SLR Private Credit BDC II Sees Capital Growth Slowdown Amid Rising Assets

TL;DR

**SLR Private Credit BDC II's capital growth is decelerating, signaling potential headwinds despite asset expansion; proceed with caution.**

AI Summary

SLR Private Credit BDC II LLC reported a net increase in unitholders' capital from operations of $351,000 for the three months ended September 30, 2025, a significant decrease from $633,000 for the same period in 2024. For the nine months ended September 30, 2025, net increase in unitholders' capital was $859,000, down from $1,166,000 in the prior year. Total investment income slightly decreased to $1,159,000 for the three months ended September 30, 2025, from $1,224,000 in 2024, while expenses decreased to $843,000 from $887,000. The company's total assets increased to $44,565,000 as of September 30, 2025, from $39,849,000 at December 31, 2024. Liabilities also rose to $28,544,000 from $24,019,000 over the same period, driven by an increase in revolving credit facilities. Net asset value per unit increased to $16.32 as of September 30, 2025, from $16.13 at December 31, 2024. The company's investment portfolio is heavily concentrated in 'Health Care Providers & Services' at 29.9% of total investments.

Why It Matters

For investors, the slowdown in net increase in unitholders' capital, despite rising total assets, suggests potential challenges in profitability or increased operational costs. The significant concentration in 'Health Care Providers & Services' (29.9%) exposes the company to sector-specific risks, which could impact future returns. The increase in revolving credit facilities indicates a reliance on debt financing, potentially increasing interest rate sensitivity. In a competitive private credit market, this performance could affect the company's ability to attract new capital and maintain its investment strategy, impacting its long-term growth trajectory.

Risk Assessment

Risk Level: medium — The risk level is medium due to a significant decrease in the net increase in unitholders' capital from operations, falling from $633,000 to $351,000 for the three months ended September 30, 2025. Additionally, the company's investment portfolio has a high concentration in 'Health Care Providers & Services' at 29.9% of total investments, exposing it to sector-specific risks.

Analyst Insight

Investors should scrutinize the drivers behind the decelerating capital growth and the increased leverage. Consider diversifying exposure if heavily invested in the healthcare sector, and monitor future interest rate impacts on the company's revolving credit facilities.

Financial Highlights

debt To Equity

1.78

revenue

$1,159,000

total Assets

$44,565,000

total Debt

$28,544,000

net Income

$351,000

revenue Growth

-5.3%

Revenue Breakdown

Key Numbers

• $351,000 — Net Increase in Unitholders' Capital (Q3 2025) (Decreased from $633,000 in Q3 2024, indicating a 44.5% decline.)
• $859,000 — Net Increase in Unitholders' Capital (9 months ended Sep 2025) (Decreased from $1,166,000 in the prior year, a 26.3% reduction.)
• $44,565,000 — Total Assets (Sep 30, 2025) (Increased from $39,849,000 at Dec 31, 2024, representing an 11.8% growth.)
• $28,544,000 — Total Liabilities (Sep 30, 2025) (Increased from $24,019,000 at Dec 31, 2024, a 18.8% rise.)
• $16.32 — Net Asset Value Per Unit (Sep 30, 2025) (Increased from $16.13 at Dec 31, 2024, a 1.2% increase.)
• 29.9% — Investment Concentration in Health Care Providers & Services (Represents the largest industry segment in the portfolio, indicating sector-specific risk.)
• $1,159,000 — Total Investment Income (Q3 2025) (Slightly decreased from $1,224,000 in Q3 2024, a 5.3% decline.)
• $843,000 — Total Expenses (Q3 2025) (Decreased from $887,000 in Q3 2024, a 4.9% reduction.)
• $16,881,000 — SPV Revolving Credit Facility (Sep 30, 2025) (Increased from $15,871,000 at Dec 31, 2024, indicating higher leverage.)
• $10,801,000 — Subscription Revolving Credit Facility (Sep 30, 2025) (Increased from $6,645,000 at Dec 31, 2024, showing a significant increase in short-term debt.)

Key Players & Entities

• SLR Private Credit BDC II LLC (company) — registrant
• Bloomberg (company) — publisher
• SEC (regulator) — filing authority
• $351,000 (dollar_amount) — net increase in unitholders' capital for Q3 2025
• $633,000 (dollar_amount) — net increase in unitholders' capital for Q3 2024
• $44,565,000 (dollar_amount) — total assets as of September 30, 2025
• $39,849,000 (dollar_amount) — total assets as of December 31, 2024
• $16.32 (dollar_amount) — net asset value per unit as of September 30, 2025
• $16.13 (dollar_amount) — net asset value per unit as of December 31, 2024
• 29.9% (dollar_amount) — percentage of total investments in Health Care Providers & Services

FAQ

Risk Factors

• Increased Leverage [medium — financial]: Total liabilities increased by 18.8% to $28,544,000 as of September 30, 2025, from $24,019,000 at December 31, 2024. This rise is largely driven by an increase in revolving credit facilities, including the SPV Revolving Credit Facility ($16,881,000) and the Subscription Revolving Credit Facility ($10,801,000), indicating higher financial leverage.
• Industry Concentration Risk [medium — market]: The investment portfolio exhibits significant concentration in the 'Health Care Providers & Services' sector, representing 29.9% of total investments as of September 30, 2025. This concentration exposes the company to sector-specific downturns or regulatory changes impacting this industry.
• Declining Net Increase in Unitholders' Capital [medium — financial]: Net increase in unitholders' capital from operations for Q3 2025 was $351,000, a 44.5% decrease from $633,000 in Q3 2024. For the nine months ended September 30, 2025, it was $859,000, down 26.3% from $1,166,000 in the prior year, suggesting reduced profitability or increased distributions.
• Credit Risk of Investments [high — operational]: As a BDC, the company's performance is directly tied to the credit quality and repayment ability of its portfolio companies. Deterioration in the financial health of these borrowers could lead to investment losses and impact net asset value.

Industry Context

The BDC sector operates within the alternative investment landscape, providing crucial financing to middle-market companies that may not have access to traditional bank loans. Key trends include increasing competition for deal flow, a focus on credit quality amidst economic uncertainty, and the impact of interest rate environments on portfolio yields and borrowing costs. BDCs often specialize in specific industries or investment types, leading to portfolio concentration risks.

Regulatory Implications

As a BDC, SLR Private Credit BDC II LLC is subject to regulations under the Investment Company Act of 1940, which imposes limits on leverage and requires certain disclosures. Changes in accounting standards or regulatory interpretations can impact financial reporting and operational flexibility. Compliance with these regulations is critical to maintaining its status and investor confidence.

What Investors Should Do

1. Monitor leverage levels closely.
2. Assess the impact of industry concentration.
3. Analyze the drivers of declining net income.

Key Dates

• 2025-09-30: Quarterly Financial Reporting — Indicates a decrease in net income from operations and a slight increase in NAV per unit, alongside growth in assets and liabilities.
• 2025-12-31: Previous Fiscal Year End — Provides the baseline for year-over-year comparisons of assets, liabilities, and NAV per unit.

Glossary

BDC

Business Development Company. A type of closed-end investment company that invests in small and medium-sized businesses and provides capital to them. (SLR Private Credit BDC II LLC is structured as a BDC, meaning its primary business is investing in private companies.)

Net Asset Value (NAV)

The market value of a company's assets minus its liabilities. For a BDC, it represents the value per share or unit. (The NAV per unit increased to $16.32, indicating growth in the underlying value of the company's investments.)

Revolving Credit Facility

A type of credit facility that allows a borrower to draw down, repay, and redraw funds up to a certain limit during the term of the facility. (The increase in revolving credit facilities, particularly the Subscription Revolving Credit Facility, suggests increased reliance on short-term debt financing.)

Unitholders' Capital

The total capital contributed by the owners (unitholders) of the company, plus retained earnings or minus losses. (The net increase in unitholders' capital reflects the company's profitability from operations after accounting for distributions.)

Year-Over-Year Comparison

Compared to the prior year, SLR Private Credit BDC II LLC shows mixed performance. Total assets grew by 11.8% to $44,565,000, while total liabilities saw a more substantial increase of 18.8% to $28,544,000, indicating rising leverage. Investment income slightly decreased by 5.3%, and operating expenses also declined by 4.9%. Most notably, the net increase in unitholders' capital from operations significantly decreased by 44.5% in Q3, suggesting a potential pressure on profitability despite asset growth.

Filing Documents

• ck0001932591-20250930.htm (10-Q) — 2833KB
• ck0001932591-ex31_1.htm (EX-31.1) — 15KB
• ck0001932591-ex31_2.htm (EX-31.2) — 16KB
• ck0001932591-ex31_3.htm (EX-31.3) — 15KB
• ck0001932591-ex32_1.htm (EX-32.1) — 8KB
• ck0001932591-ex32_2.htm (EX-32.2) — 8KB
• ck0001932591-ex32_3.htm (EX-32.3) — 8KB
• 0001193125-25-264648.txt ( ) — 9466KB
• ck0001932591-20250930.xsd (EX-101.SCH) — 939KB
• ck0001932591-20250930_htm.xml (XML) — 1848KB

Financial Statements

Financial Statements Consolidated Statements of Assets and Liabilities as of September 30, 2025 (unaudited) and December 31, 2024 3 Consolidated Statements of Operations for the three and nine months ended September 30, 2025 (unaudited) and the three and nine months ended September 30, 2024 (unaudited) 4 Consolidated Statements of Changes in Unitholders' Capital for the three and nine months ended September 30, 2025 (unaudited) and the three and nine months ended September 30, 2024 (unaudited) 5 Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 (unaudited) and the nine months ended September 30, 2024 (unaudited) 6 Consolidated Schedule of Investments as of September 30, 2025 (unaudited) 7 Consolidated Schedule of Investments as of December 31, 2024 10

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 12 Report of Independent Registered Public Accounting Firm 30 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 43 PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 44 Item 1A.

Risk Factors

Risk Factors 44 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 44 Item 3. Defaults Upon Senior Securities 44 Item 4. Mine Safety Disclosures 44 Item 5. Other Information 44 Item 6. Exhibits 44

SIGNATURES

SIGNATURES 46 2 Table of Contents

FIN ANCIAL INFORMATION

PART I. FIN ANCIAL INFORMATION In this Quarterly Report, "Company", "we", "us", and "our" refer to SLR Private Credit BDC II LLC unless the context states otherwise. Item1. Financi al Statements SLR PRIVATE CREDIT BDC II LLC Consolidated Statements of Asse ts and Liabilities (in thousands, except unit and per unit amounts) September 30, 2025 (unaudited) December 31, 2024 Assets Investments at fair value: Non-controlled/non-affiliated investments (cost: $ 42,466 and $ 37,628 , respectively) $ 43,028 $ 38,271 Cash 1,294 1,363 Interest receivable 234 213 Receivable for investments sold 1 — Prepaid expenses 8 2 Total assets $ 44,565 $ 39,849 Liabilities Revolving credit facility due December 2028 (the "SPV Facility") ($ 17,200 and $ 16,250 face amounts, respectively, reported net of unamortized debt issuance costs of $ 319 and $ 379 , respectively. See note 5) $ 16,881 $ 15,871 Revolving credit facility due March 2026 (the "Subscription Facility") ($ 10,850 and $ 6,700 face amounts, respectively, reported net of unamortized debt issuance costs of $ 49 and $ 55 , respectively. See note 5) 10,801 6,645 Distributions payable — 309 Management fee payable (see note 3) 272 364 Administration fee payable (see note 3) 8 8 Interest payable (see note 5) 370 333 Other liabilities and accrued expenses 212 489 Total liabilities $ 28,544 $ 24,019 Commitments and contingencies (see note 6) Unitholders' Capital Common Unitholders' capital ( 981,403 and 981,403 units, respectively, issued and outstanding) 15,932 15,932 Accumulated distributable net earnings (loss) 89 ( 102 ) Total unitholders' capital $ 16,021 $ 15,830 Total liabilities and unitholders' capital $ 44,565 $ 39,849 Net asset value per unit $ 16.32 $ 16.13 See notes to consolidated financial statements. 3 Table of Contents SLR PRIVATE CREDIT BDC II LL

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