Oaktree Gardens' Assets Soar 25% on Investment Growth, Net Income Nearly Doubles

TL;DR

**Oaktree Gardens is aggressively expanding its investment portfolio, driving massive asset growth and nearly doubling net investment income, but watch the rising leverage and unrealized depreciation.**

AI Summary

Oaktree Gardens OLP, LLC reported a significant increase in total assets to $986,559 thousand as of June 30, 2025, up from $787,073 thousand on September 30, 2024, primarily driven by a substantial rise in investments at fair value to $880,215 thousand from $575,225 thousand. Net investment income for the nine months ended June 30, 2025, surged to $34,100 thousand, a 98.0% increase from $17,218 thousand in the same period last year, largely due to higher interest income from non-control/non-affiliate investments, which grew to $58,627 thousand from $28,081 thousand. However, the company experienced a net unrealized depreciation of $2,467 thousand on non-control/non-affiliate investments for the nine months ended June 30, 2025, compared to an appreciation of $4,272 thousand in the prior year. Total liabilities also increased to $535,262 thousand from $422,782 thousand, mainly due to higher secured borrowings of $118,457 thousand and credit facility payable of $412,001 thousand. Net assets increased to $451,297 thousand from $364,291 thousand, with common units outstanding rising to 22,076 from 17,718. Earnings per common unit for the nine months decreased to $1.49 from $2.02, despite the increase in net investment income, due to a larger number of weighted average common units outstanding (20,735 vs. 10,618).

Why It Matters

Oaktree Gardens OLP's substantial asset growth and nearly doubled net investment income signal robust operational performance, which could attract new investors seeking exposure to private credit and specialized lending. The increase in secured borrowings and credit facility usage indicates aggressive capital deployment, potentially boosting future returns but also increasing leverage. For employees, this growth suggests stability and potential expansion. Customers of Oaktree's portfolio companies benefit from continued financing. In a competitive landscape, Oaktree's ability to significantly grow its investment portfolio and income demonstrates its strong market position and deal-sourcing capabilities, especially within the specialized consumer services, application software, and healthcare sectors.

Risk Assessment

Risk Level: medium — The company's total liabilities increased significantly to $535,262 thousand from $422,782 thousand, driven by a rise in secured borrowings to $118,457 thousand and credit facility payable to $412,001 thousand. This increased leverage, combined with a net unrealized depreciation of $2,467 thousand on non-control/non-affiliate investments for the nine months ended June 30, 2025, indicates potential valuation risks and higher financial obligations.

Analyst Insight

Investors should closely monitor Oaktree Gardens' leverage ratios and the fair value movements of its Level 3 investments, which constitute a significant portion of its portfolio. While the strong growth in net investment income is positive, the increase in debt and unrealized depreciation warrant caution. Consider if the increased risk from higher borrowings is adequately compensated by the potential for future income growth.

Financial Highlights

debt To Equity

1.19

revenue

$62,652,000

operating Margin

N/A

total Assets

$986,559,000

total Debt

$530,458,000

net Income

$34,100,000

eps

$1.49

gross Margin

N/A

cash Position

$92,198,000

revenue Growth

102.1%

Revenue Breakdown

Key Numbers

• $986.56M — Total assets (Increased from $787.07 million on September 30, 2024)
• $880.22M — Investments at fair value (Increased from $575.23 million on September 30, 2024)
• $34.10M — Net investment income (nine months) (Increased 98.0% from $17.22 million in prior year period)
• $58.63M — Interest income from non-control/non-affiliate investments (nine months) (Increased from $28.08 million in prior year period)
• $2.47M — Net unrealized depreciation (nine months) (On non-control/non-affiliate investments, compared to $4.27 million appreciation in prior year)
• $535.26M — Total liabilities (Increased from $422.78 million on September 30, 2024)
• $118.46M — Secured borrowings (Increased from $52.76 million on September 30, 2024)
• $412.00M — Credit facility payable (Increased from $367.00 million on September 30, 2024)
• $1.49 — Earnings per common unit (nine months) (Decreased from $2.02 in prior year period)
• 22,076 — Common units outstanding (As of June 30, 2025, up from 17,718 on September 30, 2024)

Key Players & Entities

• Oaktree Gardens OLP, LLC (company) — Registrant
• SEC (regulator) — Filing authority
• Bank of New York Mellon (company) — Counterparty for foreign currency forward contracts
• AVSC Holding Corp. (company) — Portfolio company in Specialized Consumer Services
• Centralsquare Technologies, LLC (company) — Portfolio company in Application Software
• Integrity Marketing Acquisition, LLC (company) — Portfolio company in Insurance Brokers
• PetVet Care Centers, LLC (company) — Portfolio company in Health Care Services
• USIC Holdings, Inc. (company) — Portfolio company in Diversified Support Services
• SOFR (dollar_amount) — Secured Overnight Financing Rate, index for floating rate loans

FAQ

Risk Factors

• Investment Value Fluctuations [medium — financial]: The company experienced a net unrealized depreciation of $2,467,000 on non-control/non-affiliate investments for the nine months ended June 30, 2025, a significant shift from an appreciation of $4,272,000 in the prior year. This highlights the volatility in the fair value of its investment portfolio.
• Increased Leverage [medium — financial]: Total liabilities increased to $535,262,000 from $422,782,000, primarily due to a substantial rise in secured borrowings to $118,457,000 and credit facility payable to $412,001,000. This increased leverage amplifies financial risk.
• Interest Rate Sensitivity [medium — market]: While higher interest rates boosted interest income by 108.7% to $58,627,000, this also increases interest expense, which rose by 118.9% to $22,274,000 for the nine-month period. Changes in interest rates can significantly impact profitability.
• Dilution of Earnings Per Unit [low — operational]: Despite a 98.0% increase in net investment income to $34,100,000, earnings per common unit decreased to $1.49 from $2.02. This is due to a significant increase in weighted average common units outstanding from 10,618 to 20,735.

Industry Context

Oaktree Gardens OLP, LLC operates within the investment management sector, likely focusing on debt and equity investments. The sector is characterized by its sensitivity to interest rate movements and market volatility, impacting investment income and asset valuations. Competition is fierce, with firms vying for investor capital and seeking attractive investment opportunities.

Regulatory Implications

As a limited partnership, Oaktree Gardens OLP, LLC is subject to various financial reporting regulations, including the requirement to file 10-Q reports. Changes in accounting standards or regulatory oversight could impact how investments are valued and reported, potentially affecting reported earnings and net asset values.

What Investors Should Do

1. Monitor investment performance closely.
2. Analyze the impact of increased leverage.
3. Evaluate the dilution effect on EPS.
4. Assess the drivers of interest income growth.

Key Dates

• 2025-06-30: End of Nine-Month Period — Reporting period for the consolidated statements of operations and cash flows, showing significant growth in assets and net investment income but a decrease in EPS due to unit dilution.
• 2025-06-30: Consolidated Statements of Assets and Liabilities — Shows total assets of $986.56 million and total liabilities of $535.26 million, with net assets at $451.30 million.
• 2024-09-30: Prior Fiscal Year End — Benchmark for year-over-year comparisons, showing total assets of $787.07 million and total liabilities of $422.78 million.

Glossary

Non-control/Non-affiliate investments

Investments in companies where Oaktree Gardens OLP, LLC does not have control or is not affiliated, typically held for investment purposes. (These investments form the largest asset class and are the primary driver of investment income and fair value changes.)

PIK interest income

Payment-in-Kind interest income, where interest is paid in the form of additional debt or equity rather than cash. (Contributes to the total investment income, though it does not provide immediate cash flow.)

Net unrealized appreciation (depreciation)

The change in the fair value of investments that have not yet been sold. Appreciation means the value increased, depreciation means it decreased. (Indicates market-driven changes in the value of the investment portfolio, impacting net income but not necessarily cash flow until realized.)

Secured borrowings

Loans or debt that are backed by specific assets of the company as collateral. (A significant component of the company's liabilities, indicating increased financial leverage.)

Credit facility payable

The amount drawn down from a revolving line of credit or other credit facility. (Represents a major source of funding and a significant liability for the company.)

Common units outstanding

The total number of ownership units of the company that have been issued and are held by investors. (An increase in common units outstanding dilutes earnings per unit and affects ownership percentages.)

Year-Over-Year Comparison

Compared to the prior year period, Oaktree Gardens OLP, LLC has seen a substantial increase in total assets, driven by a significant rise in investments at fair value. Net investment income has nearly doubled, largely due to higher interest income from its investment portfolio. However, the company experienced a shift from investment appreciation to depreciation. Liabilities have also increased considerably, primarily from higher secured borrowings and credit facility usage, leading to increased financial leverage. Despite strong income growth, earnings per common unit have decreased due to a substantial increase in the number of outstanding common units.

Filing Documents

• olp-20250630.htm (10-Q) — 1989KB
• olpgardens-ex311_202506301.htm (EX-31.1) — 8KB
• olpgardens-ex312_202506301.htm (EX-31.2) — 8KB
• olpgardens-ex321_202506301.htm (EX-32.1) — 4KB
• olpgardens-ex322_202506301.htm (EX-32.2) — 4KB
• 0001974793-25-000014.txt ( ) — 9309KB
• olp-20250630.xsd (EX-101.SCH) — 45KB
• olp-20250630_cal.xml (EX-101.CAL) — 61KB
• olp-20250630_def.xml (EX-101.DEF) — 192KB
• olp-20250630_lab.xml (EX-101.LAB) — 527KB
• olp-20250630_pre.xml (EX-101.PRE) — 368KB
• olp-20250630_htm.xml (XML) — 2018KB

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION Item 1. Consolidated Financial Statements: Consolidated Statements of Assets and Liabilities as of June 30, 2025 (unaudited) and September 30, 2024 2 Consolidated Statement of Operations (unaudited) for the three and nine months ended June 30, 2025 and 2024 3 Consolidated Statements of Changes in Net Assets (unaudited) for the three and nine months ended June 30, 2025 and 2024 4 Consolidated Statements of Cash Flows (unaudited) for the nine months ended June 30, 2025 and 2024 5 Consolidated Schedule of Investments as of June 30, 2025 (unaudited) 6 Consolidated Schedule of Investments as of September 30, 2024 9

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 11 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 31 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 43 Item 4.

Controls and Procedures

Controls and Procedures 45

— OTHER INFORMATION

PART II — OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 46 Item 1A.

Risk Factors

Risk Factors 46 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 46 Item 3. Defaults Upon Senior Securities 46 Item 4. Mine Safety Disclosures 46 Item 5. Other Information 46 Item 6. Exhibits 46

Signatures

Signatures 48 PART I

Consolidated Financial Statements

Item 1. Consolidated Financial Statements Oaktree Gardens OLP, LLC Consolidated Statements of Assets and Liabilities (in thousands, except per unit amounts) June 30, 2025 (unaudited) September 30, 2024 ASSETS Assets: Investments – Non-control/Non-affiliate, at fair value (cost June 30, 2025: $ 877,013 ; cost September 30, 2024: $ 569,556 ) $ 880,215 $ 575,225 Cash and cash equivalents 92,198 207,344 Interest receivable 4,381 2,861 Deferred financing costs 289 1,518 Derivative asset at fair value 3 — Other assets 9,473 125 Total assets $ 986,559 $ 787,073 LIABILITIES AND NET ASSETS Liabilities: Accounts payable, accrued expenses and other liabilities $ 289 $ 402 Base management fee payable 1,604 1,002 Due to affiliates 1,153 1,076 Interest payable 1,758 419 Director fees payable — 119 Secured borrowings 118,457 52,764 Credit facility payable 412,001 367,000 Total liabilities 535,262 422,782 Commitments and contingencies (Note 12) Net assets: Common units ( 22,076 and 17,718 units issued and outstanding as of June 30, 2025 and September 30, 2024, respectively) 447,300 357,700 Accumulated earnings 3,997 6,591 Total net assets (equivalent to $ 20.44 and $ 20.56 per common unit as of June 30, 2025 and September 30, 2024, respectively) (Note 10) 451,297 364,291 Total liabilities and net assets $ 986,559 $ 787,073 See notes to Consolidated Financial Statements. 2 Oaktree Gardens OLP, LLC Consolidated Statements of Operations (in thousands, except per unit amounts) (unaudited) Three months ended June 30, 2025 Three months ended June 30, 2024 Nine months ended June 30, 2025 Nine months ended June 30, 2024 Interest income: Non-control/Non-affiliate investments $ 21,059 $ 13,115 $ 58,627 $ 28,081 Interest on cash and cash equivalents 450 364 2,449 1,615 Total interest income 21,509 13,479 61,076 29,696 PIK interest income: Non-control/Non-affiliate investments 165 372 1,032 624 Total PIK interest income 165 372 1,032 624

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View this 10-Q filing on SEC EDGAR