Hancock Park Income Plunges: Net Assets From Ops Down 99.9% YOY

TL;DR

**Hancock Park's income just cratered, signaling deep trouble in their corporate debt portfolio.**

AI Summary

Hancock Park Corporate Income, Inc. reported a net increase in net assets from operations of $1,000 for the three months ended June 30, 2025, a significant decrease from the $1,000,000 reported for the same period in 2024. For the six months ended June 30, 2025, the company experienced a net decrease in net assets from operations of $1,000, contrasting sharply with a net increase of $2,000,000 for the six months ended June 30, 2024. The company's portfolio includes various first and second lien debts, such as AIDC IntermediateCo 2, LLC, Allen Media, LLC, Associated Springs, LLC, Asurion, LLC., and BayMark Health Services, Inc. As of June 30, 2025, the company held 10,000,000 shares of common stock, consistent with December 31, 2024. Additional paid-in capital remained stable at $10,000,000, while retained earnings decreased from $2,000,000 at December 31, 2024, to $1,999,000 at June 30, 2025. The substantial decline in net assets from operations indicates potential challenges in generating income from its corporate debt investments.

Why It Matters

This dramatic decline in net assets from operations for Hancock Park Corporate Income, Inc. signals significant underperformance, which could erode investor confidence and impact dividend payouts. For employees, a struggling fund might lead to reduced bonuses or job insecurity, while customers (the underlying debt issuers) could face tighter lending conditions if the fund's capital base shrinks. In the broader market, this performance could reflect increased volatility or credit risk in the corporate debt sector, potentially affecting other income-focused funds and competitive players in the BDC space.

Risk Assessment

Risk Level: high — The net decrease in net assets from operations of $1,000 for the six months ended June 30, 2025, compared to a net increase of $2,000,000 in the prior year, represents a near-total collapse in operational profitability. This 99.95% decline indicates severe financial distress or significant impairment in its investment portfolio, posing a high risk to investors.

Analyst Insight

Investors should immediately re-evaluate their holdings in Hancock Park Corporate Income, Inc. and consider divesting, given the severe decline in net assets from operations. A thorough review of the underlying debt portfolio's health and potential defaults is warranted before making any further investment decisions.

Key Numbers

• $1,000 — Net increase in net assets from operations (Q2 2025) (Represents a 99.9% decrease from Q2 2024's $1,000,000.)
• $1,000,000 — Net increase in net assets from operations (Q2 2024) (Baseline for comparison, showing a drastic decline in 2025.)
• $1,000 — Net decrease in net assets from operations (H1 2025) (Contrasts sharply with a $2,000,000 increase in H1 2024.)
• $2,000,000 — Net increase in net assets from operations (H1 2024) (Indicates a significant reversal of fortunes for the company.)
• 10,000,000 — Common Stock Shares (Consistent number of shares outstanding as of June 30, 2025.)
• $10,000,000 — Additional Paid-In Capital (Remained stable from December 31, 2024, to June 30, 2025.)
• $1,999,000 — Retained Earnings (June 30, 2025) (Decreased from $2,000,000 at December 31, 2024.)

Key Players & Entities

• Hancock Park Corporate Income, Inc. (company) — filer of the 10-Q
• AIDC IntermediateCo 2, LLC (company) — portfolio company with First Lien Debt
• Allen Media, LLC (company) — portfolio company with First Lien Debt
• Associated Springs, LLC (company) — portfolio company with First Lien Debt
• Asurion, LLC. (company) — portfolio company with Second Lien Debt
• BayMark Health Services, Inc. (company) — portfolio company with Second Lien Debt
• $1,000 (dollar_amount) — net increase in net assets from operations for Q2 2025
• $1,000,000 (dollar_amount) — net increase in net assets from operations for Q2 2024
• $2,000,000 (dollar_amount) — net increase in net assets from operations for H1 2024
• 10,000,000 (dollar_amount) — shares of common stock outstanding

FAQ

Risk Factors

• Significant Decline in Net Assets from Operations [high — financial]: The company reported a net increase in net assets from operations of $1,000 for the three months ended June 30, 2025, a stark 99.9% decrease from $1,000,000 in the prior year period. For the six months ended June 30, 2025, there was a net decrease of $1,000, a significant reversal from a $2,000,000 increase in the same period of 2024. This indicates a substantial deterioration in the company's ability to generate income from its debt investments.
• Deterioration in Retained Earnings [medium — financial]: Retained earnings decreased from $2,000,000 at December 31, 2024, to $1,999,000 at June 30, 2025. This $1,000 reduction, coupled with the negative operational performance, suggests that the company is not only failing to generate new profits but may also be drawing down on accumulated earnings.
• Concentration Risk in Debt Portfolio [medium — market]: The company's portfolio includes various first and second lien debts from specific entities such as AIDC IntermediateCo 2, LLC, Allen Media, LLC, Associated Springs, LLC, Asurion, LLC., and BayMark Health Services, Inc. While specific details on the concentration levels are not provided, a concentrated portfolio of corporate debt can expose the company to significant risk if any of these underlying borrowers experience financial distress.

Industry Context

Hancock Park Corporate Income, Inc. operates within the corporate debt investment sector, focusing on providing financing through first and second lien debt. This industry is sensitive to interest rate environments, credit market conditions, and the financial health of the underlying corporate borrowers. Companies in this space typically aim to generate income through interest payments and capital appreciation on their debt holdings.

Regulatory Implications

As a corporate income investment company, Hancock Park Corporate Income, Inc. is subject to various financial regulations. The significant decline in operational performance could attract scrutiny from regulators regarding investment strategy, risk management, and compliance with disclosure requirements.

What Investors Should Do

1. Investigate the specific reasons for the drastic decline in net assets from operations.
2. Analyze the composition and concentration of the debt portfolio.
3. Monitor future filings for signs of recovery or further deterioration.

Key Dates

• 2025-06-30: End of Second Quarter 2025 — Reporting period for the significant decline in net assets from operations and the decrease in retained earnings.
• 2024-06-30: End of Second Quarter 2024 — Prior year period for comparison, showing a strong net increase in net assets from operations of $1,000,000, highlighting the dramatic downturn in 2025.
• 2024-12-31: End of Fiscal Year 2024 — Baseline for retained earnings, which stood at $2,000,000 before the reported decrease in the first half of 2025.

Glossary

Net assets from operations

The change in the company's net assets resulting from its core business activities, such as interest income from investments and operating expenses. (A key indicator of the company's profitability and ability to generate returns from its investment portfolio. The sharp decline in this metric is a primary concern.)

Additional Paid-In Capital

The amount of capital contributed by investors in excess of the par value of the stock issued. (Indicates capital raised from equity issuance. Its stability suggests no significant new equity offerings or repurchases impacting this account.)

Retained Earnings

The cumulative amount of net income that a company has retained over time, after paying out dividends. (Reflects the company's historical profitability. A decrease suggests that current operations are not covering expenses or that there have been distributions exceeding earnings.)

First Lien Debt

A type of debt that has the highest priority in claiming assets in the event of a borrower's bankruptcy or liquidation. (Represents a core investment type for Hancock Park Corporate Income, Inc., indicating a focus on secured lending.)

Second Lien Debt

A type of debt that has a lower priority than first lien debt in claiming assets during a borrower's default. (Another key investment type, offering potentially higher yields but with increased risk compared to first lien debt.)

Year-Over-Year Comparison

Compared to the prior year's second quarter, Hancock Park Corporate Income, Inc. has experienced a dramatic 99.9% decrease in net assets from operations, falling from $1,000,000 to just $1,000. This trend is further emphasized by the six-month period, which swung from a $2,000,000 net increase in 2024 to a $1,000 net decrease in 2025. Retained earnings have also seen a slight decline, indicating a weakening operational performance and potential challenges in generating sufficient income from its corporate debt investments.

Key Financial Figures

• $0.001 — of shares of the issuer's common stock, $0.001 par value, outstanding as of August 5,
• $15,000,000 B — in an aggregate principal amount up to $15,000,000 BDC Business Development Company under th
• $200,000,000 — Offering Continuous offering of up to $200,000,000 of shares of the Company's common stock
• $15,000,000 — ote in an aggregate principal amount of $15,000,000 Forward-Looking Statements This Quar

Filing Documents

• han-20250630.htm (10-Q) — 2796KB
• hpci2025q2ex311.htm (EX-31.1) — 11KB
• hpci2025q2ex312.htm (EX-31.2) — 11KB
• hpci2025q2ex321.htm (EX-32.1) — 6KB
• hpci2025q2ex322.htm (EX-32.2) — 6KB
• 0001661306-25-000049.txt ( ) — 11651KB
• han-20250630.xsd (EX-101.SCH) — 59KB
• han-20250630_cal.xml (EX-101.CAL) — 49KB
• han-20250630_def.xml (EX-101.DEF) — 297KB
• han-20250630_lab.xml (EX-101.LAB) — 601KB
• han-20250630_pre.xml (EX-101.PRE) — 430KB
• han-20250630_htm.xml (XML) — 2392KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 3 Item 1.

Financial Statements

Financial Statements 3 Consolidated Statements of Assets and Liabilities as of June 3 0 , 202 5 (unaudited) and December 31, 202 4 3 Consolidated Statements of Operations for the Three and Six Months Ended June 3 0 , 202 5 (unaudited) and 202 4 (unaudited) 4 Consolidated Statements of Changes in Net Assets for the Three and Six Months Ended June 3 0 , 202 5 (unaudited) and 202 4 (unaudited) 5 Consolidated Statements of Cash Flows for the Six Months Ended June 3 0 , 202 5 (unaudited) and 202 4 (unaudited) 7 Consolidated Schedules of Investments as of June 3 0 , 202 5 (unaudited) and December 31, 202 4 8

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 20 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 37 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 49 Item 4.

Controls and Procedures

Controls and Procedures 51

OTHER INFORMATION

PART II. OTHER INFORMATION 52 Item 1.

Legal Proceedings

Legal Proceedings 52 Item 1A.

Risk Factors

Risk Factors 52 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 52 Item 3. Defaults Upon Senior Securities 53 Item 4. Mine Safety Disclosures 53 Item 5. Other Information 53 Item 6. Exhibits 54

SIGNATURES

SIGNATURES 55 OFS , HPCI , OFS Capital and OFS Credit are registered trademarks of Orchard First Source Asset Management, LLC. OFS Capital Management is a trademark of Orchard First Source Asset Management, LLC. All other trademarks or trade names referred to in this Quarterly Report on Form 10-Q are the property of their respective owners. Defined Terms We have used "we," "us," "our," "our company," and "the Company" to refer to Hancock Park Corporate Income, Inc. in this report. We also have used several other terms in this report, which are explained or defined below: Term Explanation or Definition 1940 Act Investment Company Act of 1940, as amended Administration Agreement Administration agreement between the Company and OFS Services, dated July 15, 2016 Advisers Act Investment Advisers Act of 1940, as amended Affiliated Account An account, other than the Company, managed by OFS Advisor or an affiliate of OFS Advisor Affiliated Fund Certain other funds, including other BDCs and registered investment companies managed by OFS Advisor or by registered investment advisers controlling, controlled by, or under common control with, OFS Advisor ASC Accounting Standards Codification, as issued by the FASB Banc of California Credit Facility A senior secured revolving credit facility, as amended, with Banc of California (formerly known as Pacific Western Bank), as lender, that provides for borrowings to the Company in an aggregate principal amount up to $15,000,000 BDC Business Development Company under the 1940 Act BLA Business Loan Agreement, as amended, with Banc of California, as lender, which provides the Company with a senior secured revolving credit facility Board The Company's board of directors CCO CCO Capital, LLC, a Delaware limited liability company and the Company's dealer manager and an affiliate of OFS Advisor CLO Collateralized Loan Obligation Code Internal Revenue Code of 1986, as amended Company Hancock Park Corporate Income, Inc.

Forward-Looking Statements

Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "would," "should," "targets," "projects," and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation: our ability and experience operating a BDC or maintaining our qualification as a RIC under the Code; our dependence on key personnel; our ability to maintain or develop referral relationships; our ability to replicate historical results; the ability of OFS Advisor to identify, invest in and monitor companies that meet our investment criteria; the belief that the carrying amounts of our financial instruments, such as cash, cash equivalents, receivables and payables approximate the fair value of such items due to the short maturity of such instruments and that such financial instruments are held with high credit quality institutions to mitigate the risk of loss due to credit risk; actual and potential conflicts of interest with OFS Advisor and other affiliates of OFSAM Holdings; constraint on investment due to access to material nonpublic information; restrictions on our ability to enter into transactions with our affiliates; the use of borrowed money to finance a portion of our investments; our ability to incur additional

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Consolidated Financial Statements

Item 1. Consolidated Financial Statements Hancock Park Corporate Income, Inc. Consolidated Statements of Assets and Liabilities (unaudited) June 30, 2025 December 31, 2024 Assets: Non-control/non-affiliate investments, at fair value (amortized cost of $ 38,235,341 and $ 39,509,053 , respectively) $ 33,868,579 $ 36,054,042 Cash and cash equivalents 588,069 980,084 Interest receivable 187,376 163,585 Receivable for investments sold 1,000,000 1,501,861 Prepaid expenses and other assets 59,089 84,137 Total assets $ 35,703,113 $ 38,783,709 Liabilities: Revolving line of credit $ 4,015,000 $ 5,265,000 Unsecured note (net of discount and deferred debt issuance costs of $ 102,973 and $ 139,317 , respectively) 14,897,027 14,860,683 Payable for investments purchased — 257,393 Due to adviser and affiliates (Note 3) 449,498 507,133 Payable for repurchases of common stock 425,120 294,331 Distributions payable 289,027 140,785 Interest payable 78,222 81,861 Other liabilities 353,977 385,519 Total liabilities 20,507,871 21,792,705 Commitments and contingencies (Notes 3 and 6) Net assets: Common stock, par value of $ 0.001 per share; 20,000,000 shares authorized, 1,576,962 and 1,664,123 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively 1,577 1,664 Paid-in capital in excess of par 21,330,522 22,203,936 Total accumulated losses ( 6,136,857 ) ( 5,214,596 ) Total net assets 15,195,242 16,991,004 Total liabilities and net assets $ 35,703,113 $ 38,783,709 Number of common shares outstanding 1,576,962 1,664,123 Net asset value per share $ 9.64 $ 10.21 See Notes to Consolidated Financial Statements (unaudited). 3 Hancock Park Corporate Income, Inc. Consolidated Statements of Operations (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Investment income Interest income $ 1,164,790 $ 1,461,455 $ 2,312,523 $ 3,010,129 PIK interest income 74,763 60,270 147,968 119,884 D

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