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Blackstone Secured Lending Fund (NYSE:BXSL) Q4 2023 Earnings Call Transcript

Blackstone Secured Lending Fund (NYSE:BXSL) Q4 2023 Earnings Call Transcript February 28, 2024

Blackstone Secured Lending Fund isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day and welcome to the Blackstone Secured Lending Fourth Quarter and Full Year 2023 Investor Call. Today's conference is being recorded. [Operator Instructions]. At this time, I'd like to turn the conference over to Stacy Wang, Head of stakeholder relations. Please go ahead.

Stacy Wang: Thank you, Katie. Good morning and welcome to Blackstone Secured Lending fund's fourth-quarter and full year. Earlier today, we issued a press release with the presentation of our results and filed our 10-K, both of which are available on the shareholders section of our website, www.bxsl.com. We will be referring to that presentation throughout today's call. I'd like to remind you that this call may include forward-looking statements, which are uncertain and outside of the firm's control and may differ materially from actual results. We do not undertake any duty in updating these statements. For some of the risks that could affect results, please see the risk factors section of our most recent annual report on Form 10-K filed earlier today. This audio cast is copyrighted material of Blackstone and may not be duplicated without consent. With that, I'd like to turn the call over to BXSL Co-Chief Executive Officer, Brad Marshall.

A professional banker meeting with a customer in her office to discuss his finances.

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Brad Marshall: Thank you, Stacy, and good morning, everyone. Thanks for joining our call this morning. Also with me today our Co-CEO, Jon Bock; and our President, Carlos Whitaker; and our CFO, Teddy Desloge. Turning to this morning's agenda, I will start with some high-level thoughts before Jon, Carlos, and Teddy to go into more details on our portfolio and fourth-quarter results. So just turning to the slide deck that we posted. And if we start on slide 4, the BXSL reported another strong quarter of results, including growth in net investment income, increased net asset value and continued solid credit performance. Several other key highlights in the quarter include the highest weighted average asset yield on the portfolio since inception at 12%, our second-best quarter of net investment income per share and the busiest deployment period in two years.

Net investment income or NII per share increased 1% quarter over quarter to $0.96 per share, which represented a 14.5% annualized return on equity. It's important to note, along with strong earnings, the quality of our earnings remains high, the limited PIC payment, nonrecurring and fee driven income. In fact, interest income, excluding PIC, fees, and dividends represented 95% of our total investment income in the fourth quarter. BXSL maintained its dividend of $0.77 per share, representing an 11.6% annualized distribution yield, one of the highest among our traded BDC peers with as much of their portfolio in first-lien senior secured assets, while covering our fourth quarter dividend by 125%. We continue to focus on our mandate of protecting investors' capital by constructing a portfolio of first-lien senior secured loans.

As of December 31, BXSL's portfolio is 98.5% first-lien senior secured debt for the 48.2% average loan to value. We had strong credit performance, supported by minimal nonaccrual rate below 0.1% at both amortized cost and fair market value, lowest among our traded BDC peers, and approximately 1.5% of our debt investments as a percentage of total cost are most marked below 90. Turning now to page 5 of the presentation deck. In the fourth quarter, BXSL saw a meaningful increase in investment activity, ending the period with over $1 billion at par in new investment commitments and $874 million in new investment fundings. New investments fund in the quarter were over 98% first lien with a weighted average EBITDA of approximately $130 million and an average loan to value of 41.5%, reflecting our continued focus on what we believe are high quality investments.

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