Thank you. I would like to remind everyone that in the course of this call we will be making certain forward-looking statements. These statements are based on current conditions, currently available information, and management's expectations, assumptions, and beliefs. They are not guarantees of future results and are subject to numerous risks, uncertainties, and assumptions that could cause actual results to differ materially from such statements. For information concerning these risks and uncertainties, see Capital Southwest's publicly available filings with the SEC. The company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances, or any other reason after the date of this press release, except as required by law. I will now hand the call off to our President and Chief Executive Officer, Bowen Diehl.

Thanks, Chris. And thank you, everyone, for joining us for our fourth quarter and fiscal year 2024 earnings call. We are pleased to be with you this morning and look forward to giving you an update on the performance of our company and our portfolio over the last quarter, as well as highlights of our performance over the last year. Throughout our prepared remarks, we will refer to various slides in our earnings presentation, which can be found in the investor relations section of our website at www.capitalsouthwest.com. You will also find our quarterly earnings press release issued last evening on our website. Before we begin, I would like to take the opportunity to mention two recent promotions, which will broaden our executive team here at Capital Southwest. Josh Weinstein, who joined Capital Southwest in 2015 and manages all our deal sourcing and underwriting activity, has been promoted to Chief Investment Officer. And Chris Rehberger, who also joined Capital Southwest in 2015 and manages all our treasury and valuation activities, has been promoted to Executive Vice President, Finance and Treasury. Both of these gentlemen have been integral contributors to Capital Southwest in generating our strong track record over the last nine plus years. Core to culture is continually cultivating talent up and down our organization, and these additions to our executive team illustrate the deep bench strength that our company has developed over the years. We'll now begin on Slide six of the earnings presentation, where we have summarized some of the key performance highlights for the March 31, 2024 fiscal year. During the fiscal year, we grew our total investment portfolio at fair value by 22% to $1.5 billion, up from $1.2 billion at the end of the prior fiscal year, while increasing our pre-tax net investment income by 18% to $2.72 per share, up from $2.30 per share in the prior fiscal year. We increased our regular dividends paid to shareholders to $2.24 per share for the fiscal year, representing an increase of 10% compared to $2.03 per share regular dividends paid in the prior fiscal year. We continued our strong track record of covering our regular dividends with pre-tax net investment income, achieving coverage for the year of 121%. In addition to our regular dividends, we paid a total of $0.23 per share in supplemental dividends during the fiscal year, compared to $0.10 per share in supplemental dividends paid in the prior fiscal year. For our March 2024 fiscal year, assuming reinvestment of our quarterly dividends, we generated a total return for our shareholders of 56%, which was among the top performing public BDCs during this time period. During the year, we strengthened our balance sheet through a variety of capital markets activities, which raised over $500 million in additional capital while reducing our regulatory leverage to 0.82 debt-to-equity as of the end of the fiscal year. Capital raised during the year included $184 million in gross equity proceeds through our equity ATM program, a new senior secured SPV credit facility led by Deutsche Bank, and an increase in commitments on our existing corporate credit facility led by ING. During the fiscal year, we also completed an underwritten bond offering. We obtained approval for the final amount of leverage on our first SBIC license, and we began the licensing process for our second SBIC license. Michael will discuss further details around these capital raising activities later in our prepared remarks. Turning to Slide seven of the earnings presentation, we have summarized key performance highlights specific to the March quarter. During the quarter, we generated pre-tax net investment income of $0.68 per share, which more than covered both our regular dividend of $0.50 per share and our supplemental dividend of $0.06 per share paid during the quarter. Portfolio earnings continue to be strong, and as of the end of the quarter, we estimate that our undistributed taxable income was $0.64 per share. Net asset value per share ended the fiscal year at $16.77, which was flat compared to the prior quarter, and up $0.40 per share compared to the year-ago quarter. As we look forward to the June quarter, we are pleased to announce today that our Board of Directors has declared a regular dividend of $0.57 per share and a supplemental dividend of $0.06 per share, bringing total dividends declared for the June quarter of 2024 to $0.63 per share. Deal quality and activity in the lower middle market during the March quarter continued at a healthy pace as private equity firms and business owners continue to transact, and we continue to source attractive investment opportunities. While we have continued to source and close deals at comfortable loan-to-value levels, averaging approximately 40%, and leverage levels of approximately 3.5x debt to EBITDA. Competition in the lower middle market has increased, resulting in spreads tightening to levels last seen over 18 months ago. The increased competition for quality deals has come from both non-bank lenders and, to some degree, traditional banks. Over the past decade, our team has done an excellent job generating attractive returns for our shareholders in all competitive environments, and I'm highly confident we will continue our track record in the current environment. Portfolio growth during the quarter was driven by $157.5 million in new commitments to six new portfolio companies and five existing portfolio companies, offset by $13.7 million in proceeds from two debt prepayments, which generated a weighted average realized IRR of 16.5%. On the capitalization front during the quarter, in addition to closing the SPV credit facility, we raised nearly $50 million in gross equity proceeds during the quarter through our equity ATM program at a weighted average price of $23.80 per share, or 142% of the prevailing NAV per share. Finally, consistent with our communication on last quarter's conference call, the I-45 senior loan fund was dissolved and the assets were distributed to the joint venture partners in accordance with their respective ownership percentages. We have remained diligent in ensuring we have strong balance sheet liquidity while also funding a meaningful portion of our investment activity with accretive equity. We continue to maintain a conservative mindset to both BDC leverage and balance sheet liquidity, managing leverage to the lower end of our target range while ensuring strong balance sheet liquidity affords us the ability to continue to invest in new platform companies and to grow our balance sheet even in periods of volatile capital markets when risk-adjusted returns can be particularly attractive. Additionally, it allows us to support our portfolio companies by either providing growth capital or by financing add-on acquisitions, all while maintaining the ability to opportunistically repurchase our stock if it were to trade meaningfully below NAV.

Thanks, Bowen. Specific to our performance for the quarter, to summarize on Slide 17, pre-tax net investment income was $29.8 million or $0.68 per share as compared to $29.8 million or $0.72 per share in the prior quarter. During the quarter, we paid out a $0.57 per share regular dividend and a $0.06 per share supplemental dividend. As mentioned earlier, our Board has declared a regular dividend of $0.57 per share and a supplemental dividend of $0.06 per share for the June quarter. Maintaining a consistent track record of meaningfully covering our dividend with pre-tax net investment income is important to our investment strategy. We continued our strong track record of regular dividend coverage with 121% coverage for the 12 months ended March 31, 2024 and 111% cumulative coverage since the launch of our credit strategy in January 2015. As a reminder, our intent is to continue to distribute a portion of the excess of our quarterly pre-tax NII over our regular dividend to our shareholders in a quarterly supplemental dividend. We are confident in our ability to continue to distribute quarterly supplemental dividends for the foreseeable future based upon our current UTI balance of $0.64 per share, our ability to grow UTI each quarter organically by over-earning our total dividend, and the expectation that we will harvest gains over time from our existing $0.85 per share in unrealized depreciation on the equity portfolio. For the quarter, total investment income decreased to $46.4 million from $48.6 million in the prior quarter. The prior quarter's investment income included a significant one-time dividend from one of our portfolio companies. The quarter-over-quarter decrease in dividend income was offset by an increase in interest income from the growth in our credit portfolio. As of the end of the quarter, our loans on non-accrual represented 2.3% of our investment portfolio at fair value and the weighted average yield in the portfolio on all investments was 12.7%.

Thanks, Michael. And again, thank you everyone for joining us today. As always, we appreciate the opportunity to provide you with an update on our business, our portfolio, and the market environment. Our company and portfolio continue to demonstrate strong performance, and we continue to be impressed by the job our team has done in building a robust asset base, deal origination and portfolio management capability, as well as a flexible capital structure. We believe we have prepared our company well for future growth and performance. The overall health and security of our portfolio is strong. Our credit portfolio is predominantly made up of first lien senior secured loans allocated across a broad array of companies and industries, the vast majority of which are backed by private equity firms. Further, interest coverage on the debt obligations across our portfolio is a strong 3.2x, with our loans across our portfolio averaging approximately 40% of the portfolio company enterprise value. Additionally, our equity co-investment portfolio gives our shareholders participation in the equity upside of many of these growing lower middle market businesses, providing further enhancement to our long-term shareholder returns. Last but not least, we have a very well-capitalized balance sheet with multiple capital sources, strong liquidity, a flexible capital structure, and an exciting runway to continue to grow our company generating strong shareholder returns for years to come. This concludes our prepared remarks. Operator, we are ready to open the lines for Q&A.

Thank you. Our first question will come from Mickey Schleien with Ladenburg. Your line is open. Please go ahead.

Bowen, you mentioned spreads tightening, which is certainly consistent with everything we're hearing across the space. When you look at the vintages of your portfolio, how much refinancing risk do you see going forward?

Yes, thanks, Mickey. As we consider the strengthening market and its liquidity, our top-rated companies have significantly outperformed, and many are likely candidates for refinancing. However, there are important points to note. We have strategies to mitigate refinancing risks for these outperforming companies. If the risk situation changes significantly, we can proactively reduce interest rates on our loans to lessen the incentive to refinance. We can also execute dividend recaps or add more debt to a business while maintaining a comfortable leverage level for strong-performing companies. In some instances, where leverage is minimal and cash flows are robust, we allow sponsors to take cash dividends quarterly while we use some of that money to pay off debt. This arrangement reduces their incentive to refinance in a secure credit environment. There are various approaches we can take to manage refinancing risks, but it is clear that when the market improves and companies are performing well, refinancing risks remain. This gives a sense of how we handle these situations.

Yes. Also, I mean just to quantify, so it's about $200 million, we would say of the portfolio was loan grade 1 that we fall in that category. Many of which has been originated in the past 18 months. So to them, still have call protection on many of those loans. And then the other piece to note is our all-in yield is 8% spread over so far on our portfolio, which is obviously robust. So if we have a portion of that $200 million, we're not able to retain when it comes back, we don't feel like it's a material downdraft to earnings going forward.

Thanks for that. That's very helpful. Could you give us some highlights on what caused the net realized loss this quarter?

So predominantly, it was the I-45 lot. So when you think about it, we had depreciation embedded in I-45 that was unrealized as an equity position. And when I-45 dissolved, that became a realized event into retained earnings. So that was about, I think, $16 million of it.

I understand. I also saw that the fair value of your non-accruals went up a little bit. Was that caused by a new non-accrual? Or was that valuation adjustments of the previous non-accruals?

Yes. We had two new names, ones that are very highly talked about syndicated name and another one is a small company in the education space, where we had Broad involved. And so yes, we have two new non-accrual names. And Mickey, both from the watch list. So it's really not a degradation of portfolio, just sort of two names that had some issues. What we'd also say is when you look at our non-accrual, our granularity in the total portfolio is about 0.9%, down from 1.3%. So when you look at our portfolio, a very granular portfolio, so non-accruals are painful, and we don't hope to like seeing them up. We do say that the impact to earnings is quite small. Those two non-accruals accounted for about a penny of earnings for the quarter.

Yes, I appreciate that. And that's certainly something I watch carefully. Lastly, Michael, the new SPV credit facility has a higher spread than the existing corporate credit facility. So notwithstanding that, what are the advantages of putting that into place?

Sure. Well, first, I would tell you this, so the spread in and of itself is higher, but the fees and the unused are lower. So they're actually at parity to the two facilities. So the other benefit is, I would tell you, we wanted to expand our diversity of our sources. Some banks we've been told over the last few years were looking for something of an SPV variety because it's better from a capital charge perspective rather than the on-balance sheet credit facility. So that's one of the reasons why we were pursuing an SPV structure. The other thing we would tell you is that the lenders that were involved in I-45, once it was dissolved, were still very interested in doing business with Capital Southwest. So they were looking for a way to get back in. So this was one way. Duetsche took down the $150 million plus the additional $50 million that's coming on board in June. But the other lenders in there have some interest as well. So when we're looking forward, we're looking at our maturities out in 2026, and we're thinking about it today. So we'd like to build up a dry powder secured facilities that allow us, if need be, to take down portions of the debt and those maturities if the capital markets were closed. We do anticipate probably paying it down prior to getting within 6 or 12 months. But having diversity of secured sources that we can draw, especially to refinance, is really helpful in terms of flexibility.

Yes, I understand. And that makes sense. Those are all my questions this morning. I appreciate your time as always. Thank you.

And our next question comes from the line of Vilas Abraham with UBS. Your line is open. Please go ahead.

I wanted to ask about the mix of origins in the March quarter. It looks like the top 3 about $70 million or so in fundings were Consumer Products and Consumer Services. Can you update us on just how you're feeling about more cyclical industries? And in general, what kind of internal framework you might have on managing industry concentrations across the portfolio?

Yes. Well, first I'll say we look at economic sensitivity, the same across all our companies. We look at past recessions and what that customer base or that type companies in that industry did from an economic, from an earnings volatility. So that's the same way we look at consumers and we leverage accordingly. So these consumer companies, I mean, they're kind of interesting names, is to lower leverage, high free cash flow, high variable cost component of their cost structure. In one case, it's an enthusiast type product. In the other case, it's an incubator for new fragrance lines and things in the industry. So interesting consumer plays in the consumer services company is a two-man at a truck franchise that basically moves renters from apartment to apartment in local markets. And so obviously a segment that may perhaps be less cyclical. But ultimately, we look at the businesses as we match leverage to potential economic volatility. So with respect to your question on sectors, look at that. I mean, clearly, I'd say consumer is an area that is probably close to the top of what we'd be doing from a weighted perspective. But we're constantly, John and I, and Michael are constantly looking at that from a risk management perspective. We don't want something in the market existential in the market to basically move the credit picture of our portfolio meaningfully.

Got it. You don't necessarily have any hard ceilings in terms of concentration for particular industries, right?

No, I don't think so. I mean, look, I think our sectors, we've got some of the larger concentration sectors around a relative basis. You probably would look at us increasing those meaningfully. But we don't feel like there's like, of course, it's not just the sector, it's the actual companies that are in there, and what they do within that sector. But we don't think we're overweighted in any sector.

And to these sectors that certainly the consumer is something that has a higher bar, I think Bowen mentioned earlier in the statement just now that our leverage levels on those are really in the 2x to 3x with loan to values in the sub-40%. So these are companies that we feel like the financial profile and their cash flow history would withstand cycles well.

I mean, obviously, we all have sensitivity to the consumer sectors. I mean, it starts with us having sensitivity in that as well. I think it is interesting to point out, I think all three of these consumer names are with private equity firms that virtually all they do is consumer. So they're very deep. And what's interesting about a sponsor who has deep expertise in the sector, especially like consumers, is that if you look across their portfolio, they have relationships across customers or suppliers or sales channels like retail or whatever across the other companies that they use to leverage to support and enhance the consumer company that they're buying. And so it's interesting. I mean, you really can't say that about a generalist private equity firm necessarily, but one that's deeply rooted in the consumer sector or health care sector, but consumers especially they can really leverage their relationships across their portfolio to enhance, and that's kind of part of their playbook leveraged to enhance each new platform they buy.

Got it. Okay. That's helpful. And my next question is, yes, so I appreciate your remarks on competition and spread tightening. Has there been any impact to structure that you're seeing at this point? And is it any harder now to get the equity co-invest than in the past?

So on the structure, I would tell you, if you got the market increases in competition. You have some erosion of structure. But the good news is we always talk about and I know you know this, but like in the lower middle market, I mean, our documents are tight. Our covenants are tight, reasonable. The EBITDA add-backs were very sensitive to that. So sometimes credit performance, obviously, I mean it's wrong to say it doesn't change at all when the market gets more competitive. But in our market, I mean, it's already well within what one would be comfortable with. And so it doesn't really deteriorate that much, but it's not 0. And then what is the other question?

So equity co-investment.

Yes. Equity co-investment is usually a function of that private equity firm's size of their check versus the size of their fund and where they are in their fund life and that type of thing. It's not necessarily a function of how competitive the market is. It's more of a function of the individual private firm and where they are on their liquidity profile.

And then you will see, though, is our checks, we haven't really grown our whole size that much, obviously, we talked about the granularity. But to the extent we have or maybe our debt goes up from $12 million to $15 million or maybe $18 million. You're not seeing the equity check. It's still difficult to get a large equity co-investment from the sponsor to the way Bowen's indicated. In another case, obviously, places where we get the debt store, if we don't get the equity story. So that all being said, I mean we'd expect our equity hold as a portfolio would probably be in the 8% to 10%, probably not going to be able to grow up beyond 10%.

And our next question is going to come from the line of Bryce Rowe with B. Riley. Your line is open. Please go ahead.

Maybe I wanted to start on with a couple of more questions about I-45. I'm just curious what was the impact on the debt portfolio from that resolution, or dissolution, and just trying to understand the quarter-over-quarter increase in the debt portfolio. What percentage of that or what dollar amount was coming from the I-45 asset?

Sure. So there were 17 portfolio companies that came over for approximately $80 million. And just the yield on those was about S plus 650, so not materially lower than our portfolio. But obviously, the $80 million is a very small percentage. So it had a very little impact. And I've mentioned on other calls that the impact to earnings is a net positive because we're getting rid of a lot of frictional costs associated with trustees and audits, et cetera. So you can consider this a net impact to earnings to Capital Southwest.

Okay. And Michael, I mean what's the inclination to hold those or just to be opportunistic if you see an opportunity to get out? I assume you're not in control of the situation, so to speak. So is that the right way to think about it?

That would be the right way to look at it. We ride the story up.

Okay. And then, Bowen and Michael, you mentioned the dividend income for the quarter, and it being more onetime in nature. Any color around the source of that dividend? And then help us quantify how much the impact was?

Yes. So actually, what I was indicating was last quarter, we had a $2.4 million one-time dividend, that's for the 12/31 quarter. And in this quarter, we had some dividends, but we certainly didn't have anything of that materiality. So I think dividend income came down about $2 million quarter-over-quarter. But at the same time, our interest income, one, because you had assets coming over from I-45 into the portfolio, as we just noted, there was additional interest income there, plus we had net portfolio growth during the quarter.

Okay. And so was there any I-45 dividend income in the quarter? I assume there's not, but maybe there was?

Yes. There was a bit of it. I think it was around $500,000. It wasn't significant for the quarter.

Okay. Last one for me. The comp line down a bit. It sounds like from the press release that there was just a difference in bonus accrual quarter-over-quarter. Any thoughts on kind of what a good run rate might be from a comp perspective?

Sure. So cash comp I would expect for this coming quarter fiscal year to be on a quarterly basis around $2.8 million for cash comp. Probably the RSU expense around $1.5 million, and G&A is about $2.5 million a quarter. So the total, you'd expect about $6.8 million as a run rate quarterly. That will obviously vacillate up and down, but what you should expect maybe on that times 4 would be your annualized amount.

Okay. And what was the reason for the lower bonus accrual in the quarter?

Sure. So in that previous quarter, they indicated that we had that $2.4 million dividend. And to that point, we accrued additional bonus increased above the target. And then in the fourth quarter, we had accrued probably above where we decided to pay out for the company. And so there was a back out of some accrual for the target.

And our next question is going to come from the line of Erik Zwick with Hovde Group. Your line is open. Please go ahead.

Just one question for me today. One, it was nice to see that the kind of the dollar value of investment upgrades was a little bit more than twice what was downgraded in the quarter. I guess my question is more towards those downgrades plus three relationships you have there. If you could just talk maybe about the circumstances or characteristics that led to those downgrades in terms of company performance or whether they're facing some industry challenges or anything you could provide there would be interesting.

Yes. I'm just looking at the list here. I mean, they're all pretty idiosyncratic. Two of them were our non-accruals, one was another company that's relatively isocratic. So hard to really put a like there's a point on the economy that we see one of them was broad and one of the large syndicated deals seems to be over-levered. So there are not really any trends in those names that I can point to.

Okay. No, that's helpful. I appreciate it. And then maybe then kind of one quick follow-up on that point now. If we look at the interest rate futures curve, it seems that we're likely to be in this higher for longer interest rate environment for a while. And I guess, how are your companies coping with us? Were there anyone that were holding out, hoping that we would see a decline in interest rates or are most managed well and have continued to be able to grow EBITDA and hopefully delever over time? How are they handling this interest rate environment?

Yes. A couple of comments I'll make on that. On the last 12, 18 months of this kind of interest rate cycle, we've kind of commented on some of the things we've seen these private equity firms do and cutting operational costs because their interest burden is going up. And they've been doing that. And then we're also leverage levels that we're leveraging companies up and fixed charge coverage is a very important metric, right, obviously. And so as rates come up, leverage on new loans can come down. Ultimately, if the zone out and say, okay, what's the health of the engine that's generating earnings and dividends for our shareholders, things like EBITDA to interest coverage metrics on a weighted average basis of 3.2x is pretty healthy, especially in the current interest rate environment and the average loan to values, which is not tax charge issue, but it's an absolute leverage issue, 40% is pretty healthy. So we feel like as a portfolio, we look at narratively, we look at what the private equity firms are doing in the portfolio to manage the business in a higher interest rate environment, and we look at the kind of portfolio level test metrics and you feel pretty good. I mean, there are small problems here or there, a small handful of companies that we talk about. But overall, our portfolio looks pretty good from an engine creating earnings for our shareholders' perspective. And then, the longer we go into this the longer the industry's companies, private equity firms have kind of gotten their sea legs, if you will, in the higher interest rate environment and they've managed the business for the longer we're in this environment, the less you kind of wake up in the middle of thinking something is going to blow up, kind of thing. That means you're going to have, the one thing I will say is interest rates are higher, it brings problems to the table faster and our deal teams can get in front of the private equity firms and insist that they put money in the businesses and support anything from liquidity, but also they want to continue to increase their CapEx budgets may be higher than what we have in our credit agreement. We have sponsors that have put equity in, so they can continue to focus on their growth. Those types of things. And so when the system gets tighter because the interest burden is going up, it tightens the whole system and brings conversations to the table faster before there's kind of a material problem or a shift in the thesis of the business that makes sense.

I think the lever that's available probably to all BDCs is to pick toggle. We haven't seen that across the portfolio, but certainly, there's probably 1 or 2 where that has come into play. But all that our PIC number came down significantly from the previous quarter. So we're still at a very low level. But again, that's a lever you can utilize if companies have a short-term issue with interest coverage.

Yes. I think some of the analysts have asked us questions about that view early on, like 18 months ago, like what do we expect? I would have expected more PIC toggles in a rising interest rate environment than we've seen. And I think some of that is the profitability of our companies or in the sponsor's willingness to support the businesses rather than take on additional kind of interest burden on the business but Michael is right.

Well, also, a lot of the deals, I would say the majority of the deals that we originate, the interest coverage is well above 3x to 5x at close. So the fact that ours is 3.2 right now, and that's had degradation because of base rates, but you compare that to the syndicated market where those guys are living at 2x in a normal environment. And so they're going to get crunched a lot harder and a lot sooner than our lower middle office portfolio has or will.

And our next question is going to come from the line of Robert Dodd with Raymond James. Your line is open. Please go ahead.

This is Sean-Paul Adams on the line for Robert Dodd. On the downgrades and the risk ratings in the portfolio, it looks like it was primarily driven by the non-accruals. I'm just asking for a little bit more color on the non-accruals. It seems like the education Phase 1 could be related to the Student Resource Center. Is that just an accreditation issue, or is there a path forward for getting that back on accrual?

So I would summarize the challenges there as the education partner, one of the education partners that they do work with and place students in and there were some broad involved as well in that deal. And so it's a little bit idiosyncratic to that particular company and situation.

The other one was Research Now, which was obviously broadly held in BDC portfolios across the board. That's when we have limited information because the first lien lenders are negotiating. It doesn't look like it's going to be a great outcome for the second lien lenders.

We'll end up with a small equity ownership in the business, the second lien lender probably most of these situations work out.

To your question, I also tell you, we just had our watchlist meeting literally two days ago, and we went through all the list of companies and on that watch list, what we actually saw is that a lot of these companies are either stable or slightly positive. And there is a hope and I wouldn't say it's in the next 1 or 2 quarters, but where some of the non-accruals might actually turnaround to go back on accrual rather than seeing any of those watchlist names in the near future going on non-accrual. That's not a prediction or projection, but that's just an observation based upon the information we reviewed the other day.

Got it. That's perfect. And on the outlook for the next fiscal year, have there been any shifts in the long-term target range concerning leverage, given changes in the forward curve? It seems like you guys just tapped the lower end of the short-term target you guys were talking about last quarter for leverage.

Yes. I mean I wouldn't say it's a change. And I think what I would tell you is that leverage is going to be probably as low as 0.8 on a regulatory basis or as high as 0.95. That's probably where our comfort level is and we're at 0.82 at the moment. I would anticipate based on how we feel about our portfolio that we might lever that up closer to the middle of the range. But as we've shown during the course of the last few years, we're mindful of where the economy is and mix in that we vacillate in the same rhythm of the economy itself.

And our next question is a follow-up question with Vilas Abraham with UBS. Your line is open. Please go ahead.

Just one more follow-up here. More of a high-level question. And we've talked about this a little bit before in the past. But as you guys think about the internal management structure and the flexibility it provides. Can you give us any thoughts on how you might be thinking about any potential partnership side car vehicles that kind of thing?

I mean that's obviously something that we've been thinking about and honestly, probably working on behind the scenes. As our portfolio has grown, our hold size can grow as well. There's a lot of deals that we share with other partners where that we could be putting maybe having a separate account, separately managed account, where they would be, we manage that capital it'd be a portion of what of origination we hold. That obviously would earn a fee and intend to carry. So honestly, it would be strategic, but it would work well within what we're already doing today. So it wouldn't require us to go up balance sheet. So that is something we're considering. I think that's kind of I hear people say, do have to test a lot of frogs in those ventures in order to actually meet and kind of close on a partnership. So I don't think that's a calendar year 2024 event, but we would definitely expect that to be something in the future that we are able to incorporate into the balance sheet.

Yes. It's an interesting opportunity for us. There's definitely institutions out there into investing in our track record of our asset class, but don't want to pay above net asset value, so if they can partner with us in a fund concept and investing in some of our deals directly. It's interesting. But those types of things are always for us. I mean we're all about long-term shareholder returns. And candidly, there's a lot of opportunity just organically doing what we're doing and continuing to basically slightly higher hold sizes by sharing less of deals and as our guys get even our mid-level and they were growing up in the industry and growing up increasing their franchise personally of relationships it's really broadening the top end of our follow of deals we look at. There's a lot of organic growth really in front of us. And we don't want to distract ourselves from that, but it's actually an opportunity we think in this.

Thank you. And I would like to hand the conference back over to Bowen Diehl for closing remarks.

Thanks, operator, and thanks for all the questions today. We appreciate the opportunity to update you on the business. So we look forward to continuing to execute and talking to you all next quarter. Thank you.

This concludes today's conference call. Thank you for participating. And you may now disconnect.