as well as responsibilities under the investment advisory and management agreement. They may also be called upon to provide significant managerial assistance to certain of our portfolio companies. These demands on their time, which will increase as the number of investments grow, may distract them or slow the rate of investment. In order for us to grow, Ares will need to hire, train, supervise, manage and retain new employees. However, we cannot assure you that Ares will be able to do so effectively. Any failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations.

We will need to periodically access the capital markets to raise cash to fund new investments in excess of our repayments, and we may also need to access the capital markets to refinance existing debt obligations to the extent such maturing obligations are not repaid with availability under our revolving credit facilities, which includes our senior secured revolving credit agreement, dated as of December 28, 2005 (as amended, the “Revolving Credit Facility”), our purchase and sale agreement, dated as of November 3, 2004 (as amended, the “Revolving Funding Facility”), our loan and servicing agreement, dated as of January 20, 2012 (as amended, the “SMBC Funding Facility”) and our revolving credit and security agreement, dated as of June 11, 2020 (as amended, the “BNP Funding Facility” and, together with the Revolving Credit Facility, the Revolving Funding Facility and the SMBC Funding Facility, the “Credit Facilities”) or cash flows from operations. We have elected to be treated as a RIC and operate in a manner so as to qualify for the U.S. federal income tax treatment applicable to RICs. Among other things, in order to maintain our RIC status, we must distribute to our stockholders on a timely basis generally an amount equal to at least 90% of our investment company taxable income, and, as a result, such distributions will not be available to fund investment originations or repay maturing debt. We must continue to borrow from financial institutions and issue additional securities to fund our growth. Unfavorable economic or capital market conditions may increase our funding costs, limit our access to the capital markets or could result in a decision by lenders not to extend credit to us. An inability to successfully access the capital markets may limit our ability to refinance our existing debt obligations as they come due and/or to fully execute our business strategy and could limit our ability to grow or cause us to have to shrink the size of our business, which could decrease our earnings, if any. See “—The capital markets may experience periods of disruption and instability. Such market conditions may materially and adversely affect the debt and equity capital markets, which may have a negative impact on our business and operations.”

In addition, we are currently allowed to borrow amounts or issue debt securities or preferred stock, which we refer to collectively as “senior securities,” such that our asset coverage, as calculated pursuant to the Investment Company Act, equals at least 150% immediately after such borrowing (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us). Such requirement, in certain circumstances, may restrict our ability to borrow or issue debt securities or preferred stock. The amount of leverage that we employ will depend on our investment adviser’s and our board of directors’ assessments of market and other factors at the time of any proposed borrowing or issuance of senior securities. We cannot assure you that we will be able to maintain or increase the amount available to us under our current Credit Facilities or to our portfolio companies under the Letter of Credit Facility (as defined below), obtain other lines of credit or issue senior securities at all or on terms acceptable to us.

Borrowings, also known as leverage, magnify the potential for gain or loss on amounts invested and, therefore, increase the risks associated with investing in our securities. We currently borrow under the Credit Facilities and have issued or assumed other senior securities, and in the future may borrow from, or issue additional senior securities to, banks, insurance companies, funds, institutional investors and other lenders and investors. Lenders and holders of such senior securities have fixed dollar claims on our consolidated assets that are superior to the claims of our common stockholders or any preferred stockholders. If the value of our consolidated assets increases, then leveraging would cause the net asset value per share of our common stock to increase more sharply than it would have had we not incurred leverage.

As of December 31, 2024,2025, we had approximately $3.6$4.5 billion of outstanding borrowings under the Credit Facilities, our wholly owned consolidated subsidiary, Ares Direct Lending CLO 1 LLC (“ADL CLO 1”) had approximately $476 million in aggregate principal amount outstanding of the notes offered in the ADL CLO 1 debt securitization that mature on April 25, 2036 (collectively, the “April 2036 CLO Notes”), excluding the approximately $226 million of subordinated notes that mature on April 25, 2036 issued by ADL CLO 1 which were retained by us and eliminated in consolidation (the “April 2036 CLO Subordinated Notes”), our wholly owned consolidated subsidiary, Ares Direct Lending CLO 4 LLC (“ADL CLO 4”) had approximately $544 million in aggregate principal amount outstanding of the loans incurred in the ADL CLO 4 debt securitization that mature on October 24, 2036 (collectively, the “October 2036 CLO Secured Loans” and, together with the April 2036 CLO Notes, the “Debt Securitizations”), excluding the approximately $260 million of subordinated notes that mature on October 24, 2036 issued by ADL CLO 4 which were retained by us and eliminated in consolidation (the “October 2036 CLO Subordinated Notes”), our wholly owned consolidated subsidiary, Ares Direct Lending CLO 7 LLC (“ADL CLO 7”) had approximately $700 million in aggregate principal amount outstanding of the notes offered in the ADL CLO 7 debt securitization that mature on January 20, 2038 (collectively, the “January 2038 CLO Notes” and, together with the April 2036 CLO Notes and the October 2036 CLO Secured Loans, the “Debt Securitizations”), excluding the approximately $303 million of subordinated notes that mature on January 20, 2038 issued by ADL CLO 7 which were retained by us and eliminated in consolidation (the “January 2038 CLO Subordinated Notes”), and we had approximately $9.2$9.8 billion in aggregate principal amount outstanding of senior unsecured notes (we refer to each series of unsecured notes using the defined term set forth under the “Unsecured Notes” column of the table below and collectively referred to all such seriesseries, together with an additional issuance of unsecured notes as described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Result of Operations—Recent Developments,” as well as Note 16 to our consolidated financial statements for the year ended December 31, 2025 below as the “Unsecured Notes”).

(1)The effective stated interest rates of the January 2027 Notes, the March 2029 Notes, the July 2029 Notes and the JulySeptember 20292030 Notes include the impact of interest rate swaps.

In order for us to cover our annual interest payments on our outstanding indebtedness at December 31, 2024,2025, we must achieve annual returns on our December 31, 20242025 total assets of at least 2.4%.2.5%. The weighted average stated interest rate charged on our principal amount of outstanding indebtedness as of December 31, 20242025 was 4.9%. We intend to continue borrowing under the Credit Facilities in the future and we may increase the size of the Credit Facilities, the Letter of Credit Facility or issue additional debt securities or other evidences of indebtedness (although there can be no assurance that we will be successful in doing so). See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments,” as well as Note 16 to our consolidated financial statements for the year ended December 31, 20242025 for a subsequent event relating to an additional issuance of unsecured notes. For more information on our indebtedness, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources.” Our ability to service our debt depends largely on our financial performance and is subject to prevailing economic conditions and competitive pressures. The amount of leverage that we employ at any particular time will depend on our investment adviser’s and our board of directors’ assessments of market and other factors at the time of any proposed borrowing and is subject to our compliance with our asset coverage requirement following any such borrowing.

The Credit Facilities, the Debt Securitizations and the Unsecured Notes impose financial and operating covenants that restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC. A failure to renew the Credit Facilities or to add new or replacement debtcredit facilities or to issue additional debt securities or other evidences of indebtedness could have a material adverse effect on our business, financial condition and results of operations.

(2)In order to compute the “Corresponding Return to Common Stockholders,” the “Assumed Return on Portfolio” is multiplied by the total value of our assets as of December 31, 20242025 to obtain an assumed return to us. From this amount, the interest expense (calculated by multiplying the weighted average stated interest rate of 4.9% by the approximately $13.8$16.0 billion of principal outstanding debt outstanding as of December 31, 20242025) is subtracted to determine the return available to stockholders. The return available to stockholders is then divided by the total value of our net assets as of December 31, 20242025 to determine the “Corresponding Return to Common Stockholders.”

In addition to regulatory requirements that restrict our ability to raise capital, the Credit Facilities, the Debt Securitizations and the Unsecured Notes contain various covenants that, if not complied with, could accelerate repayment under the Credit Facilities, the Debt Securitizations and the Unsecured Notes, thereby materially and adversely affecting our liquidity, financial condition and results of operations.

The agreements governing the Credit Facilities, the Debt Securitizations and the Unsecured Notes require us to comply with certain financial and operational covenants. These covenants may include, among other things:

As of the date of this Annual Report, we are in compliance in all material respects with the covenants of the Credit Facilities, the Debt Securitizations and the Unsecured Notes. However, our continued compliance with these covenants depends on many factors, some of which are beyond our control. For example, depending on the condition of the public debt and equity markets and pricing levels, unrealized depreciation in our portfolio may increase in the future. Any such increase could result in our inability to comply with our obligation to restrict the level of indebtedness that we are able to incur in relation to the value of our assets or to maintain a minimum level of stockholders’ equity.

Accordingly, although we believe we will continue to be in compliance, there are no assurances that we will continue to comply with the covenants in the Credit Facilities, the Debt Securitizations and the Unsecured Notes. Failure to comply with these covenants could result in a default under the Credit Facilities, the Debt Securitizations or the Unsecured Notes, that, if we were unable to obtain a waiver from the lenders or holders of such indebtedness, as applicable, such lenders or holders could accelerate repayment under such indebtedness and thereby have a material adverse impact on our business, financial condition and results of operations.

To finance certain investments, we have completed debt securitizations through collateralized loan obligations (“CLOs”) and may in the future securitize certain of our secured loans or other investments, including through the formation of one or more additional CLOs, while retaining all or most of the exposure to the performance of such investments. As of December 31, 2024,2025, weour haveconsolidated subsidiaries had collectively completed twothree debt securitizations, one in May 2024 throughsecuritizations. ADL CLO 1, which1 has approximately $476 million in aggregate principal amount of April 2036 CLO Notes issued and outstanding (excluding the April 2036 CLO Subordinated Notes), and one in November 2024 through. ADL CLO 4, which4 has approximately $544 million in aggregate principal amount of October 2036 CLO Secured Loans issued and outstanding (excluding the October 2036 CLO Subordinated Notes). ADL CLO 7 has approximately $700 million in aggregate principal amount of January 2038 CLO Notes issued and outstanding (excluding the January 2038 CLO Subordinated Notes). Our current CLOs involve, and any additional CLOs would involve, a contribution by us of a pool of assets to a special purpose entity, and a sale of debt interests in such entity on a non-recourse or limited-recourse basis to purchasers.

The manager for a CLO that we create may be us, our investment adviser or an affiliate, and such manager may be entitled to receive compensation for structuring and/or management services. To the extent our investment adviser or an affiliate other than us serves as manager and we are obligated to compensate our investment adviser or the affiliate for such services, we, our investment adviser or the affiliate will implement offsetting arrangements to assure that we, and indirectly, our common stockholders, pay no additional management fee to our investment adviser or the affiliate in connection therewith. Our investment adviser serves as asset manager to ADL CLO 11, ADL CLO 4 and ADL CLO 47 under asset management agreements with such entities and is entitled to receive compensation for structuring and/or management services. Our investment adviser has agreed to waive any management fees from ADL CLO 11, ADL CLO 4 and ADL CLO 4.7. To the extent we serve as the manager,manager to any CLOs, we will waive any right to receive fees for such services from us (and indirectly our common stockholders) or any affiliate.

We rely on the Co-Investment Exemptive Order granted to us, our investment adviser and certain of itsour affiliates by the SEC that allows us to engage in co-investment transactions with other affiliated fundsentities managed by our investment adviser, subject to certain termsconditions and conditions.requirements. However,As whilea the termsresult of investments permitted by the Co-Investment Exemptive OrderOrder, requirethere that wecould be givensignificant the opportunity to participateoverlap in certain transactions originated by our investment adviserportfolio and the investment portfolios of affiliated entities that have an investment objective similar to ours and can rely on the Co-Investment Exemptive Order. We may also otherwise co-invest with funds managed by Ares or any of its downstream affiliates, wesubject ultimatelyto maycompliance notwith participateexisting inregulatory thoseguidance, transactions.applicable Inregulations addition, based on guidelines approved by our board of directors, we may not see certain transactions originated byand our investment adviseradviser’s orallocation its affiliates. This also may limit the scope of investment opportunities that may otherwise be available to us.policy.

Conflicts may arise in allocating and structuring investments, time, services, expenses or resources among the investment activities of Ares funds, Ares, other Ares-affiliated entities and the employees of Ares. Certain of our executive officers and directors, and members of the U.S. direct lending investment committee of our investment adviser, serve or may serve as officers, directors or principals of other entities, including other Ares funds. These officers and directors will devote such portion of their time to our affairs as is required for the performance of their duties, but they are not required to devote all of their time to us. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in our or our stockholders’ best interests or may require them to devote time to services for other entities, which could interfere with the time available to provide services to us. Members of our investment adviser’s U.S. direct lending investment committee may have significant responsibilities for other Ares funds. Similarly, although the professional staff of our investment adviser will devote as much time to the management of us as appropriate to enable our investment adviser to perform its duties in accordance with the investment advisory and management agreement, the investment professionals of our investment adviser may have conflicts in allocating their time and services among us, and investment vehicles managed by our investment adviser or one or more of its affiliates. These activities could be viewed as creating a conflict of interest insofar as the time and effort of the professional staff of our investment adviser and its officers and employees will not be devoted exclusively to our business but will instead be allocated between our business and the management of these other investment vehicles.

In addition, certain Ares funds may have investment objectives that compete or overlap with, and may from time to time invest in asset classes similar to those targeted by us. Consequently, we, and these other entities, may from time to time pursue the same or similar capital and investment opportunities. Pursuant to its investment allocation policy, Ares and its controlled affiliates, including our investment adviser, endeavor to allocate investment opportunities in a fair and equitable manner, and in any event consistent with any fiduciary duties owed to us. Nevertheless, it is possible that we may not be given the opportunity to participate in certain investments made by investment funds managed by investment managers affiliated with Ares (including our investment adviser) and, if given such opportunity, may not be allowed to participate in such investments without the prior approval of our directors who are not “interested persons” of the Company (as defined in the Investment Company Act) and, in some cases, the prior approval of the SEC. In addition, there may be conflicts in the allocation of investments among us and the funds managed by investment managers affiliated with Ares (including our investment adviser) or one or more of our controlled affiliates or among the funds they manage, including investments made pursuant to the Co-Investment Exemptive Order. Further, such other Ares funds may hold positions in portfolio companies in which we have also invested. Such investments may raise potential conflicts of interest between us and such other Ares funds, particularly if we and such other Ares funds invest in different classes or types of securities or investments of the same underlying portfolio company. In that regard, actions may be taken by such other Ares funds that are adverse to our interests, including, but not limited to, during a restructuring, bankruptcy or other insolvency proceeding or similar matter occurring at the underlying portfolio company.

To maintain our status as a RIC, in addition to the Annual Distribution Requirement, we must also meet certain annual source of income requirements at the end of each taxable year and asset diversification requirements at the end of each calendar quarter. Failure to meet these requirements may result in our having to (a) dispose of certain investments quickly or (b) raise additional capital to prevent the loss of RIC status. Because most of our investments are in private companies and are generally illiquid, any such dispositions may be at disadvantageous prices and may result in losses. Also, the rules applicable to our qualification as a RIC are complex with many areas of uncertainty. Accordingly, no assurance can be given that we have qualified or will continue to qualify as a RIC. If we fail to maintain our status as a RIC for any reason and become subject to regular “C” corporation income tax, the resulting corporate-level income taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. Such a failure would have a material adverse effect on us and on any investment in us. Certain provisions of the Code provide some relief from RIC disqualification due to failures of the source of income and asset diversification requirements, although there may be additional taxes due in such cases. We cannot assure you that we would qualify for any such relief should we fail the source of income or asset diversification requirements. In addition, because the relevant provisions of the Code may change, compliance with one or more of the RIC requirements may be impossible or impracticable.

A large percentage of our portfolio investments are not publicly traded. The fair value of investments that are not publicly traded may not be readily determinable. We value these investments at least quarterly at fair value as determined in good faith by our investment adviser, as the valuation designee, subject to the oversight of our board of directors, based on, among other things, the input of IVPs that have been engaged to support the valuation of such portfolio investments atquarterly, leastbeginning onceas duringof athe trailingthird 12-monthquarter periodafter origination (with certain de minimis exceptions) and under a valuation policy and a consistently applied valuation process. The valuation process is conducted at the end of each fiscal quarter by ourthe investment adviser, and asubstantially portionall ofinvestments in our investment portfolio at fair value isare subject to review by an IVP each quarter. However, we may use these IVPs to review the value of our investments more frequently, including in connection with the occurrence of significant events or changes in value affecting a particular investment. In addition, our independent registered public accounting firm obtains an understanding of, and performs select procedures relating to, our valuation process within the context of performing our integrated audit.

The types of factors that may be considered in valuing our investments include the enterprise value of the portfolio company (the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time), the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flows, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments would trade in their principal markets and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent sale occurs, weour considerinvestment adviser considers the pricing indicated by the external event to corroborate ourits valuation. Because such valuations, and particularly valuations of private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our investment adviser’s determinations of fair value may differ materially from the values that would have been used if a ready market for these investments existed and may differ materially from the values that we may ultimately realize. Our net asset value per share could be adversely affected if our investment adviser’s determinations regarding the fair value of these investments are higher than the values that we realize upon disposition of such investments.

Our investment portfolio includes our investment in IHAM, a wholly owned portfolio company, which as of December 31, 2024,2025, represented 7.1%8.3% of our total portfolio at fair value. In addition, for the year ended December 31, 2024,2025, approximately 9.6%9.8% of our total investment income was earned from our investment in IHAM. For more information, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Portfolio and Investment Activity—Ivy Hill Asset Management, L.P.” and Note 4 to our consolidated financial statements for the year ended December 31, 2024.2025.

Increasing scrutiny from stakeholders and regulators with respect to sustainability—or ESG —matters may impose additional costs and expose us to additional risks.

Our business (including that of our portfolio companies) faces increasing public scrutiny related to ESG activities. A variety of organizations measure the performance of companies on ESG topics, and the results of these assessments are widely publicized. Certain institutional investors may consider such ESG ratings and measures in making their investment decisions. If our ESG ratings or performance do not meet the standards set by such investors or our stockholders, they may choose to exclude our securities from their investments. In addition, investment in funds that specialize in companies that perform well in such assessments remain popular, and major institutional investors have publicly discussed their consideration of such ESG ratings and measures in making their investment decisions.

Moreover, in recent years “Anti-ESGanti-ESG” sentiment has gained momentum across the U.S., with a growing number ofseveral states, federal agencies, the executive branch and federal agencies, and Congress having enacted,proposed, proposedenacted or indicated an intent to pursue “anti-ESG” policies, legislation or initiatives, issued related legal opinions and engaged inpursued related investigations and litigation. If investors subject to “anti-ESG” legislation view our investment adviser’s responsible investing or ESG practices as being in contradiction of such “anti-ESG” policies, legislation or legal opinions, such investors may not invest in us and it could negatively impact the price of our common stock. In addition, corporate diversity, equity and inclusion (“DEI”) practices have recently come under increasing scrutiny. For example, some advocacy groups and federal and state officials have asserted that the U.S. Supreme Court’s decision striking down race-based affirmative action in higher education in June 2023 should be analogized to private employment matters and private contract matters and several media campaigns and cases alleging discrimination based on such arguments have been initiated since the decision. Additionally, in January 2025, President Trump signed a number of Executive Orders focused on DEI, which indicate continued scrutiny of DEI initiatives and potential related investigations of certain private entities with respect to DEI initiatives, including publicly traded companies. If we do not successfully manage expectations across varied stakeholder interests, it could erode stakeholder trust, impact our reputation and constrain our investment opportunities. Such scrutiny of both ESG and DEI related practices could expose our investment adviser to the risk of litigation, investigations or challenges by federal or state authorities or result in reputational harm.

Additionally, certainCertain regulations related to ESG that are applicable to us and our portfolio companies could adversely affect our business. For example, the European Commission’s “action plan on financing sustainable growth” (“Action Plan”) is designed to, among other things, define and reorient investment toward more sustainable economic activity.activities. The Action Plan contemplates, among other things: establishing European Union (the “EU”) labels for green financial products; clarifying asset managers’ and institutional investors’ duties regarding sustainabilityESG in their investment decision-making processes; increasing disclosure requirements in the financial services sector around sustainabilityESG and increasing the transparency of companies on their ESG policies and related processes and management systems; and introducing a ‘green supporting factor’ in the EU prudential rules for banks and insurance companies to incorporate climate risks into banks’ and insurance companies’ risk management policies. Moreover, on January 5, 2023, the Corporate Sustainability Reporting Directive (“CSRD”) came into effect. The CSRD amends and strengthens the rules introduced on sustainabilityESG reporting for companies, banks and insurance companies under the Non-Financial Reporting Directive (2014/95/EU) (“NFRD”). The CSRD requires a much broader range of companies, including non-EU companies with significant turnover and a legal presence in EU markets, to produce detailed and prescriptive reports on sustainability-relatedESG-related matters within their financial statements. CSRD is a novel regime and applicable scoping thresholds, the date of application and the substance of reporting requirements have been subject to a regulatory amendment process and are expected to be subject to further processes to refine the relevant requirements, including subsequent rule making and regulatory clarifications. There can be no assurance that adverse developments with respect to CSRD will not adversely affect our assets or the returns from those assets. One or more of our portfolio companies may fall within scope of CSRD and this may lead to increased management burdens and costs. There is a risk that a significant reorientation in the market following the implementation of these regulations could be adverse to our portfolio companies if they are perceived to be less valuable as a consequence of, e.g., their carbon footprint or allegations or evidence of “greenwashing” (i.e., the holding out of a product as having green or sustainable characteristics where this is not, in fact, the case). We and our portfolio companies are subject to the risk that similar measures might be introduced in other jurisdictions in the future.

Climate change is widely considered to be a significant threat to the global economy. Our business operations and our portfolio companies may face risks associated with climate change, including risks related to the impact of climate-related legislation and regulation (both domestically and internationally), risks related to climate-related business trends (such as the process of transitioning to a lower-carbon economy), and risks stemming from the physical impacts of climate change, such as the increasing frequency or severity of extreme weather events (including wildfires, droughts, hurricanes and floods) and rising sea levels and temperatures. These events and the disruptions they cause, alone or in combination, could also lead to increased costs of insurance for us and/or our portfolio companies.

We, as well as our investment adviser and its affiliates, participate in a highly regulated industry and are each subject to regulatory examinations in the ordinary course of business. There can be no assurance that we, our executive officers, directors, and our investment adviser, its affiliates and/or any of their respective principals and employees will avoid regulatory investigation and possible enforcement actions stemming therefrom. Our investment adviser is a registered investment adviser and, as such, is subject to the provisions of the Advisers Act. We and our investment adviser are each, from time to time, subject to formal and informal examinations, investigations, inquiries, audits and reviews from numerous regulatory authorities both in response to issues and questions raised in such examinations or investigations and in connection with the changing priorities of the applicable regulatory authorities across the market in general. In addition, the new presidential administration will lead toany leadership changes or reforms at a number of U.S. federal regulatory agencies with oversight over our industry. Any changes or reformsindustry may impose additional costs or result in other limitations on us.

The United States has recently enacted and proposed to enact significant new tariffs. Additionally, President Trump has directed various federal agencies to further evaluate key aspects of U.S. trade policy and there has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs. There continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. Any of these factors could depress economic activity and restrict our portfolio companies' access to suppliers or customers and have a material adverse effect on their business, financial condition and results of operations, which in turn would negatively impact us.

Our business is highly dependent on communications and information systems of Ares Management, the parent of our investment adviser and our administrator. In this Annual Report, we sometimes refer to hardware, software, informationinformation, communications and communicationsartificial intelligence systems or programs maintained by Ares Management and used by us, our investment adviser and our administrator as “our” systems. We also face operational risk from transactions and key data not being properly recorded, evaluated or accounted for with respect to our portfolio companies. In addition, we face operational risk from errors made in the execution, confirmation or settlement of transactions. In particular, our investment adviser is highly dependent on its ability to process and evaluate, on a daily basis, transactions across markets and geographies in a time-sensitive, efficient and accurate manner. Consequently, we and our investment adviser and administrator rely heavily on Ares Management’s financial, accounting and other data processing systems.

As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by our investment adviser, as the valuation designee, subject to the oversight of our board of directors. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material. WeOur investment adviser may take into account the following types of factors, if relevant, in determining the fair value of our investments: the enterprise value of a portfolio company (the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time), the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to similar publicly traded securities, changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments would trade in their principal markets and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent sale occurs, weour useinvestment adviser considers the pricing indicated by the external event to corroborate ourits valuation. While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market to market participants (even if we plan on holding an investment through its maturity). As a result, volatility in the capital markets can also adversely affect our investment valuations. Decreases in the market values or fair values of our investments are recorded as unrealized depreciation. The effect of all of these factors on our portfolio can reduce our net asset value (and, as a result our asset coverage calculation) by increasing net unrealized depreciation in our portfolio. Depending on market conditions, we could incur substantial realized and/or unrealized losses, which could have a material adverse effect on our business, financial condition or results of operations.

TheIn currentrecent years, the macroeconomic environment ishas characterizedexperienced byuncertainty related to evolving tariff and trade policies, geopolitical tensions, inflationary pressures, labor shortages,market strikes,shortages work stoppages, laborand disputes, changes in interest rates, supply chain disruptions and accidents, changing interest rates, persistent inflation,disruptions, foreign currency exchangefluctuations, volatility,and periods of volatility in global capital markets and concerns over actual and potential tariffs and sanctions, inflation and persistent recession risk.markets. The risks associated with our and our portfolio companies’ businesses are more severe during periods of economic slowdown or recession.

Many of our portfolio companies may be susceptible to economic downturns or recessions and may be unable to repay our loans during these periods. Therefore, during these periods our non-performing assets may increase and the value of our portfolio may decrease if we are required to write down the values of our investments. Adverse economic conditions may also decrease the value of collateral securing some of our loans and the value of our equity investments. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing investments and harm our operating results. We experienced to some extent such effects as a result of thepast economic downturndownturns, thatincluding occurredthose throughoutoccurring during portions of the2020 pastthrough five fiscal years2024 and from 2008 through 20092009, and may experience such effects again in any future downturn or recession.

Additionally, when we invest in first lien senior secured loans (including “unitranche” loans, which are loans that combine both senior and subordinated debt,loans, generally in a first lien position), second lien senior secured loans or subordinated debt, we may acquire warrants or other equity securities as well. Our goal is ultimately to dispose of such equity interests and realize gains upon our disposition of such interests. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.

We have entered and may in the future enter into hedging transactions, which may expose us to risks associated with such transactions. We may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates. Use of these hedging instruments may include counter-party credit risk.

In addition, under Rule 18f-4, a BDC may enter into an unfunded commitment agreement that is not a derivatives transaction, such as an agreement to provide financing to a portfolio company, if the BDC has, among other things, a reasonable belief, at the time it enters into such an agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements, in each case as itthey becomesbecome due. Unfunded commitment agreements entered into by a BDC in compliance with this condition will not be considered for purposes of computing asset coverage for purposes of compliance with the Investment Company Act with respect to our use of leverage as well as derivatives and/or other financial contracts.

In addition, due to the asset coverage test applicable to us as a BDC, we may be limited in our ability to make distributions. Certain of the Credit Facilities may also limit our ability to declare dividends if we default under certain provisions. Further, if we invest a greater amount of assets in non-income producing securities, it could reduce the amount available for distribution and may also inhibit our ability to make required interest payments to holders of our debt, which may cause a default under the terms of our debt agreements. Such a default could materially increase our cost of raising capital, as well as cause us to incur penalties under the terms of our debt agreements.

•global unrest; and

•general economic trends and other external factors.factors; and

•changes in the general economy, including those caused by tariffs and trade disputes with other countries, changes in inflation and risk of recession;

•political and regulatory conditions that contribute to uncertainty and market volatility including the impact of any prolonged U.S. government shutdown as well as the recentlegislative, regulatory, trade, immigration and other policies associated with the current U.S. presidential election and legislative, regulatory, trade and policy changes associated with a new administration;

•ongoing conflicts in the Middle EastEast, recent U.S. military action in Venezuela, and the Russia-Ukraine war, including the potential for volatility in energy prices and other commodities and their impact on the industries in which we invest;

We use words such as “anticipates,” “believes,” “expects,” “intends,” “projects,” “seeks,” “estimates,” “will,” “should,” “could,” “would,” “likely,” “may” and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. OurYou should not place undue reliance on these forward-looking statements, and our actual results and condition could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” and the other information included in this Annual Report.

Our investment objective is to generate both current income and capital appreciation through debt and equity investments. We invest primarily in first lien senior secured loans (including “unitranche” loans, which are loans that combine both senior and subordinated debt,loans, generally in a first lien position) and second lien senior secured loans. In addition to senior secured loans, we also invest in subordinated loans (sometimes referred to as mezzanine debt) and preferred equity.

Additionally, since our IPO on October 8, 2004 through December 31, 2024,2025, our realized gains have exceeded our realized losses by approximately $0.9$1.0 billion (excluding a one-time gain on the acquisition of Allied Capital Corporation in April 2010 (the “Allied Acquisition”), income tax expense on net realized gains, and realized gains/losses from the extinguishment of debt and other transactions). For the same time period, our average annualized net realized gain rate was approximately 0.8% (excluding a one-time gain on the Allied AcquisitionAcquisition, income tax expense on net realized gains, and realized gains/losses from the extinguishment of debt and other transactions). Net realized gain/loss rates for a particular period are the amount of net realized gains/losses during such period divided by the average quarterly investments at amortized cost in such period.

As a BDC, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities and indebtedness of private U.S. companies and certain public U.S. companies, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. We also may invest up to 30% of our portfolio in non-qualifying assets, as permitted by the Investment Company Act. Specifically, as part of this 30% basket, we may invest in entities that are not considered “eligible portfolio companies” (as defined in the Investment Company Act), including companies located outside of the United States, entities that are operating pursuant to certain exceptions under the Investment Company Act, and publicly traded entities whose public equity market capitalization exceeds the levels provided for under the Investment Company Act. In addition, we, our investment adviser and certain of our affiliates have received an order from the SEC that permits us and other BDCs and registered closed-end management investment companies managed by Ares Management to co-invest in portfolio companies with each other and with other affiliated investment entities (the “Co-Investment Exemptive Order”). As required by the Co-Investment Exemptive Order, we have adopted, and our board of directors has approved, policies and procedures reasonably designed to ensure compliance with the terms of the Co-Investment Exemptive Order, and our investment adviser and our Chief Compliance Officer will provide reporting to our board of directors. Co-investments made under the Co-Investment Exemptive Order are subject to compliance with certain conditions and other requirements, which could limit our ability to participate in co-investment transactions. As a result of investments permitted by the Co-Investment Exemptive Order, there could be significant overlap in our investment portfolio and the investment portfolio of affiliated Ares Management entities that can rely on the Co-Investment Exemptive Order and have an investment objective similar to ours. We may also otherwise co-invest with funds managed by Ares Management or any of its downstream affiliates, subject to compliance with existing regulatory guidance, applicable regulations and our investment adviser’s allocation policy.

(3)Includes both funded and unfunded commitments. For the years ended December 31, 20242025 and 2023,2024, investment commitments exited included exits of unfunded commitments of $1.3$1.7 billion and $779$1.3 million,billion, respectively.

(4)For the years ended December 31, 20242025 and 2023,2024, net fundings (repayments) of first lien secured revolving loans were $68$20 million and $327$(68) million, respectively.

(6)Includes our subordinated loan to and equity investments in IHAM (as defined below), as applicable. See “Ivy Hill Asset Management, L.P.” below and Note 4 to our consolidated financial statements for the year ended December 31, 20242025 for more information on IHAM.

(4)Includes our subordinated loan to and equity investments in IHAM, as applicable.

(1)We have committedprovided a commitment to fund up to $750 million and $500 millionmillion, as of December 31, 2025 and 2024, respectively, to IHAM, thewith availability of which isfunding solely at our discretion.

From time to time, IHAM or certain IHAM Vehicles may purchase investments from, or sell investments to, us. For any such sales or purchases by the IHAM Vehicles to or from us, the IHAM Vehicle must obtain approval from third parties unaffiliated with us or IHAM, as applicable. During the years ended December 31, 20242025 and 2023,2024, IHAM or certain of the IHAM Vehicles purchased $759$3.7 millionbillion and $1.2$759 billion,million, respectively, of loans from us. For the years ended December 31, 20242025 and 2023,2024, we recognized $1approximately $0 million and $13$1 million, respectively,million of net realized losseslosses, respectively, from these sales. During the yearsyear ended December 31, 20242025, andneither 2023,IHAM nor any IHAM Vehicles sold any investments to us. During the year ended December 31, 2024, IHAM or certain IHAM Vehiclesvehicles sold $32 million and $85 million, respectively, of investments to us.

We have established a joint venture with Varagon to make certain first lien senior secured loans, including certain stretch senior and unitranche loans, primarily to U.S. middle-market companies. The joint venture is called the Senior Direct Lending Program, LLC (d/b/a the “Senior Direct Lending Program” or the “SDLP”). In July 2016, we and Varagon and its clients completed the initial funding of the SDLP. TheWe, and other BDCs, registered closed-end management investment companies and other affiliated investment entities managed by our investment adviser or its affiliates, may directly co-invest with the SDLP mayin generallyaccordance commitwith andthe hold individual loansterms of upthe toCo-Investment $450Exemptive million.Order. The SDLP is capitalized as transactions are completed and all portfolio decisions and generally all other decisions in respect of the SDLP, including co-investment transactions made by the SDLP in accordance with the terms of the Co-Investment Order, must be approved by an investment committee of the SDLP consisting of representatives of ours and Varagon (with approval from a representative of each required).

The interest income from our investment in the SDLP Certificates and capital structuring service fees and other income earned with respect to our investment in the SDLP Certificates for the years ended December 31, 20242025 and 20232024 were as follows:

As of December 31, 20242025 and 2023,2024, the SDLP portfolio was comprised entirely of first lien senior secured loans to primarily to U.S. middle-market companies and were in industries similar to the companies in our portfolio. As of December 31, 2024,2025, twonone of the loans in the SDLP portfolio were on non-accrual status. As of December 31, 2023,2024, onetwo of the loans wasin the SDLP portfolio were on non-accrual status. Below is a summary of the SDLP’sSDLP portfolio as of December 31, 20242025 and 20232024:

(4)As discussed above, theseThese commitments to fund delayed draw loans have been approved by the investment committee of the SDLP.SDLP and will be funded if and when conditions to funding such delayed draw loans are met.

Pursuant to Rule 4-08(g) of Regulation S-X, selectedSelected financial information of the SDLP, in conformity with GAAP, as of December 31, 20242025 and 20232024 and for the years ended December 31, 20242025 and 20232024 areis presented below:

Interest income from investments for the year ended December 31, 20242025 increased from the comparable period in 20232024 primarily due to the increase in the average size of our portfolio.portfolio, which was partially offset by declining base rates. The average size and weighted average yield of our portfolio at amortized cost for the years ended December 31, 20242025 and 20232024 were as follows:

Capital structuring service fees for the year ended December 31, 20242025 increased from the comparable period in 20232024 primarily due to an increase in new investment commitments. The lower weighted average capital structuring service fee percentage during the year ended December 31, 2024 was primarily due to a general decline in market fee levels and a higher percentage of new investment commitments to existing portfolio companies, which generally resulted in lower fee opportunities as compared to the comparable period in 2023. The new investment commitments and weighted average capital structuring service fee percentages for the years ended December 31, 20242025 and 20232024 were as follows:

(1)Excludes $2,517$1.6 millionbillion and $580$2.5 millionbillion of new investment commitments sold to third partythird-party lenders during the years ended December 31, 20242025 and 2023,2024, respectively. Excludes $412$812 million and $470$412 million of investment commitments sold to IHAM for the years ended December 31, 20242025 and 2023,2024, respectively.

(1)Includes the impact of the interest rate swaps for the years ended December 31, 2024 and 2023.swaps.

Stated interest expense for the year ended December 31, 20242025 increased from the comparable period in 20232024 primarily due to the increase in the average principal amount of debtour outstanding and the impact of higher interest rates on our floating debt obligations.debt. Average outstanding debt outstanding and weighted average stated interest rate on our outstanding debt outstanding for the years ended December 31, 20242025 and 20232024 were as follows:

(1)The weighted average stated interest rate on our debt outstanding for the years ended December 31, 2024 and 2023debt includes the impact of interest rate swaps. See Note 6 to our consolidated financial statements for the year ended December 31, 2024,2025 for more information on the interest rate swaps.

The income based fee for the year ended December 31, 20242025 increaseddecreased from the comparable period in 20232024 primarily due to the pre-incentive fee net investment income, as defined in the investment advisory and management agreement, for the year ended December 31, 20242025 being higherlower than in the comparable period in 2023.2024.

For the yearsyear ended December 31, 20242025, andthe 2023,reduction in the capital gains incentive fee calculatedaccrued in accordance with GAAP was $23 million. For the year ended December 31, 2024, the capital gains incentive fee accrued in accordance with GAAP was $18 million and $53 million, respectively.million. The capital gains incentive fee accrual for the year ended December 31, 20242025 changed from the comparable period in 20232024 primarily due to net gainslosses on investments, foreign currency, other transactions and the extinguishment of debt of $119$116 million compared to net gains of $256$86 million for the comparable period in 2023.2024. The capital gains incentive fee accrued under GAAP includes an accrual related to unrealized capital appreciation, whereas the capital gains incentive fee actually payable under our investment advisory and management agreement does not. There can be no assurance that such unrealized capital appreciation will be realized in the future. The accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. As of December 31, 2024,2025, there was $105$82 million of capital gains incentive fee accrued in accordance with GAAP. As of December 31, 2024,2025, there was no capital gains incentive fee actually payable under our investment advisory and management agreement. See Note 3 to our consolidated financial statements for the year ended December 31, 20242025 for more information on the base management fee, income based fee and capital gains incentive fee.

Income Tax Expense, Including Excise TaxTaxes

Depending on the level of taxable income earned in a tax year, we may choose to carry forward such taxable income in excess of current year dividend distributions from such current year taxable income into the next tax year and pay a 4% excise tax on such income, as required. To the extent that we determine that our estimated current year taxable income will be in excess of estimated dividend distributions for the current year from such income, we accrue excise tax, if any, on estimated excess taxable income as such taxable income is earned. For the years ended December 31, 20242025 and 2023, the estimated excess taxable income carried forward was approximately $922 million and $631 million, respectively, and as a result,2024, we recorded a net expense of $35$37 million and $23$35 million, respectively, for U.S. federal excise tax.taxes.

Certain of our consolidated subsidiaries are subject to U.S. federal and state income taxes. For the yearyears ended December 31, 2025 and 2024, we recorded a net tax expense of $121 million and $38 million, primarilyrespectively, duefor to income taxes incurred related to net realized gains on investments held by our taxablesuch subsidiaries. For the year ended December 31, 2023, we recorded a net tax benefit of $3 million as a result of tax refunds resulting from the overpayment of the prior year’s income taxes. The income tax expense for our taxable consolidated subsidiaries will vary depending on the level of realized gains from the exits of investments held by such taxable subsidiaries during the respective periods.

(1)Includes $0.8$3,707 billionmillion and $1.2$759 billionmillion of loans sold to IHAM andor certain vehiclesIHAM managed by IHAMVehicles during the years ended December 31, 20242025 and 2023,2024, respectively. Net realized losses of $1approximately $0 million and $13$1 million were recorded on these transactions with IHAM during the years ended December 31, 20242025 and 2023,2024, respectively. See Note 4 to our consolidated financial statements for the year ended December 31, 20242025 for more information on IHAM and itsthe managedIHAM vehicles.Vehicles.

During the year ended December 31, 2024, we repaid in full the 2024$403 Convertiblemillion Notesin (asaggregate definedprincipal below)amount of our unsecured convertible notes, which bore interest at a rate of 4.625% per year, upon their maturity in March 2024 with a combination of cash and shares of our common stock, resulting in a realized loss on extinguishment of debt of approximately $14 million.

We value our portfolio investments at least quarterly and the changes in value are recorded as unrealized gains or losses in our consolidated statement of operations. Net unrealized gains and losses on investmentsinvestments, including the net change in deferred tax liabilities, for the years ended December 31, 20242025 and 2023,2024, were comprised of the following:

(1)The net unrealized (appreciation) depreciation reversed related to net realized gains or losses represents the unrealized appreciation or depreciation recorded on the related asset at the end of the prior periods.

•ongoing conflicts in the Middle East and South America and the Russia-Ukraine war, including the potential for volatility in energy prices and other commodities and their impact on the industries in which we invest;

Since our initial public offering (“IPO”) on October 8, 2004 through MarchJune 31,30, 2026, our exited investments resulted in an asset level realized gross internal rate of return to us of approximately 13% (based on original cash invested, net of syndications, of approximately $56.9$58.0 billion and total proceeds from such exited investments of approximately $73.4$74.9 billion). Internal rate of return is the discount rate that makes the net present value of all cash flows related to a particular investment equal to zero. Internal rate of return is gross of expenses related to investments as these expenses are not allocable to specific investments. Investments are considered to be exited when the original investment objective has been achieved through the receipt of cash and/or non-cash consideration upon the repayment of a debt investment or sale of an investment or through the determination that no further consideration was collectible and, thus, a loss may have been realized.

Additionally, since our IPO on October 8, 2004 through MarchJune 31,30, 2026, our realized gains have exceeded our realized losses by approximately $1.1 billion (excluding a one-time gain on the acquisition of Allied Capital Corporation in April 2010 (the “Allied Acquisition”), income tax expense on net realized gains, and realized gains/losses from the extinguishment of debt and other transactions). For the same time period, our average annualized net realized gain rate was approximately 0.8% (excluding a one-time gain on the Allied Acquisition, income tax expense on net realized gains, and realized gains/losses from the extinguishment of debt and other transactions). Net realized gain/loss rates for a particular period are the amount of net realized gains/losses during such period divided by the average quarterly investments at amortized cost in such period.

During the firstsecond quarter of 2026, U.S. leveraged corporate credit markets demonstratedgenerated resiliencepositive relativetotal to broad equity indices,returns, supported by moderating expectations for U.S. gross domestic product growth, stable long-runeconomic inflationgrowth and lowbalanced unemployment.labor Thesemarket tailwindsconditions, weredespite partially offset by increasedcontinued uncertainty related to geopolitical developments,developments withand marketstheir nowimpact expectingon energy prices. With inflation remaining above the Federal Reserve's long-run target, the Federal Reserve reiterated its commitment to maintainprice stability and its willingness to further tighten monetary policy ratesif atwarranted currentby levelseconomic this year amid rising near-term inflation expectations.conditions. Looking ahead, while risks have risen,remain, underlying fundamentals remainare supportive of continued stability and healthy overall economic activity.

Our investment activity for the three months ended MarchJune 31,30, 2026 and 2025 is presented below.

(1)New investment commitments include new agreements to fund revolving loans or delayed draw loans. See Note 7 to our consolidated financial statements for the three and six months ended MarchJune 31,30, 2026 for more information on our commitments to fund revolving loans or delayed draw loans.

(2)Includes both funded and unfunded commitments. Of these new investment commitments, we funded $2.5$2.2 billion and $2.2$2.0 billion for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

(3)Includes both funded and unfunded commitments. For the three months ended MarchJune 31,30, 2026 and 2025, investment commitments exited included exits of unfunded commitments of $430$265 million and $536$171 million, respectively.

(4)For the three months ended MarchJune 31,30, 2026 and 2025, net fundingsrepayments of first lien secured revolving loans were $189$15 million and $80$23 million, respectively.

(5)See “Senior Direct Lending Program” below and Note 4 to our consolidated financial statements for the three and six months ended MarchJune 31,30, 2026 for more information on the SDLP (as defined below).

(6)Includes our subordinated loan to and equity investments in IHAM (as defined below), as applicable. See “Ivy Hill Asset Management, L.P.” below and Note 4 to our consolidated financial statements for the three and six months ended MarchJune 31,30, 2026 for more information on IHAM.

As of MarchJune 31,30, 2026 and December 31, 2025, our investments consisted of the following:

(2)First lien senior secured loans include certain loans that we classify as “unitranche” loans. The total amortized cost and fair value of the loans that we classified as “unitranche” loans were $11.4$13.1 billion and $11.2$12.8 billion, respectively, as of MarchJune 31,30, 2026, and $11.3 billion and $11.2 billion, respectively, as of December 31, 2025.

(3)The proceeds from these certificates were applied to co-investments with Varagon Capital Partners (“Varagon”) and its clients to fund first lien senior secured loans to 4572 and 39 different borrowers as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

We have commitments to fund various revolving and delayed draw senior secured and subordinated loans, including commitments to fund which are at (or substantially at) our discretion. Our commitment to fund delayed draw loans is triggered upon the satisfaction of certain pre-negotiated terms and conditions. Generally, the most significant and uncertain term requires the borrower to satisfy a specific use of proceeds covenant. The use of proceeds covenant typically requires the borrower to use the additional loans for the specific purpose of a permitted acquisition or permitted investment, for example. In addition to the use of proceeds covenant, the borrower is generally required to satisfy additional negotiated covenants (including specified leverage levels). We are also party to subscription agreements to fund equity investments. See Note 7 to our consolidated financial statements for the three and six months ended MarchJune 31,30, 2026 for more information on our unfunded commitments, including commitments to issue letters of credit, related to certain of our portfolio companies.

The weighted average yields at amortized cost and fair value of the following portions of our portfolio as of MarchJune 31,30, 2026 and December 31, 2025 were as follows:

Set forth below is the grade distribution of our portfolio companies as of MarchJune 31,30, 2026 and December 31, 2025:

As of MarchJune 31,30, 2026 and December 31, 2025, the weighted average grade of the investments in our portfolio at fair value was 3.1 and 3.1, respectively.

As of MarchJune 31,30, 2026 and December 31, 2025, loans on non-accrual status represented 2.1%2.4% of the total investments at amortized cost (or 1.2%1.4% at fair value) and 1.8% at amortized cost (or 1.2% at fair value), respectively.

Ivy Hill Asset Management, L.P. (“IHAM”), our wholly owned portfolio company, is an asset manager and an SEC-registered investment adviser. As of MarchJune 31,30, 2026, IHAM had assets under management of approximately $16.3 billion. As of MarchJune 31,30, 2026, IHAM managed 24 vehicles (the “IHAM Vehicles”). IHAM earns fee income from managing the IHAM Vehicles and has also invested in certain of these vehicles as part of its business strategy. The amortized cost of IHAM’s total investments as of MarchJune 31,30, 2026 and December 31, 2025 was $3,419$3,628 million and $3,190 million, respectively. For the three and six months ended MarchJune 31,30, 2026 and 2025,2026, IHAM had management and incentive fee income of $15 million and $12$30 million, respectively, and other investment-related income of $98$100 million and $58$198 million, respectively, which included net realized gains or losses on investments and other transactions. For the three and six months ended June 30, 2025, IHAM had management and incentive fee income of $12 million and $24 million, respectively, and investment-related income of $55 million and $113 million, respectively, which included net realized gains or losses on investments and other transactions.

The amortized cost and fair value of our investments in IHAM as of MarchJune 31,30, 2026 and December 31, 2025 were as follows:

(1)We have provided a commitment to fund up to $1.0 billion and $750 million, as of MarchJune 31,30, 2026 and December 31, 2025, respectively, to IHAM, with availability of funding solely at our discretion.

The interest income and dividend income that we earned from IHAM for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

From time to time, IHAM or certain IHAM Vehicles may purchase investments from, or sell investments to, us. For any such sales or purchases by the IHAM Vehicles to or from us, the IHAM Vehicle must obtain approval from third parties unaffiliated with us or IHAM, as applicable. During the threesix months ended MarchJune 31,30, 2026 and 2025, IHAM or certain of the IHAM Vehicles purchased $1,042$2,128 million and $794$1,371 million, respectively, of loans from us. For the threesix months ended MarchJune 31,30, 2026 and 2025, we recognized approximately $3$2 million and $0 million of net realized gains, respectively, from these sales. During the threesix months ended MarchJune 31,30, 2026 and 2025, neither IHAM nor any IHAM Vehicles sold any investments to us.

The yields at amortized cost and fair value of our investments in IHAM as of MarchJune 31,30, 2026 and December 31, 2025 were as follows:

Pursuant to Rule 4-08(g) of Regulation S-X, selected financial information of IHAM, in conformity with U.S. generally accepted accounting principles (“GAAP”), as of MarchJune 31,30, 2026 and December 31, 2025 and for the three and six months ended MarchJune 31,30, 2026 and 2025 are presented below.

____________________________________ (2)The determination of such fair value is determined in accordance with IHAM’s valuation process (separate and apart from our valuation process described elsewhere herein). The amortized cost of IHAM’s total investments as of MarchJune 31,30, 2026 and December 31, 2025 was $3,419$3,628 million and $3,190 million, respectively. The amortized cost of the total investments of IHAM on a consolidated basis as of MarchJune 31,30, 2026 and December 31, 2025 was $12,339$13,381 million and $11,766 million, respectively.

(4)As of MarchJune 31,30, 2026 and December 31, 2025, net unrealized losses of $102$125 million and $85 million, respectively, have been eliminated upon consolidation and the elimination is included in “non-controlling interests in Consolidated IHAM Vehicles” in the selected balance sheet information.

(5)Non-controlling interests in Consolidated IHAM Vehicles includes net unrealized depreciation in the Consolidated IHAM Vehicles of $292$316 million and $167 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

We have established a joint venture with Varagon to make certain first lien senior secured loans, including certain stretch senior and unitranche loans, primarily to U.S. middle-market companies. The joint venture is called the Senior Direct Lending Program, LLC (d/b/a the “Senior Direct Lending Program” or the “SDLP”). In July 2016, we and Varagon and its clients completed the initial funding of the SDLP. We, and other BDCs, registered closed-end management investment companies and other affiliated investment entities managed by our investment adviser or its affiliates, may directly co-invest with the SDLP in accordance with the terms of the Co-Investment Exemptive Order. The SDLP is capitalized as transactions are completed and all portfolio decisions and generally all other decisions in respect of the SDLP, including co-investment transactions made by the SDLP in accordance with the terms of the Co-Investment Exemptive Order, must be approved by an investment committee of the SDLP consisting of representatives of ours and Varagon (with approval from a representative of each required).

We provide capital to the SDLP in the form of subordinated certificates (the “SDLP Certificates”), and Varagon and its clients provide capital to the SDLP in the form of senior notes, intermediate funding notes and the SDLP Certificates. As of MarchJune 31,30, 2026, we and a client of Varagon owned 87.5% and 12.5%, respectively, of the outstanding SDLP Certificates.

As of MarchJune 31,30, 2026 and December 31, 2025, we and Varagon and its clients had agreed to make capital available to the SDLP of $6.2 billion and $6.2 billion, respectively, in the aggregate, of which $1.4 billion and $1.4 billion, respectively, is to be made available from us. This capital will only be committed to the SDLP upon approval of transactions by the investment committee of the SDLP. Below is a summary of the funded capital and unfunded capital commitments of the SDLP.

The amortized cost and fair value of our SDLP Certificates and our yield on our investment in the SDLP Certificates at amortized cost and fair value as of MarchJune 31,30, 2026 and December 31, 2025 were as follows:

The interest income and capital structuring service fees and other income earned with respect to our investment in the SDLP Certificates for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

As of MarchJune 31,30, 2026 and December 31, 2025, the SDLP portfolio was comprised of first lien senior secured loans to primarily U.S. middle-market companies in industries similar to the companies in our portfolio. As of MarchJune 31,30, 2026, one of the loans in the SDLP portfolio was on non-accrual status. As of December 31, 2025, none of the loans in the SDLP portfolio were on non-accrual status. Below is a summary of the SDLP portfolio as of MarchJune 31,30, 2026 and December 31, 2025:

(2)First lien senior secured loans include certain loans that the SDLP classifies as “unitranche” loans. As of MarchJune 31,30, 2026 and December 31, 2025, the total principal amount of loans in the SDLP portfolio that the SDLP classified as “unitranche” loans was $2,932$2,975 million and $2,844 million, respectively.

Selected financial information of the SDLP, in conformity with GAAP, as of MarchJune 31,30, 2026 and December 31, 2025 and for the three and six months ended MarchJune 31,30, 2026 and 2025 is presented below:

For the three and six months ended MarchJune 31,30, 2026 and 2025

Operating results for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

Interest income from investments for the three and six months ended MarchJune 31,30, 2026 increased from the comparable periodperiods in 2025 primarily due to the increase in the average size of our portfolio, which was partially offset by lower yields. The average size and weighted average yield of our portfolio at amortized cost for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

Capital structuring service fees for the three months ended MarchJune 31,30, 2026 decreasedincreased from the comparable period in 2025 primarily due to an increase in the weighted average capital structuring fee percentage. This increase was partially offset by a decrease in new investment commitments. The new investment commitments and weighted average capital structuring service fee percentages for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

(1)Excludes $478$86 million and $366$161 million of new investment commitments soldoriginated during the three months ended June 30, 2026 and 2025, respectively, and syndicated to third-party lenders during the threesame periods, respectively, and $565 million and $526 million during the six months ended MarchJune 31,30, 2026 and 2025, respectively. Excludes $378$554 million and $155 million of investmentinvestments commitmentsfunded to IHAM for the three months ended MarchJune 31,30, 2026.2026 Thereand were2025, norespectively, investmentand commitments$932 tomillion IHAMand during$155 million for the threesix months ended MarchJune 31,30, 2025.2026 and 2025, respectively.

Dividend income for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

(1)Dividend income received from IHAM for the threesix months ended MarchJune 31,30, 2026 includes a non-recurring special dividend of $3 million.

Recurring dividend income for the three and six months ended MarchJune 31,30, 2026 decreased from the comparable periodperiods in 2025 primarily due to a decrease in yielding preferred equity investments.

(1)Accrued in accordance with GAAP as discussed below. As of MarchJune 31,30, 2026 and December 31, 2025, there was no capital gains incentive fee actually payable under our investment advisory and management agreement.

Interest and credit facility fees for the three and six months ended MarchJune 31,30, 2026 and 2025 were comprised of the following:

Stated interest expense for the three and six months ended MarchJune 31,30, 2026 increased from the comparable periodperiods in 2025 primarily due to the increase in the average principal amount of our outstanding debt. Average outstanding debt and weighted average stated interest rate on our outstanding debt for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

(1)The weighted average stated interest rate on our outstanding debt includes the impact of interest rate swaps. See Note 6 to our consolidated financial statements for the three and six months ended MarchJune 31,30, 2026 for more information on the interest rate swaps.

The base management fee for the three and six months ended MarchJune 31,30, 2026 increased from the comparable periodperiods in 2025 primarily due to the increase in the average size of our portfolio.

The income based fee for the three and six months ended MarchJune 31,30, 2026 decreased from the comparable periodperiods in 2025 primarily due to the pre-incentive fee net investment income, as defined in the investment advisory and management agreement, for the three and six months ended MarchJune 31,30, 2026 being lower than in the comparable periodperiods in 2025.

For the three months ended MarchJune 31,30, 2026, the reduction in the capital gains incentive fee accrued in accordance with GAAP was $21 million. For the three months ended June 30, 2025, the capital gains incentive fee calculated in accordance with GAAP was $4 million. For the six months ended June 30, 2026 and 2025, the reduction in the capital gains incentive fee accrued in accordance with GAAP was $61$82 million and $25$21 million, respectively. The capital gains incentive fee accrual for the threesix months ended MarchJune 31,30, 2026 changed from the comparable period in 2025 primarily due to net losses on investments, foreign currency and other transactions of $306$494 million compared to net losses of $124$105 million for the comparable period in 2025. The capital gains incentive fee accrued under GAAP includes an accrual related to unrealized capital appreciation, whereas the capital gains incentive fee actually payable under our investment advisory and management agreement does not. There can be no assurance that such unrealized capital appreciation will be realized in the future. The accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. As of MarchJune 31,30, 2026, there was $20 million ofno capital gains incentive fee accrued in accordance with GAAP.GAAP As of March 31, 2026, there was noor capital gains incentive fee actually payable under our investment advisory and management agreement. See Note 3 to our consolidated financial statements for the three and six months ended MarchJune 31,30, 2026 for more information on the base management fee, income based fee and capital gains incentive fee.

Cash payment of any income based fee and capital gains incentive fee otherwise earned by our investment adviser is deferred if during the most recent four full calendar quarter period ending on or prior to the date such payment is to be made the sum of (a) the aggregate distributions to our stockholders and (b) the change in net assets (defined as total assets less indebtedness and before taking into account any income based fee and capital gains incentive fee payable during the period) is less than 7.0% of our net assets (defined as total assets less indebtedness) at the beginning of such period. These calculations will be adjusted for any share issuances or repurchases. Any income based fee and capital gains incentive fee deferred for payment are carried over for payment in subsequent calculation periods to the extent such fees are payable under the terms of the investment advisory and management agreement. Pursuant to these terms, payment of the $84 million income based fee earned by our investment adviser for the second quarter of 2026 has been deferred. See Note 3 to our consolidated financial statements for the three and six months ended MarchJune 31,30, 2026 for more information on the related deferral terms.

Administrative and other fees represent fees paid to Ares Operations and our investment adviser for our allocable portion of overhead and other expenses incurred by Ares Operations and our investment adviser in performing their obligations under the administration agreement and the investment advisory and management agreement, respectively, including our allocable portion of the compensation, rent and other expenses of certain of our officers and their respective staffs. See Note 3 to our consolidated financial statements for the three and six months ended MarchJune 31,30, 2026,2026 for more information on the administrative and other fees.

Depending on the level of taxable income earned in a tax year, we may choose to carry forward such taxable income in excess of current year dividend distributions from such current year taxable income into the next tax year and pay a 4% excise tax on such income, as required. To the extent that we determine that our estimated current year taxable income will be in excess of estimated dividend distributions for the current year from such income, we accrue excise tax, if any, on estimated excess taxable income as such taxable income is earned. For the three and six months ended MarchJune 31,30, 20262026, we recorded a net expense of $7 million and approximately $14 million, respectively, for U.S. federal excise taxes. For the three and six months ended June 30, 2025, we recorded a net expense of approximately $7 million and $7$14 million, respectively, for U.S. federal excise taxes.

Certain of our consolidated subsidiaries are subject to U.S. federal and state income taxes. For the three and six months ended MarchJune 31,30, 2026 and 2025,2026, we recorded a net tax expense (benefit) of approximately $(1)$1 million and $0 million, respectively, for such subsidiaries. For the three and six months ended June 30, 2025, we recorded a net tax expense of $46 million and $46 million, respectively, for these subsidiaries. The income tax expense for our taxable consolidated subsidiaries will vary depending on the level of realized gains from the exits of investments held by such taxable subsidiaries during the respective periods.

The net realized gains (losses) from the sales, repayments or exits of investments during the three and six months ended MarchJune 31,30, 2026 and 2025 were comprised of the following:

(1)Includes $1,042$1,087 million and $794$2,128 million of loans sold to IHAM or certain IHAM Vehicles during the three and six months ended MarchJune 31,30, 20262026, respectively. Includes $577 million and $1,371 million of loans sold to IHAM or certain IHAM Vehicles during the three and six months ended June 30, 2025, respectively. Net realized loss of approximately $1 million and net realized gains of approximately $2 million were recorded on these transactions with IHAM during the three and six months ended June 30, 2026, respectively. Net realized gains of approximately $3$0 million and approximately $0 million were recorded on these transactions with IHAM during the three and six months ended MarchJune 31, 2026 and30, 2025, respectively. See Note 4 to our consolidated financial statements for the three and six months ended MarchJune 31,30, 2026 for more information on IHAM and the IHAM Vehicles.