third quarter 2026
Filed Oct 27, 2026Ares Capital Corporation Announces September 30, 2026 Financial Results and Declares Fourth Quarter 2026 Dividend of $0.48 Per Share
Third-quarter Core EPS was $0.46 per share and net investment income was $328 million, while GAAP net income was $319 million, below $404 million in the prior-year quarter. Portfolio credit quality remained stable, liquidity was approximately $6.9 billion under credit facilities plus $722 million of cash and cash equivalents, and the company declared a $0.48 per-share fourth-quarter dividend.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3-26 total investment incomeGAAP | $763M | – | – |
| Q3-26 interest income from investmentsGAAP | $558M | – | – |
| Q3-26 capital structuring service feesGAAP | $23M | – | – |
| Q3-26 dividend incomeGAAP | $160M | – | – |
| Q3-26 other incomeGAAP | $22M | – | – |
| Q3-26 total expensesGAAP | $429M | – | – |
| Q3-26 interest and credit facility feesGAAP | $221M | – | – |
| Q3-26 base management feeGAAP | $109M | – | – |
| Q3-26 income based feeGAAP | $82M | – | – |
| Q3-26 capital gains incentive feeGAAP | — | – | – |
| Q3-26 administrative feesGAAP | $4M | – | – |
| Q3-26 other general and administrativeGAAP | $13M | – | – |
| Q3-26 net investment income before income taxesGAAP | $334M | – | – |
| Q3-26 income tax expense, including excise taxesGAAP | $6M | – | – |
| Q3-26 net investment incomeGAAP | $328M | – | – |
| Q3-26 net realized gains (losses)GAAP | −$52M | – | – |
| Q3-26 net unrealized gains (losses)GAAP | $43M | – | – |
| Q3-26 realized loss on extinguishment of debtGAAP | −$2M | – | – |
| Q3-26 GAAP net incomeGAAP | $319M | – | – |
| Q3-26 GAAP net income per shareGAAP | $ 0.44 | – | – |
| Q3-26 Core EPSnon-GAAP | $ 0.46 | – | – |
| Q3-26 basic and diluted weighted average shares of common stock outstandingGAAP | 720M | – | – |
| Nine months 2026 total investment incomeGAAP | $2.29B | – | – |
| Nine months 2026 total expensesGAAP | $1.19B | – | – |
| Nine months 2026 net investment incomeGAAP | $1.08B | – | – |
| Nine months 2026 net realized gains (losses)GAAP | $51M | – | – |
| Nine months 2026 net unrealized gains (losses)GAAP | −$552M | – | – |
| Nine months 2026 GAAP net incomeGAAP | $582M | – | – |
| Nine months 2026 GAAP net income per common shareGAAP | $ 0.81 | – | – |
| Nine months 2026 Core EPSnon-GAAP | $ 1.39 | – | – |
| Portfolio investments at fair value as of September 30, 2026GAAP | $29.21B | – | – |
| Total assets as of September 30, 2026GAAP | $30.60B | – | – |
| Stockholders' equity as of September 30, 2026GAAP | $13.95B | – | – |
| Net asset value per share as of September 30, 2026GAAP | $ 19.31 | – | – |
| Debt/equity ratio as of September 30, 2026other | 1.11x | – | – |
| Debt/equity ratio, net of available cash, as of September 30, 2026other | 1.06x | – | – |
| Q3-26 gross commitmentsother | $2.11B | – | – |
| Q3-26 exits of commitmentsother | $2.47B | – | – |
| Fair value of accruing debt and other income producing securities as of September 30, 2026other | $26.05B | – | – |
| Number of portfolio company investments as of September 30, 2026other | 636 | – | – |
| Percentage of floating rate securities at fair value as of September 30, 2026other | 70 % | – | – |
| Weighted average yield on debt and other income producing securities at amortized cost as of September 30, 2026other | 10.6 % | – | – |
| Weighted average yield on debt and other income producing securities at fair value as of September 30, 2026other | 10.8 % | – | – |
| Weighted average yield on total investments at amortized cost as of September 30, 2026other | 9.5 % | – | – |
| Weighted average yield on total investments at fair value as of September 30, 2026other | 9.6 % | – | – |
Capital returns
- Fourth quarter 2026 dividend declared: $0.48 per share, payable on December 29, 2026 to stockholders of record as of December 15, 2026.
- Third quarter 2026 dividend: $0.48 per share for a total of approximately $346 million, paid on September 30, 2026 to stockholders of record as of September 15, 2026.
What drove it
- New investment commitments in the third quarter of 2026 were approximately $2.1 billion, of which approximately $1.6 billion were funded.
- Of third-quarter new commitments, 71% were first lien senior secured loans and 85% were floating rate debt securities.
- The weighted average yield of debt and other income producing securities funded during the third quarter at amortized cost was 10.4%; the weighted average yield on total investments funded was 10.2%.
- Ares Capital exited approximately $2.5 billion of investment commitments in the third quarter, including approximately $1.2 billion of loans sold to IHAM or certain vehicles managed by IHAM.
- As of October 22, 2026, investment backlog was approximately $2.5 billion.
- From October 1, 2026 through October 22, 2026, new investment commitments were approximately $1.1 billion, of which approximately $855 million were funded.
- On October 26, 2026, Ares Capital entered into a definitive agreement to acquire MidCap Financial Investment Corporation in a cash and stock transaction.
Concerns
- Q3-26 GAAP net income was $319 million versus $404 million in Q3-25, reflecting net realized losses of $ (52) million versus net realized gains of $162 million in Q3-25.
- Q3-26 gross commitments were $2,109 million versus $3,924 million in Q3-25.
- Loans on non-accrual status represented 2.4% of total investments at amortized cost, or 1.4% at fair value, as of September 30, 2026, versus 1.8% at amortized cost, or 1.2% at fair value, as of December 31, 2025.
- Nine-month net unrealized gains (losses) were $ (552) million versus $ (174) million in the comparable 2025 period.
- Net asset value per share was $19.31 as of September 30, 2026, versus $19.94 as of December 31, 2025.
What to watch
- Conversion of the approximately $2.5 billion investment backlog as of October 22, 2026 into funded investments.
- Portfolio non-accrual levels and the weighted average portfolio grade, which was 3.1 at fair value as of both September 30, 2026 and December 31, 2025.
- The pace of originations after Q3 gross commitments of $2,109 million and recent commitments of approximately $1.1 billion through October 22, 2026.
- Terms, closing and effects of the announced MidCap Financial Investment Corporation transaction.
- The ability of Core EPS of $0.46 per share to support the declared $0.48 per-share fourth-quarter dividend.
Balance sheet and cash flow
- Cash and cash equivalents as of September 30, 2026: $722 million; December 31, 2025: $638 million.
- Restricted cash as of September 30, 2026: $220 million; December 31, 2025: $286 million.
- Debt as of September 30, 2026: $15,124 million; December 31, 2025: $15,991 million.
- Total aggregate principal amount of debt outstanding as of September 30, 2026: $15.5 billion; $15.1 billion at carrying value.
- Available for additional borrowings under existing credit facilities as of September 30, 2026: approximately $6.9 billion.
- In July 2026, Ares Capital repaid $1,000 million aggregate principal amount of unsecured notes that bore interest at 2.150% per annum.
- In September 2026, Ares Capital issued $750 million in aggregate principal amount of unsecured notes bearing interest at 6.250% per annum and maturing on September 15, 2033.
- The ADL CLO 1 refinancing adjusted the interest rate from SOFR plus a blended weighted average spread of 1.86% to SOFR plus a blended weighted average spread of 1.51% and extended stated maturity from April 25, 2036 to July 25, 2038.
Analysis
Ares Capital reported third-quarter GAAP net income of $319 million, or $0.44 per share, compared with $404 million, or $0.57 per share, in Q3-25. Core EPS, a non-GAAP measure, was $0.46 per share versus $0.50 per share. Net investment income was $328 million compared with $338 million, as total investment income of $763 million was below $782 million while total expenses were $429 million versus $433 million. The period included $52 million of net realized losses, compared with $162 million of net realized gains in Q3-25, partly offset by $43 million of net unrealized gains compared with $96 million of net unrealized losses.
Origination activity was measured in the quarter. Gross commitments were $2,109 million, compared with $3,924 million in Q3-25, and exits of commitments were $2,473 million compared with $2,625 million. The portfolio remained concentrated in first lien senior secured loans, which were 58% of fair value, and 70% of securities at fair value were floating rate. New commitments were approximately $2.1 billion, 71% in first lien senior secured loans, while 85% were floating rate debt securities. Funded debt and other income producing securities carried a 10.4% weighted average yield at amortized cost.
Credit metrics were stable in the company's disclosure. The weighted average portfolio grade at fair value was 3.1 at September 30, 2026 and December 31, 2025. Non-accrual loans were 2.4% of total investments at amortized cost, or 1.4% at fair value, compared with 1.8% and 1.2%, respectively, at December 31, 2025. Portfolio investments at fair value were $29,213 million, down from $29,485 million at year-end, and net asset value per share was $19.31 compared with $19.94.
The balance sheet retained substantial stated liquidity. Cash and cash equivalents were $722 million and available borrowing capacity under existing credit facilities was approximately $6.9 billion. Debt was $15,124 million on the balance sheet, while the debt-to-equity ratio was 1.11x and the ratio net of available cash was 1.06x. During the quarter, the company refinanced the ADL CLO 1 debt securitization, repaid $1,000 million of 2.150% unsecured notes at maturity, and issued $750 million of 6.250% unsecured notes due September 15, 2033.
Management declared a $0.48 per-share fourth-quarter 2026 dividend, payable December 29, 2026. Recent activity points to a stronger near-term transaction pipeline: commitments from October 1 through October 22 were approximately $1.1 billion, with approximately $855 million funded, and investment backlog was approximately $2.5 billion as of October 22. The filing also disclosed a definitive cash-and-stock agreement dated October 26 to acquire MidCap Financial Investment Corporation.
Management, verbatim
We reported solid third quarter results supported by continued healthy portfolio performance, including stable credit quality and historically low levels of non-accruing loans and problem assets.
Kort Schnabel, Chief Executive Officer of Ares Capital
While a slower transaction environment led to a more measured pace of originations during the quarter, our investment backlog is up meaningfully from last quarter, and we are seeing stronger transaction activity entering the fourth quarter.
Kort Schnabel, Chief Executive Officer of Ares Capital
We increased our debt capacity through a $750 million issuance of seven-year unsecured notes, while also reducing our funding costs through the reset of our debt securitization and modest utilization of our commercial paper program.
Scott Lem, Chief Financial Officer of Ares Capital
Not in the filing
stated, not guessed- Forward financial guidance for revenue, gross margin, operating expenses, tax rate, EPS, net investment income, portfolio activity or other financial metrics was not provided.
- Prior-quarter comparisons were not provided for the reported operating metrics.
- Segment revenue and segment operating results were not provided.
- Operating cash flow and free cash flow were not provided.
- Share repurchase activity was not provided.
- Gross margin was not provided.
- All balance-sheet line items and all components of realized and unrealized gains are not individually included in key_metrics.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.